De Minimis Benefits/Other Benefits

178. Statement 1: Monetized value of unused sick leave credits not exceeding 10 days to private employees is a
tax exempt benefit.
Statement 2: Monetized value of unused sick leave credits not exceeding 10 days to government employees
is a tax exempt benefit.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

Answer: B
Ul Only monetized unused vacation leave credit not exceeding ten (10) days received by an employee from a private sector is tax exempt

Monetized unused Vacation and Sick leave credits granted to government employees, regardless of the number of days, are tax
exempt.

Which of the following housing benefits is exempt from income tax?

business premises6 ad^aCent <with‘n 50 meters) from the perimeter of the
P ary housing for a stay in the housing unit for three (3) months or less

business premises
 a. Housing privilege of military officials of the Armed Forces of the Philippines
b. All of the above

❖ Answer: D

181. Which of the following conditions is required in order that expenses incurred or paid by
an employee but which are paid or reimbursed by his employer will be exempt from income
tax?
I. The expenditures are duly receipted for and in the name of the employer.
II. The expenditures are not of a nature of a personal expense attributable to the
employee.
a. I only c. Any of I and II
b. II only d. Both I and II are required

❖ Answer: D

182. Statement 1: Expenses receipted in the name of the employer which do not partake the
nature of personal expenses attributable to employees should not be treated as taxable
fringe benefits.
Statement 2: The expenses described above, if incurred by a managerial employee, should
neither be included in the computation of fringe benefit tax nor in the determination of the
individual taxpayers’ returnable compensation income.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

❖ Answer: C

183. Statement 1: Representation and transportation allowance given regularly on a monthly basis
are not taxable fringe benefits but taxable as compensation income subject to basic tax under
Sec. 24(A) of the Tax Code.
Statement 2: Expenses in connection with attending business meeting or convention in the
Philippines such as food, beverages and transportation are nontaxable benefits of the
employee
a. Only statement 1 is correct
b. Only statement 2 is correct
 c. Both statements are correct
d. Both statements are incorrect

❖ Answer: C

184. A domestic corporation provides fixed daily meal allowance to all its regular employees. The
meal allowance is:
a. Exempt from basic income tax
b. Subject to fringe benefit tax if the recipient is a rank and file employee

Subject to fringe benefit tax if the recipient is a managerial employee Subject to basic income tax
c.
d. mTgeneral. fixed or variable allowances which are received by a public officer or employee or officer or employee of a private
entity, in addition to the regular compensation, fixed for his position or office, is compensation subject to income tax and
consequently, creditable withholding tax on compensation income.
Basis: Section 2.78.1(A) of RR 2-98 as amended by RR 10-2008. Examples of fixed or variable allowances are
transportation allowance, representation allowance, communication allowance, living away from home allowance
(LAFHA), and the like.

185. Accountancy University (AU) granted a scholarship grant abroad (Master of Science in
Accountancy) to Fermin, one of its regular faculty members. The management of AU believed that
the university will be able to improve its accountancy program through the scholarship grant.
Nonetheless, no written contract was executed between AU and Fermin requiring the latter to
remain in the employ of the employer for a certain period of time. The scholarship grant is
a. Subject to basic income tax or fringe benefit tax depending on the rank of Fermin
b. De minimis benefit, hence, tax-exempt regardless of rank
c. The benefit was provided for the benefit of the employer, hence, non-taxable on the
part of the employee
d. None of the above

❖ Answer: A

186. The cost of educational assistance extended by an employer to the dependents of an employee
shall be treated as taxable fringe benefits, unless:
a. The education or study involved is directly connected with the parent’s employer's business
or profession.
b. There is a written contract between the parents and the employer that the former is
under obligation to remain in the employ of the latter for period of time they have mutually
agreed upon. 1

c. The assistance was provided through a competitive scheme under the scholarship program
of the employer.
d. Any of the choices
❖ Answer: C
187
T expenses,which are paid for py employer for the foreign travel of
treatedVtaxahiP w purpose,of attendln9 business meetings or conventions shall not be Y as
taxable fringe
benefits, except:
b. Lodg^wst aX|^.ninT StCh 3S expenses for ,ood’ beverages and local transportation)
c. C^st^^?WJn?n9toanavera9eo’u^3«)orlessperday
d 30°/'°^noniy Ebusiness class airplane bcket
'°X^t0,firs,class pricket
Use the following data for the next four (^questions:
The following data were taken from Juan (single), holding managerial position for 2018 taxable year:

Gross salaries @ P50.000 per month P600.000

SSS contributions 12,000 z
Philhealth contributions 7,200
Pag-ibig contributions 4,800 '
Union dues 3,000
Withholding tax on compensation income 73,250
Allowances, not subject to liquidation 100,000
Gasoline allowances, subject to liquidation 17.000

13th month pay 50,000

De minimis benefits 12,000

188. The taxable compensation income subject to graduated rate under Section 24(A) of the tax code is;
a. P465.000 c. P573.000
b. P576.000 d. P600.000

❖ Answer: C
Gross salaries @ P50,000 per month P600,000
SSS contributions (12,000)
Philhealth contributions (7,200)
Pag-ibig contributions (4,800)
Union dues (3,000)
Compensation income subject to basic tax P573,000

189. Based on the above data, the fringe benefit tax due is:
a. P0 c. P53.846
b. P8.000 d. P47.059

❖ Answer: C
111 FBT = P100,000/65% x 35% = P53.846

190. The total income tax expense of Juan is:

a. P127.096 c. P170.760
b. P141.000 d. P179.400

❖ Answer: A