FRINGE BENEFITS

Question 1

1. Which of the following is subject to fringe benefit tax?
   a. Compensation income of the rank and file employees
   b. Compensation income of the supervisory employees
   c. Fringe benefit of the rank and file employees
   d. Fringe benefit of the managerial employees

Answer 1

D

Question 2

2. Which statement is incorrect? The fringe benefit tax is
   a. A final tax withheld at source
   b. Imposed on the employee
   c. Imposed on the employer
   d. Deductible by the employer

Answer 2

B

Question 3

3. Which of the following fringe benefit is not subject to the fringe benefits tax?
   a. Housing
   b. Expense account
   c. Vehicle of any kind
   d. De minimis benefits

Answer 3

D

Question 4

4. Statement 1: A fringe benefit which is subject to the fringe benefit tax is part of the taxable
   compensation income of the employee.
   Statement 2: A fringe benefit which is not subject to the fringe benefit tax is part of the taxable
   compensation income of the employee.
   Statement 3: The fringe benefit tax is not deductible from the gross income of the employer.
   Statement 2: The fringe benefit tax is withheld by the employee.
   a. Only one (1) of the above statements is true
   b. Two (2) of the above statements are true
   c. Three (3) of the above statements are true
   d. All of the above statements are true

Answer 4

A

Question 5

5. Which of the following statement are incorrect?
   Statement 1: Fringe benefit is a form of pay which may be in the form of property, services, cash

or cash equivalent to supplement a stated pay for the performance of services under an employee-
employer relationship.

Statement 2: Fringe benefits subject to fringe benefit tax cover those fringe benefits given or
furnished to a managerial, supervisory and rank-and-file employee.
Statement 3: FBT is a final tax imposed on the employee withheld by the employer, computed
based on the monetary value of the fringe benefit.
Statement 4: The one liable under the law to pay the fringe benefit tax is the employee.
Statement 5: Fringe benefits subject to FBT shall be included in the income tax return of the
employee.
a. Statements I and II only
b. Statements II and III only
c. Statements II, III and IV only
d. Statements II, III, IV and V only

Answer 5

D

Question 6

6. Statement 1: Grossed-up monetary value is reflected in the books of accounts as fringe benefit
   expense and fringe tax expense.
   Statement 2: Any amount not withheld by the employer on employee’s salary is the liability of the employer.
   Statement 3: The compensation income of supervisorial employees is subject to both basic tax and
   fringe benefit tax.
   a. Only one (1) of the above statements is true
   b. Two (2) of the above statements are true
   c. Three (3) of the above statements are true
   d. None of the above statements are true

Answer 6

B

Question 7

7. Statement 1: Monetized value of unused vacation and sick leave credits not exceeding 10 days to
   private employees is a tax-exempt benefit.
   Statement 2: Monetized value of unused vacation and sick leave credits not exceeding 10 days to
   government employee is a tax-exempt benefit.
   Statement 3: De minimis benefits of managerial employees within the ceiling is exempt from
   income tax.

Answer 7

FALSE
FALSE
TRUE

Question 8

8. Which of the following housing benefits is/are subject to fringe benefit tax?
   a. Housing privilege of military officials of the Armed Forces of the Philippines
   b. Housing unit inside or adjacent within 50 meters from the perimeter of the business
   premises
   c. Temporary housing for a stay in the housing unit for six (6) months or less
   d. All of the above are subject to fringe benefit tax

Answer 8

C

Question 9

9. Statement 1: Expenses receipted in the name of the employer which do not partake the nature of
   personal expenses attributable to employees should be treated as taxable fringe benefits.
   Statement 2: “Other benefits” subject to P90,000 ceiling include Christmas bonus, productivity
   incentive bonus, loyalty awards and gifts in cash or in kind and other benefits of similar nature.
   Statement 3: The excess of de minimis benefits over their respective ceilings are considered as part of other benefits subject to tax only on the excess over the P90,000 ceiling.
   a. Statements 1 and 2 are correct
   b. Statements 2 and 3 are correct
   c. Statements 1 and 3 are correct
   d. All of the above statements are correct

Answer 9

B

Question 10

10. Statement 1: Meal allowance and lodging furnished by the employer to the employees are exempt from tax if furnished for the “advantage or convenience of the employer”.
    Statement 2: Tax exempt meal allowance should be furnished within the premises of the employer.
    a. Only statement 1 is correct
    b. Only statement 2 is correct
    c. Both statements are correct
    d. Both statements are incorrect

Answer 10

C

Question 11

11. The following denote exemption from the fringe benefits tax, except
    a. Convenience of the employer
    b. Necessity to the business or trade
    c. Welfare and benefits of the employee
    d. De minimis benefits

Answer 11

C

Question 12

12. The following are basic rules on fringe benefits tax, except
    a. Fringe benefit given to rank and file employees is not subject to fringe benefits tax
    b. Fringe benefit given to a supervisory or managerial employee is subject to fringe benefits tax
    c. De minimis benefit whether given to rank and file employee or to supervisory or managerial employee is not subject to fringe benefit tax
    d. The fringe benefit tax is a tax paid by the managerial or supervisory employee

Answer 12

D

Question 13

13. The following fringe benefits are exempt from fringe benefit tax, except
    a. Benefits given to the rank and file employees
    b. If required by the nature of or necessary to the trade, business or profession of the employer
    c. If given for the convenience or advantage of the employee
    d. Contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization benefit plans

Answer 13

C

Question 14

14. The following fringe benefits exempt from fringe benefits tax, except
    a. Contributions of the employer for the benefit of the employees to retirement, insurance
    and hospitalization benefits plans
    b. De minimis benefits
    c. Fringe benefits given to the rank and file employees
    d. Fringe benefits furnished or granted by the employer to its managerial and supervisory
    employees

Answer 14

D

Question 15

15. The grossed-up monetary value of fringe benefit subject to fringe benefit tax received by a non-
    resident alien not engaged in trade or business (NRANETB) in the Philippines is computed by

dividing the monetary value of the fringe benefit by
a. 75%
b. 25%
c. 85%
d. 15%

Answer 15

A