(Modified) Identification

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(MODIFIED) IDENTIFICATION

Determine whether or not the following is subject to fringe benefit tax. Write A if the benefit is
subject to fringe benefit tax, otherwise, write B. Assume further that the employee is holding
supervisory or managerial position unless stated otherwise.

1. Fringe benefit required by the nature of or necessary to trade or business of the employer.
2. Fringe benefit for the convenience or advantage of the employer.
3. Car plan for managerial employees.
4. Daily meal allowance for managerial employees.
5. Monetized unused vacation leave credits of private employees not exceeding 10 days.
6. Monetized unused vacation leave credits of government employees in excess of 10 days.
7. Monetized value of sick leave credits not exceeding 10 days.
8. Monetized value of sick leave credits of private employees in excess of 10 days.
9. Compensation income of supervisory and managerial employees.
10. Housing units situated inside or adjacent to business or factory (located within 50 meters
from the perimeter of business).
11. House benefits to the Chief Finance Officer of the company
12. Allowances received by supervisory and managerial employees not subject to liquidation.
13. Used by employee of aircraft (including helicopters) owned/maintained by the employer.
14. Cost of 1st class/business class airplane ticket for business travel or convention abroad in
excess of 70%.
15. De minimis benefits received by an executive of a company.
16. Educational assistance (Master of Science in Accountancy) granted to Fe, the Finance
Manager of ABC Company. No written contract was executed by Fe and ABC.
17. Premiums borne by the employer for the group insurance of its employees
18. Contributions of the employer for the benefit of the employee to retirement, insurance
and hospitalization benefit plans.
19. Reimbursement of transportation expenses paid to a messenger of the company.
20. Contributions made by an employer to SSS, GSIS and similar contributions under
existing laws in excess of what the law requires as contributions.
MULTIPLE CHOICE
Choose the letter of the correct answer.
Principles
1. Which of the following statements is correct?
I. The fringe benefit tax is a final withholding tax on the grossed-up monetary value of the
fringe benefit granted by the employer to an employee who holds a managerial of
supervisory position.
II. Fringe benefit tax is effective regardless of whether the employer is an individual,
professional partnership or a corporation (regardless of whether the corporation is taxable
or not).
III. The fringe benefit tax regulations cover only those fringe benefits given or furnished to
managerial or supervisory employees. The regulations do not cover those benefits which
are part of compensation income, because these are subject to creditable withholding tax
on compensation in accordance with RR No.2-98, as amended.
a. I only c. I, II and III
b. I and II only d. None of the above
2. Statement 1: Fringe benefits are forms of incentives to employees.
Statement 2: Fringe benefits include salaries, services, or other benefit given by employer to an
individual employee.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are not correct

3. Which of the following statements regarding fringe benefit tax is wrong?


a. Fringe benefit tax is imposed on the employee
b. The employer is the one liable for the payment of fringe benefit tax.
c. Both “a” and “b*
d. Neither “a” nor “b”

4. This income of a resident alien holding managerial position is subject to basic tax
a. Fringe benefit tax
b. Interest income from Philippine currency deposit with Security Bank
c. P50, 000 winnings from PCSO and Philippine lotto
d. Prizes from S&R (P10, 000), Gateway (P10, 000), and Glorieta (P10,000) or a total of
P30,000
5. Which of the following is a fringe benefit not covered by the fringe benefit tax
a. De minimis benefit.
b. Housing privileges granted to rank and file employees.
c. Fringe benefits granted as a result of the nature of the business, trade, or profession of
the employer.
d. All of these.
6. The following earnings are subject to fringe benefit tax, except
a. Salary of a rank-and-file employee
b. Housing necessary for trade and for the convenience of the employer
c. Food allowance for the convenience of the employer and necessary in the conduct of
the business
d. All of the above

7. The following are exempt fringe benefits, except for one


a. Fringe benefits given to rank and file employee.
b. Fringe benefit given for the convenience of the employee.
c. When the fringe benefit is required by the nature of or necessary to the trade, business
or profession of the employer.
d. Rice benefit amounting to P1, 500 a month.

8. Which of the following benefits is not subject to the fringe benefits tax?
a. Contributions of the employer for the benefit of the employee to retirement, insurance
and hospitalization benefit plans
b. Housing
c. Expense account a
d. Vehicle of any kind

9. Statement 1: Household of the employee borne by the employer such as salaries of household
help, personal driver and other similar personal expenses are taxable fringe benefits.
Statement 2: A fringe benefit which is not subject to the fringe benefit tax is returnable income
of the employee.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

10. Fringe benefit tax is computed based on the


a. Monetary value of the fringe benefit
b. Book value of the fringe benefit
c. Grossed-up monetary value of the fringe benefit
d. Fair value of the fringe benefit
11. Which of the following statements regarding grossed-up monetary value is correct?
I. The grossed-up monetary value of the fringe benefit is simply figure meant to represent
the entire income earned by the employee.
II. The grossed-up monetary value includes the net amount of money received, the net
monetary value of any property received, and the amount of fringe benefit tax.
III. The grossed-up monetary value of the fringe benefit is determined by dividing the
monetary value of the fringe benefit by 65% starting January 1, 2018.
a. l only c. I, II and III
b. I and II only d. None of the above

12. Which statement is wrong? The amount on which the fringe benefit tax Rate is applied is:
a. The monetary value of the fringe benefit
b. The grossed-up monetary value of fringe benefit
c. The amount deductible by the employer from his/its gross income
d. Reflected in the books of accounts in the two accounts of “fringe benefit expense” and
“fringe benefit tax expense”

13. If both the fringe benefit expense and the fringe benefit tax expense are allowed as
deductions from gross income of a corporation, the entry in the books of accounts is

a. Fringe benefit expense XXX


Fringe benefit tax expense XXX
Cash XXX
b. Fringe benefit tax expense XXX
Cash XXX
c. Fringe benefit expense XXX
Fringe benefit tax expense XXX
Income constructively received XXX
Cash XXX
d. Any of the above

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