Problems

1. A management employee borrowed from his employer (advances against salaries) P 120,000,
payable from his salaries at P 5,000 every payday (fifteen days). Since check- off was to be made
against salaries, there was no interest charged on the loan. The deduction for fringe benefit tax
is:
Interest @ 12%: (120,000*12%) P14,400
No interest 0
Fringe benefit P14,400

Monetary value P14,400

Divided by 65%

GUMV P22,153.85
Tax rate 35%
FBT P7,753.85

Fringe benefit tax expense P 7,753.85

Fringe benefit tax payable P 7,753.85

2. In 2020, Miss Hera Lopez, a managerial employee, was reimbursed by her employer for the total
salary she paid to her house helper amounting to P 16,320 for the year and, also the P34,000
travelling expenses which incurred in connection with her duty as sales manager. How much
would be the fringe benefit tax for the year
Monetary Value P16,320
Divided by 65%

GUMV P25,107.69
Tax rate 35%
FBT P 8,787.69

Fringe benefit expense P 16,320

Fringe benefit tax expense 8,787.69

Cash P 16,320

Fringe benefit tax payable 8,787,69

3. In 2020, Mrs. Mayflor, a branch manager of RCBC – Davao was given a benefit of an assignment
of condominium owned by the bank. The prevailing rent of the same class of condominium is
 P25,000 per month. The fair market value of the condominium is P 8,000,000 per BIR valuation
but the zonal value is P 6,000,000. What is the grossed up monetary value of the fringe benefit?
Annual value = FMV * 5%
Annual value = P8M * 5%
Annual value = P 400,000

Monetary value = AV * 50%

Monetary value = P400,000 * 50%
Monetary value = P 200,000

Monetary value P 200,000

Divided by: 65%
GUMV P307,692.31
Tax rate 35%
FBT P107,692.31

4. In 2020, a managerial employee was given by his employer all paid vacation expenses
amounting to P 500,000. How much is the fringe benefit tax?
FBT = P269,230.77

Accounting Entries:
 Fringe benefit expense XXX

Fringe benefit tax expense XXX

Cash/property XXX

Fringe benefit tax payable XXX

Fringe benefit tax expense XXX

Fringe benefit tax payable XXX

The Hi-Grade Corporation is engaged in the manufacturing of vitamins proven to enhance human
memory and alertness. The plant is located in a secluded place somewhere in Tagum City managed by
Mr. Clever, a Filipino. During the year 2020, the following privileges were given to Mr. Clever:

1. A Toyota Vios car purchased by the Corp. in the name of Mr. Clever Worth
P690,000. The intention of the Corporation is for the manager to travel early so that
he can monitor the operations since the operation start at 4:00 in the morning;
2. Rice allowance of P1,000 per month
3. Fare tickets worth 100,000 to enjoy a holiday in California
4. He is allowed to stay in the residential house and lot owned by the Corporation in
Davao City with market value of P1,500,000 while zonal value is P2,000,000.

1. The fringe benefit tax for the house and lot described above is
Annual value = ZV * 5%
Annual value = P2M * 5%
Annual value = P 100,000

Monetary value = AV * 50%

Monetary value = P100,000 * 50%
Monetary value = P 50,000

Monetary value P 50,000

Divided by: 65%
GUMV P 76,923.08
Tax rate 35%
FBT P 26,923.08

2. In the above given problem, how much is the total fringe benefit tax liability of the Corporation?
Monetary value P 100,000
Divided by: 65%
GUMV P 153,846.15
Tax rate 35%
FBT P 53,846.15

FBT:
*Housing - P 26,923.08
*Holiday - 53,846.15
Total P 80,769.23