Professional Documents
Culture Documents
46
SUGGESTED ANSWERS
Chapter 6: Fringe Benefits Tax
CHAPTER 6
False Fringe benefits given to rank-in-file, except those which are among the de minimis and those given
for employers convenience, are not subject to FBT but subject to compensation income tax.
True
True
False P750/semester is the ceiling for exempt medical allowance
False- the exempt meal allowance must be related in the rendering of overtime work to be considered de
minimis.
True
True
True
False A travel required by the company to its officer is not subject to FBT because by its nature a travelling
expense.
true
False Scholarship grants to employees not related to business is taxable.
False These are among those exempted from fringe benefit tax.
SUGGESTED ANSWERS
Chapter 6: Fringe Benefits Tax
Problem 6-3
Problem 6-4
1.
C
1.
A Yes, also if received by supervisor
2.
B
2.
C
3.
C
3.
A
4.
C
4.
D
5.
D
5.
D
6.
A
6.
A
7.
B
7.
B
8.
D
8.
B
9.
A
9.
A only P5,000 is taxable the excess of
10.
B
P10,000.
10. D
11.
B
11. D
12.
D
12. D
Problem 6 5
Not in the choices = P51,000
P1,000,000
Net income (P300,000/30%)
170,000
P1,170,000
30%
P
351,000
300,000
Additional tax to be paid
P
51,000
The fringe benefits of rank-in-file employee are subject to regular withholding tax on wages, [Sec. 24 (A),
NIRC]. There is no grossed-up monetary value involved. If the BIR uncover the concealment resulting to the
nonpayment of withholding tax, the fringe benefits shall be disallowed as deductible expense. [Sec. 34 (A)
(1ai), NIRC]
Problem 6 6
C
P48,000
Fringe benefit tax (P102,000/68%) x 32%
Income tax:
P2,500,000
Total
P2,602,000
P78,600
Note: The fringe benefit tax expense is not deductible because the related withholding tax was not
withheld and paid until the tax evasion was discovered by the BIR.
Problem 6 7
SUGGESTED ANSWERS
Chapter 6: Fringe Benefits Tax
1. Letter B
P
34,000
Cash
Letter C
1.
Letter C
P170,000
2.
Letter B
P250,000
3.
Letter D
P
-0 -
employer.
Problem 6 9
C
P
61,200
81,600
Fringe benefits subject to FBT
P142,800
Salaries are subject to normal tax. The fringe benefits subject to FBT shall only start from the time Mr. Rojas
was promoted to managerial level. His fringe benefits prior to his promotion should be subject to normal tax.
Problem 6 10
B
P 200,000
Deductible from business income (P136,000/68%)
Problem 6 11
A
None, because fringe benefit tax is a final tax and no deduction is allowed from gross compensation income
except personal exemptions and health or hospitalization insurance actually paid if the family income does
not exceed P250,000.
Problem 6 12 D
Zero. No Fringe benefit tax is to be imposed on fringe benefit of rank -in-file employee. Mr. Estrada
is a company messenger. His fringe benefit is subject to withholding tax on wages.
Problem 6 13
49
SUGGESTED ANSWERS
Chapter 6: Fringe Benefits Tax
1
Letter A
.
Grossed-up monetary value (P6,000,000 x 5% x 50%)/68%
P220,588
32%
P
70,588
2
Letter B
.
Down payment
P2,000,000
Total
P5,037,000
32%
P
59,258
Problem 6 14
D
P73,529
FB Expense is equal to GMV (P2,000,000 x 5% x 50%)/68%
Problem 6 15
B
P2,040,000
Acquisition cost = fair market value (higher than zonal
value)
P 6,250
Problem 6 16
A
Zero. Jeans used of the condominium is not for her benefit but for the benefit of B
Corporation as the former conducts investigation for inventory fraud.
Problem 6 17
A
P47,500,000
Discounted price of the cars (P1,000,000 x 95% x 50)
[(P48,000,000/50) x 10]
10
Problem 6 18
1
Letter A
.
Grossed-up monetary value [(P1,000,000/5) x 50%] /68%
P147,059
32%
P
47,059
2
Letter C
.
Grossed-up monetary value (P1,000,000/5)/68%
P294,117
32%
P
94,117
50
SUGGESTED ANSWERS
Chapter 6: Fringe Benefits Tax
Problem 6 19
D
P150,000
Lease price per vehicle [P6,000,000/(20 + 14 + 6)]
6
Total fringe benefits to officers
P900,000
[(P900,000/6) x 50%]
Problem 6 20
C
P
850,000
68%
P1,250,000
32%
The use of aircraft (including helicopters) owned and maintained by the employer shall be treated as
business use and not b e subject to the fringe benefit tax.
The use of yacht whether owned and maintained or leased by the employer shall be treated as taxable fringe
benefit. The value of the fringe benefit shall be measured based on the depreciation of a yacht at an
estimated useful life of 20 years. [Sec. 2.33 (B), Rev. Regs. No. 3-98]
Problem 6 21
B
P 5,440
Light and power of his residential house
Grocery items
6,800
Problem 6 22
D
P17,000
Grocery items
P20,400
Fringe benefit tax (P20,400/68%) x 32%
P 9,600
Problem 6 23
B
P525,000
FB expense (P476,000 x 75%)/68%
Problem 6 24
D
P 7,680
Fringe benefit tax (P16,320/68%) x 32%
Problem 6 25
C
P27,200
Fringe benefit tax (P57,800/68%) x 32%
Problem 6 26
SUGGESTED ANSWERS
Chapter 6: Fringe Benefits Tax
Letter D
There is no FBT for rank-in-file employee.
Letter B
Benchmark interest (P88,400 x 12%)
P10,608
Less: Actual interest charge (P88,400 x 3%)
P
2,652
Difference
7,956
FBT (P7,956/68%) x 32%
P
3,744
Problem 6 27
D
P
5,440
Professional Tax Receipts
13,600
Goma golf club
68,000
Baguio Country Club
340,000
All membership fees paid by the company in behalf of the comptroller are considered fringe benefits; hence,
subject to FBT.
Problem 6 28
A
P
20,000
Hotel accommodation [($1,600- ($300 x 4)] x P50/$1
Problem 6 29
C
P 7,680
Fringe benefit tax [(P54,400 x 30%) / 68%] x 32%
Problem 6 30
B
P600,000
Fringe benefit expense (P408,000/68%)
Problem 6 31
A
Problem 6 32
1.
Letter D
None. Exempt because the educational benefit is related to work. (Employers benefit rule)
Letter B
P65,280 Only the monetary value is deductible because the benefit is tax-exempt.
Problem 6 33
D
P200,000
Grossed-up monetary value (P170,000/85%)
30,000
Problem 6 34 B
SUGGESTED ANSWERS
Chapter 6: Fringe Benefits Tax
P10,000
24,000
P34,000
Problem 6 35
C
P100,000
Annual life insurance premium
P1,000,000
Amount of loan
107,000
Less: Present value at 12% (P1,000,000 x 0.893)
893,000
P207,000
Problem 6 36
C
P 2,040
Insurance premium - VP for Operation (50% x P4,080)
68%
P 3,000
32%
P 960
Problem 6 37
P12,000
1.
Rice subsidy
4,000
10,000
1,500
Laundry allowance
3,600
10,000
P41,100
2.
Car
P214,000
68%
P314,705
32%
P100,705
Note: The new BIR interpretation is that the excess of the actual fringe benefit given shall be
taxable after deducting the de minimis threshold amount. The excess amount of fringe benefit
shall be subject to withholding tax on wages whether the recipient employee is a rank-in-file or
managerial employee.
Problem 6 38
P13,464
1.
Housing benefit (P12,240 x 110%)
Total
P33,864
Taxable amount of FB
P49,800
2.
Fringe benefit tax (P49,800 x 32%)
P15,936
Violeta Vicente cannot deduct the FBT from her gross income.
San Miguel Corporation, however, can deduct the entire amount of grossed-up monetary value amounting to
P49,800 from the gross income of the corporation as fringe benefit expense.
SUGGESTED ANSWERS
Chapter 6: Fringe Benefits Tax
Problem 6 39
P68,000
A.
1.
Monetary value
2.
FBT (P68,000/68%) x 32%
P32,000
B.
1.
Down payment
P200,000
year:
152,550
129,276
109,548
92,844
562,896
78,678
Acquisition cost
P762,896
Divided by
Monetary value
P152,579
2.
FBT (P152,579/68%) x 32%
P
71,802
C.
1.
Monetary value (P816,000 x 150%)
P1,224,000
2.
FBT (P1,224,000/68%) x 32%
P
576,000
D.
1.
Annual monetary value = annual depreciation (P1,020,000/25)
P
40,800
2.
FBT (P40,800/68%) x 32%
P
19,200
E.
1.
Monetary value (P244,000 x 50%)
P
122,000
2.
FBT (P122,000/68%) x 32%
P
57,412
F.
1.
Monetary value (P1,360,000 x 5% x 50%)
P
34,000
2.
FBT (P34,000/68%) x 32%
P
16,000
Problem 6 40
P
70,588
FBT car:
P
300,000
Down payment
865,200
(P240,000 x 3.605)
Acquisition cost
P1,165,200
Divided by
Monetary value
P
233,040
P
109,666
2.
Journal entries:
70,588
FB expense
70,588
FB expense
342,706
233,040
Car
109,666
SUGGESTED ANSWERS
Problem 6 41
P 125,000
1.
Monetary value assignment of condominium (P5,000,000 x 5% x
50%)
2.
Grossed-up monetary value of condominium (P125,000/68%)
P 183,823
3.
Fringe benefit tax on the use of condominium (P183,823 x 32%)
P 58,823
4.
Grossed-up monetary value of the car (P500,000/5)/68%
P 147,059
5.
FBT of car (P147,059 x 32%)
P 47,059