CHAPTER 3: FRINGE BENEFIT TAX AND DE MINIMIS BENEFITS

Determine whether or not the following is subject to fringe benefit tax. Fringe benefit required by the nature of or necessary to trade or business of the employer.

• subject to fringe benefit tax

• not subject to fringe benefit tax

Determine whether or not the following is subject to fringe benefit tax. House benefits to the Chief Finance Officer of the company.

• subject to fringe benefit tax

• not subject to fringe benefit tax

True or False: A fringe benefit is any goods, service or other benefits furnished or granted by an employer in cash or in kind, including basic salaries to individual employees.

• False

• True

Which of the following statements is correct?

I. The fringe benefit tax is a final withholding tax on the grossed-up monetary value of the fringe benefit granted by the employer to an employee who holds a managerial or supervisory position.

II. Fringe benefit tax is effective regardless of whether the employer is an individual, professional partnership or a corporation (regardless of whether the corporation is taxable or not).

III. The fringe benefit tax regulations cover only those fringe benefits given or furnished to managerial or supervisory employees. The regulations do not cover those benefits which are part of compensation income, because these are subject to creditable withholding tax on compensation in accordance with RR No. 2-98, as amended.

• I only

• I and II only

• I, II and III

• None of the above

Determine whether or not the following is subject to fringe benefit tax. Fringe benefit for the convenience or advantage of the employer.

• subject to tax

• not subject to tax

Determine whether or not the following is subject to fringe benefit tax. Allowances received by supervisory and managerial employees not subject to liquidation.

• subject to tax

• not subject to tax

True or False: A fringe benefit which is subject to the fringe benefit tax is taxable income of the employee.

• True

• False

Statement 1: Fringe benefits are forms of incentives to employees.

Statement 2: Fringe benefits include salaries, services, or other benefit given by employer to to an individual employee.

• Only statement 1 is correct.

• Only statement 2 is correct.

• Both statements are correct.

• Both statements are not correct.

Determine whether or not the following is subject to fringe benefit tax. Car plan for managerial employees.

• subject to tax

• not subject to tax

Determine whether or not the following is subject to fringe benefit tax. Used by employee of aircraft (including helicopters) owned/ maintained by the employer.

• subject to tax

• not subject to tax