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Accountancy (The National Teachers College)

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J aypaul O campo A ci dera, CPA 2016

1

CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

FRINGE BENEFITS TAX Dela Cruz / De Vera / Lopez / Llamado

C 1. As a rule, fringe benefits furnished or granted in cash or in kind by an employer to an individual

employee may be subject to the fringe benefit tax, if given to
A. Rank and file employees B. Managerial employees C. Those holding supervisory positions
a. Only A and B
b. Only A and C
C. Only B and C
d. A, B and C

A 2. The fringe benefit tax is

A. Imposed on the employer B. Withheld at source C. Deductible expense by the employee
a. Only A and B
b. Only A and C
c. Only B and C
d. A, B and C

D 3. Which of the following is subject to the fringe benefit tax?

a. Compensation income of the rank and file employees
b. Fringe benefit of the rank and file employees
C. Compensation income of the managerial employees
d. Fringe benefit of the managerial employees

C 4. The following concepts denotes exemption from the fringe benefits tax, except
a. Convenience of the employer
b. • Necessity to the business or trade
C . Welfare and benefit of the employees
d. De minirnis benefits

A 5. With regard to the amount on which the fringe benefit tax rate is applied, which statement is wrong?
The tax benefit rate is applied on
a. The monetary value of the fringe benefit
b. The gross-up monetary value of the fringe benefit
C . The amount deductible by the employer from gross income
d. Both amounts of the fringe benefit and the fringe benefit tax

D 6. The following fringe benefits are not subject to fringe benefit tax, except
a. If required by the nature of or necessary to the trade, business or profession of the employer
b. Contribution of the employer for the benefit of the employee to retirement, insurance and
hospitalization benefit plans
C. Benefits given to rank and file employees
d. If given for the convenience or advantage of the employee

D 7. Basic rules on fringe benefits tax, except

a. Fringe benefits given to rank and file employees are not subject to fringe benefit tax
b. Fringe benefits given to a supervisory or managerial employee are subject to fringe benefit tax
C. De minimis benefits whether given to rank and file employee or to a supervisory or managerial
employee are not subject to fringe benefit tax
d. The fringe benefit tax is a tax imposed on the managerial or supervisory employee

D 8. Which of the following statements is correct?

a. Fringe benefit given to employees is subject to fringe benefit tax.
b. Fringe benefit given to employees is exempt from fringe benefit tax.
.c. If the fringe benefits is taxable, the tax will be paid by the employer.
d. Fringe benefits may be given to managerial, supervisory and rank and file employees.

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D 9. Daily meal allowance for overtime work is a de minimis benefit if not exceeding what percent oithe
basic minimum wage?
a. 10% c. 20%
b. 15% d. 25%

C 10. Facilities or privileges furnished or offered by an employer to his employees that are of relatively
small value and are offered or furnished by the employer merely as a means of promoting the heillth,
goodwill, contentment, or efficiency of his employees.
a. Fringe benefit
b. Fringe benefit tax
C. De minimis benefit
d. Grossed-up monetary value

D 11. The following fringe benefits are not subject to fringe benefits tax, except:
a. Fringe benefits given to the rank and file employees, whether granted under a collecttive
bargaining agreement or not
b. Contributions of the employer for the benefit of the employees to retirement, insuranc or
hospitalization benefits plans
C . De minimis benefits as defined in the rules and regulations to be promulgated by the Secretai& of
Finance, upon recommendation by the Commissioner
d. Fringe benefits furnished or granted by the employer to its managerial and supervisory employ es

B 12. Which statement is wrong? The fringe benefit tax is

a. Imposed on the employer
b. Imposed on the rank and file employee if the amount of the benefit exceeds the ceiling allowed by
the tax code
C. Withheld at source
d. Deductible by the employer

A 13. The following are considered as de minimis benefits granted to each employee except,
a. Monetized unused sick leave credits of private employees not exceeding 10 days during the yeir
b: Monetized mused vacation leave credits of private employees not exceeding 10 days during the
year
C. Monetized value of vacation leave credits paid to government officials and employees
d. Monetized value of sick leave credits paid to goverment officials and employees

A 14. Which of the following is not considered as "de minimis" benefits?

a. Employees achievement award for length of service or safety achievement in the form of cash or
gift certificate not exceeding P10,000 per year
b. Medical cash allowance to dependents of employees not exceeding P1,500 per year
C. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per year
d. Medical allowance to cover medical and healthcare needs, annual medical/executive check-up,
maternity assistance and routine consultations not exceeding P10,000 per year

15. In 2015, A Corporation allowed its Sales Manager to incur expenses subject to reimbursement, as
follows:
Electricity (Meralco) — 70% in the name of A Corporation 20,000
Water (Maynilad) — 70% in the name of A Corporation 2,000
Grocery (SM) 10,000
Gasoline of Company car 12,000J . O . A .
Representation and Transportation — business trip 4,000

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D The amount subject to fringe benefits tax is •

a. P48,000
b. P25,400
C. P15,400
d. P16,600

A 16. The grossed-up monetary value of fringe benefit subject to fringe benefit tax received by a non-
resident alien individual not engaged in trade or business in the Philippines is computed by dividing
the monetary value of the fringe benefit by
a. 75%
b.68%
C. 85%
d.15%

A 17. The following data belong to A Corp. for the year 2015
a. Educational assistance to supervisors and their children P100,000
b. Employer's contribution for the benefit of the employees to retirement, 80,000
insurance and hospitalization benefit plans
C. Year's rental for an apartment paid by the corporation for the use of its 120,000
comptroller
The fringe benefits tax due is
a. P 75,294
b. P103,529
C. P141,176
d. P112,941

A 18. A Corp., a regional operating headquarter of a MNC in the Philippines provided its employees cash
and non-cash fringe benefits in 2015 as follows:
Total amount of fringe benefits P1,000,000
60% of said amount was given to rank and file employees
40% of said amount was given to corporate officers as follows:
a. to resident citizens (taxed at regular rates) 45%
b. to non-resident aliens not engaged in business in the Phils. 35%
C . to special aliens and Filipino employees 20%

The fringe benefits tax due is

a. P145,491
b. P188,235
c. P 84,706
d. P 60,704 -

19. B Co., owns a condominium unit which is being used by the President of the corp.. It has a fair market
value per Real Property Tax Declaration of P2,100,000 and a zonal value of P3,000,000.
Determine the fringe benefit tax due.
Monetary Value: 75,000 Fringe Benefit Tax Due: 35,294

20. Mr. A is a mining engineer employed by B Co., a mining firm. The company's mine is in Mindanao.
Mr, A was provided by the company with living quarters at the mine site The fair rental value of the
living quarters is P15,000 a month.
Determine the fringe benefit tax due.
Monetary Value: 0 Fringe Benefit Tax Due: 0
J .O .A .
21. In addition to other fringe benefits, Mr. B, a Chief Accountant, availed of the ear plan of his employer,
C Company. Under the plan, Mr. B shouldered only (50%) of the cost of the car, with the company

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shouldering the other 50%. Mr. B paid P340,000 for the car. The car was registered in the nanle of
Mr. B.

Determine:
a. The fringe benefit tax due. Monetary Value: 340,000 Fringe Benefit Tax Due: 160,000
b. The deductible expense of the employer 500,000

22. In 2015, A company purchased a second hand car for its Chief Accountant as a fringe benefit. The
cash purchase price of the car was P120,000. The company paid P30,000 as down payment plus ifour
equal annual installment of P30,000 (120,000 plus P30,000 interest). The ownership was transferred
to the chief accountant.
Determine the fringe benefit tax due.
Monetary Value: 24,000 Fringe Benefit Tax Due: 11,294

23. In 2015, A, the sales manager, purchased a brand new car amounting to P500,000 of which P200,000
was contributed by the company as his fringe benefit.
Determine the fringe benefit tax due.
Monetary Value: 200,000 Fringe Benefit Tax Due: 94,118

24. In 2015, ABC Corp. hired Miss A as sales manager for cosmetics. She was given the following
compensation and fringe benefits:
Salary P200,000/month
Three maids 4,000 per maid/rtionth
Personal driver 8,000/month
Home owner's Association dues 1,200/year

Determine the fringe benefit tar due.

Monetary Value: 241,200 Fringe Benefit Tax Due: 113,506

25. In 2015, A, the owner of Victory Supermarket lent P100,000 to B, the supermarket manager. It was
stipulated in their agreement that the amount should be paid in one year with an annual interest of 3%.
Determine the fringe tax due. Monetary Value: 9,000 Fringe Benefit Tax Due: 4,235

26. In 2015, Mr. A The Vice President for Finance of X Corporation incurred the following expen+ in
attending a three-day foreign business convention:

Plane tickets (USA travel)

First class $1,000
Economy 500

Hotel accommodation (USA) 2,700

Inland travel 600

Assume $1.00 ---- P50

Determine the fringe benefit tax due assuming that the business convention was:
a. With documentary evidence b. Without documentary evidence
Monetary Value: 105,000 Monetary Value: 240,000
Fringe Benefit Tax Due: 49,412 Fringe Benefit Tax Due: 112,941
B 27. In 2015 ABC Corporation paid for the annual rental of a residential house used by its general manager
amounting to P136,000. The entry to record the benefit is
a. Fringe Benefit Expense P136,000
Fringe Benefit Tax Expense 64,000
Cash P200,000
J .O .A .
b. Fringe Benefit Expense P136,000
Fringe Benefit Tax Expense 32,000
Cash P168,000

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C. Fringe Benefit Expense P68,000

Fringe Benefit Tax Expense 32,000
Cash P100,000
d. Fringe Benefit Expense P68,000
Fringe Benefit Tax Expense 64,000
Cash P132,000

28. Identify whether or not the following are subject to fringe benefits tax:
a. Fringe benefit required by the nature of or necessary to the trade or business of the employer
b. Fringe benefit for the convenience or advantage of the employer
C. Fringe benefit given to rank and file employees
d. Housing privilege of the AFP
e. Housing units situated inside or adjacent to business or factory (located within 30 meters from the
perimeter of the business).
f. Temporary housing for an employee who stays in the housing unit for 3 months or less
g. Representation and entertainment allowances which are fixed in amount and regularly received by
EXEMPT employee
h. Use by employee of aircraft (including helicopters) owned and maintained by the employer
i. Cost of economy and business class airplane ticket for foreign travel
j. De minimis benefits
k. Educational assistance granted to employees' dependents through competitive scheme under
scholarship program of the company.
I. Cost of premiums borne by the employer for the group insurance of his employees
m. Contribution of employer for the benefit of the employee under SSS and GSIS laws
n. Contribution of employer for the benefit of the employee to retirement, insurance nd
hospitalization benefit plans.

29. As a means of promoting the health, goodwill, contentment, and efficiency of his employes,
employer A gave rank and file employee B the following fringe benefits in 2015:

a. Monetized unused vacation leave of 15 days P24, 00

b. Rice subsidy 36, 00
C. Uniform and clothing allowance 12, 00
d. Achievement award for length of service in the form of tangible personal property 20, 00
e. Gifts given during Christmas and major anniversary celebrations 15,000
f. Medical benefits 20,000
g. Laundry allowance 12,000
h. 13th month pay 30,600
i. Mid year bonus 30,600
j. Productivity bonus 15,600

Determine the amount of:

a. Deductible expense of A 214,000 b. Taxable benefits of B 64,400

The End!!!

J .O .A .

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