TAX05-03 Fringe Benefits Tax

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]
Fringe Benefits Tax TAX05-03
1. First Statement - A “fringe benefit” is defined as being any good, service or other
benefit furnished or granted in cash or in kind by an employer to an individual
employee.
Second Statement – It is the employer who is required to pay the income tax on the
fringe benefit.
a. True, True
b. True, False
c. False, False
d. False, True
2. Share based payments, e.g., stock options, restricted stock units and alike, given by
the employer to his/her/its employees, are:
a. Subject to the fringe benefits tax in all cases
b. Exempt income of the employee
c. Reportable as compensation income of the employee in all cases
d. Subject to the Fringe Benefits tax in case of an employee holding a managerial
position
3. The fringe benefits tax is generally based on

a. Compensation income
b. Monetary value
c. Grossed-up monetary value
d. Value of the benefit
4. The following are not subject to the Fringe Benefits tax, except:
a. Fringe benefit received by a rank-and-file employee
b. Fringe benefit received by a managerial and supervisory employee
c. Salary and wages of managerial employee
d. Salary and wages of rank-and-file employee
5. Identify the erroneous statement from the following: The Fringe Benefit Tax is
a. The liability of the employer.
b. An income tax of the employee subjected to the final withholding tax system
whereby the burden thereof rest upon the employer
c. Deductible expense of the employer
d. Liability of the employee if the employee is a rank-and-file employee
6. Which among the following is a taxable “de minimis” benefit

a. Medical cash allowance to cover medical and healthcare need, annual
medical/executive check-up, maternity assistance and routine consultations not
exceeding Php10,000/year.
b. Gifts given during Christmas and major anniversary celebrations not exceeding
Php5,000 per year
c. Employees achievement award for length of service or safety achievement in the
form of cash or gift certificate in an amount not exceeding Php10,000.
d. Rice allowance not exceeding Php2,000 per month.
7. The following are exempt de minimis benefits except:

a. Uniform given to employees by the employer not exceeding Php6,000 per annum
b. Laundry allowance not exceeding Php300 per month
c. Productivity incentive pay not exceeding Php10,000 pursuant to a collective
bargaining agreement
d. Monetized unused vacation leave not exceeding 15 days
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No. 125 Brgy. San Sebastian
Mobile : 0927 283 8234
Telephone : (043) 723 8412
8. Sean Umali is a rank-and-file employee. During the year, he received the following
from his employer:
Basic Salary- net of statutory exclusions Php 420,000
13th month pay Php35,000
Productivity Incentive pay w/ CBA Php15,000
Christmas Bonus Php35,000
Uniform Allowance Php10,000
Monetized unused vacation leave (15 Php26,250
days_)
Rice Subsidy Php30,000
Determine Sean Umali’s Taxable Income for the year.
a. Php420,000
b. Php433,750
c. Php445,000
d. Php170,000
Items 9 to 11 are based on the following:
Galante Inc. provided residential accommodation to its Branch Manager. Rental expense
per quarter, paid directly by the employer to the lessor is P130,000.
9. The value of the benefit during the quarter is:
a. Php200,000
b. Php130,000
c. Php65,000
d. Php35,000
10. The monetary value during the quarter is:

a. Php200,000
b. Php130,000
c. Php65,000
d. Php35,000
11. The Fringe Benefits Tax due for the quarter is:
a. Php200,000
b. Php130,000
c. Php65,000
d. Php35,000
12. The journal entry to record the fringe benefit is
a. Fringe Benefit Expense Php130,000

Fringe Benefit Tax Expense Php 35,000
Cash Php165,000
b. Fringe Benefit Expense Php130,000

Cash Php200,000
c. Fringe Benefit Expense Php 65,000

Cash Php100,000
d. Fringe Benefit Expense Php200,000

Cash Php235,000

Mobile : 0927 283 8234
Telephone : (043) 723 8412
Items 13 and 14 are based on the following:
Trey Lorenz, a Senior Manager, was sent by his Firm to Bangkok Thailand to participate
in the Leadership Development Program of their Global professional Firm. The training
lasted for three (3) days. The following are the expenses incurred for his trip abroad.
Air Fare – First Class Ticket USD2,000

Air Fare – Economy Ticket USD700
Hotel Accommodation USD2,250
Per diem allowance( for inland travel USD1,500
expenses)
Assume that the foreign exchange is USD1.00 = Php50.00

13. Assuming that there was proper documentary evidence showing that the
employee’s foreign trip was related to his employer’s business, the Fringe Benefits
Tax due is:
a. Php322,500
b. Php100,000
c. Php52,500
d. Php173,654
14. Assuming that there was no proper documentary evidence showing that the
employee’s foreign trip was related to his employer’s business, the Fringe Benefits
Tax due is:
a. Php322,500
b. Php100,000
c. Php52,500
d. Php173,654
Numbers 15 and 16 are based on the following:
15. Source of Life, a non-stock non profit religious organization, owns a condominium
unit at the Serendra in the Bonifacio Global City. It was bought by the Company at a
price then of Php10,000,000. On the other hand, the fair value of the said
condominium unit is Php15,000,000 as zonal value and Php8,000,000 in the City
Assessors Office. This condominium unit is being used by the Company’s head
Pastor for his residential accommodation. How much is the fringe benefits tax due on
the first quarter of the year.
a. Php144,231
b. Php750,000
c. Php93750
d. Php50,481
16. Assuming the Company gave the condominium unit to the Head Pastor. The fringe
benefits tax will be:
a. Php5,384,615
b. Php8,076,924
c. Php15,000,000
d. Php7,500,000
Numbers 17 to 18 are based on the following:
Coco Roco is a sole proprietor of a business engaged in manufacture and design of

furniture. Her Chief Designer, holding a managerial position, was provided a motor
vehicle bought at a price of Php2,100,000.

Mobile : 0927 283 8234
Telephone : (043) 723 8412
17. The fringe benefits tax on the motor vehicle provided to the Chief Designer is:
a. Php1,130,769
b. Php56,538
c. Php861,538
d. Php161,538
18. The quarterly fringe benefits tax on the motor vehicle, provided the same was bought
in installment resulting to an interest of Php125,000 and registered under the name
of the Chief Designer:
a. Php1,130,769
b. Php56,538
c. Php861,538
d. Php161,538
19. The fringe benefits tax on the motor vehicle provided the Chief Designer shouldered
the first Php500,000 of the price of the car:
a. Php1,130,769
b. Php56,538
c. Php861,538
d. Php161,538
20. Benz Peredo is a managerial employee of Pranser and Never Inc. (PNI), as part of
his compensation package, he was given stock options on the common shares of PNI
(traded in the New York Stock Exchange). The following are the pertinent details of
his stock options benefit:
Number of Stock options Awarded 2,500
Exercise Price Php75
Fair market value at exercise Php100
Assuming he exercised all of the stock options awarded to him, the fringe benefits tax
on his stock options exercise is:
a. Php33,654
b. Php96,154
c. Php134,615
d. Php100,962
21. The Quarterly Remittance Return of final income taxes withheld on fringe benefits paid
to employees other than rank-and-file (BIR Form 1603Q) is due:
a. Not later than the last day of the month following the close of the quarter during
which withholding was made.
b. Not later than the 20th day of the month following the close of the quarter during
which the withholding was made.
c. Not later than the 5th day of the month following the close of the quarter during
d. Not later than the 25th day of the month following the close of the querter during
22. The following are exempt fringe benefits except

a. Contributions of the employer for the benfit of the employee to retirement,
insurance and hospitalization benefit plans.
b. Housing accommodation within 100 meters from the perimeter of the
employer’s business
c. Temporary housing for a stay in the housing unit for a period not exceeding
three (3) months.
d. Fringe benefit given for the advantage of the employer.
That in all things, God will be glorified.

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No. 125 Brgy.

Fringe Benefits Tax TAX05-03

3. The fringe benefits tax is generally based on

6. Which among the following is a taxable “de minimis” benefit

7. The following are exempt de minimis benefits except:

1|P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

10. The monetary value during the quarter is:

12. The journal entry to record the fringe benefit is

a. Fringe Benefit Expense Php130,000

b. Fringe Benefit Expense Php130,000

c. Fringe Benefit Expense Php 65,000

d. Fringe Benefit Expense Php200,000

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Items 13 and 14 are based on the following:

Air Fare – First Class Ticket USD2,000

Assume that the foreign exchange is USD1.00 = Php50.00

Numbers 15 and 16 are based on the following:

Numbers 17 to 18 are based on the following:

Coco Roco is a sole proprietor of a business engaged in manufacture and design of

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22. The following are exempt fringe benefits except

That in all things, God will be glorified.

4|P a g e AESCARTIN/TLOPEZ/JPAP A/DS ALES

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