Ch6: Fringe Benefit Tax Flashcards
Fringe Benefit meaning
any GOOD, SERVICE, or OTHER BENEFIT furnished or granted by an employer in CASHor IN KIND, in addition to basic salaries, to an individual emploee (except rank and file employee
10 Inclusions of Fringe Benefit
- Housing
- Expense Account
- Vehicle
- Household personnel (maid, driver)
- Interest on loan at less than market rate: to the extent of the difference between the market rate and actual rate granted.
- MEMBERSHIP fees, dues and other expenses in social and athletic clubs.
- Foreign travel expense
- Holiday and vacation expenses
- Educational assistance to employee or his dependents.
- life or health insurance
- Other non-life insurance premiums or similar amounts in excess of what the law allows.
Fringe benefit subjects to an individual, professional partnership or corporation (taxable or not) EXCEPT:
- FB authorized and exempted from income tax under the Code or under any special law.
- Contributions of the ER for the benefit of the EE to retirement, insurance & hospitalization benefit plans. (including abt life/reputation)
- Benefits given to the rank-and-file, whether granted under a CBA or not.
- De minimis benefits
- Grant of FB to the EE is REQUIRED by the nature of or necessary to the trade, bus or profession of the ER.
- Convenience of the Employer rule
When allowance (free meals and lodging) are furnished by the ER to his EEs as a condition for employment and for the convenience of the ER, the allowances furnished are NOT TAXABLE to the EE.
Convenience-of-the-employee rule.
Engr. A is the plant mngr of Ph Oil Company. During the year, he received P220,000 as salary. In addition. he was given free meals worth P33,000 and living quaters worth P22,500.
a. Hm is his taxable compensation income?
b. If the factor operated 42/7 and he was required to live within the factory compound for the convenience of ER, hm is his taxable compensation income?
a. Salary 220,000
Free Meals 33,000
Living Quarters 22,500
TCI TOTAL 77,500
b. Only the salary of 220,000
Sec 2, Labor Code : one who is vested with powers or prerogatives to lay down and execute mngt policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees.
Managerial employee
those who, in the interest of the employer, effectively recommend such managerial actions, if the exercise of such authority is not merely routinary or clerical in nature but requires the use of the independent judgement
Supervisory employees.
facilities or priveleges furnished or offered by an ER to his EEs that are of RELATIVELY SMALL VALUE and are offered or furnished by the ER merely as a means of promoting HEALTH, GOODWILL, CONTENTMENT, or EFFIENCY of EEs
DE MINIMIS BENEFITS
“12 DMB” not subject to tax & withholfing tax in compensation income of M,S, and R&F employees
- Monetized unused VACATION LEAVE CREDITS of private EEs not exceeeding 10 days during the yr.
- Monetized value of VACATION &SICK LEAVE CREDITS paid to gov’t officials and emploees.
- MEDICAL CASH ALLOWANCE to dependents of EEs not exceeding 1,500/semester per employee or 250/mo.
- Rice subsidy - 2,000 or 1 sack of 50 kg/month not more than P2,000
- Uniforms and Clothing allwnce - not excd 6,000/annum
- actual medical assistance not exceeding P10,000/year.
- Laundry allowance ntexd 300/mo.
- EE’s achievement awards: tagibkle property with an annual monetary value Ntexd P10,000
- Christmas gifts and major anniversary celebs ntexd 5,000/annum per employee.
- Flowers, fruits, books, etc given to EEs under special circumstances.
- Daily Meal allowance for OT and night/graveyard shift ntexd 25% of the basic minimum wae on a per region basis.
- Benefits received from CBA and productivity schemes combined ntexd 10,000/taxable year per employee.
