Fringe Benefits Tax

Question 1

Fringe Benefit

Answer 1

any good, service or other benefit furnished by the employer in cash or in kind, in addition to basic salaries, to an individual.

Question 2

Fringe benefits given to supervisory and managerial employees are subject to

Answer 2

fringe benefit tax

Question 3

Fringe benefits given to rank and file employees are subject to

Answer 3

withholding tax on compensation

Question 4

Characteristics of fringe benefits tax

Answer 4

1. Imposed on the fringe benefit realized by a supervisory or managerial employee
2. Withheld and paid by the employer to the government
3. Considered a final tax and not included in taxable income subject t regular compensation
4. Filed and paid quarterly through BIR Form No. 1603Q on or before the last day of the month following the quarter in which the withholding was made
5. Grossed up tax, amount taken home is net of final tax

Question 5

Fringe benefits not subject to fringe benefit tax

Answer 5

1. Fringe benefits which are authorized and exempted from income tax under the tax code or any special law
2. Contributions of the employer for the benefit of the employee to retirement insurance and hospitalization benefit
3. Benefits given to rank and file, whether granted under CBA or not
4. De minimis benefits
5. Benefits granted to employee which are required by the nature of, or necessary to trade, business, or profession of the employer
6. Benefits granted for the convenience or advantage of the employer

Question 6

Rule on valuation of fringe benefits paid in cash

Answer 6

Monetary value = amount aid in cash

Question 7

Rule on valuation of fringe benefits paid in kind

Answer 7

Monetary value = FV or BV, whichever is higher

Question 8

Rule on valuation of fringe benefits free use

Answer 8

Monetary value = 50% of the rental value or depreciation value

a. ) Real property = 20 years (DV = 5% of the value of property
b. ) Movable property = 5 years (DV = 20% of the value of property

Question 9

Foregone interest

Answer 9

For loans with no or less interest than that of the market rate (12%)
Monetary value = interest paid - (market interest rate - interest rate)

Question 10

What are the expenses subject to FBT and exempted?

Answer 10

FBT: Personal expenses of the employee paid by the employer

EXC:

1. Not personal expenses but for business, and duly receipted in the name of employer
2. Amounts given on a monthly basis (fixed) = regular compensation subject to withholding tax on compensation