FRINGE BENEFIT TAX

1. The following fringe benefits were received by a managerial employee from his employer:
a. Cash amounting to P 68,000 to purchase a motor vehicle.
b. Car acquired on installment. Terms: P200, 000 down payment and P180,000 installment for
5 years. The effective interest rate is 18% per year.
c. House and lot costing P816,000 transferred in the name of the employee. The property has a
fair market value 150% based on its cost. The estimated useful life of the property is 25
years.
d. House and lot costing P1,020,000 with a fair market value of P1,600,000. The property was
not transferred in the name of the employee. The estimated useful life of the property is 25
years.
e. Apartment rented by the company for P244,000 for a year and granted the same to be used
by the same to be used by the employee for free.
f. Assignment of residential property for the use of employee. The property has a fair market
value of P1,360,000 but its zonal value is P1,224,000.

Required: Compute for the following (independent situation):

a. Monetary value
b. Fringe benefit tax

X Corporation purchased a residential property with a zonal value of P5, 000, 000. The property
has a fair market value of P6, 000, 000.

2. If the property was assigned for the use of X Co.s president, how much is the fringe benefit tax?
a. P70, 588 c. P48, 000
b. 58, 824 d. P40, 000

3. If the property was acquired for the use of X Co.s manager for P2, 000, 000 down payment and
P1, 000, 000 on instalment basis per year in 4 years (with nan effective interest rate of 12% per
year), how much is the fringe benefit tax?
a. P70, 588 c. P58, 824
b. P59, 258 d. P35, 294

A Co. purchased a car for a cash price of P1, 000, 000. If the A co. purchased the car on
instalment, the monthly payment would be P20, 000 for 5 years.

4. If the company decided to maintain the car for the personal use of its president as needed. How
much is the fringe benefit tax?
a. P 47, 059 c. P 94, 118
b. P 56, 471 d. P112, 941

5. If the company decided to transfer the ownership of the car in the name of its president, how
much is the fringe benefit tax?
a. P 47, 059 c. P 94, 118
b. P56, 471 d. P112, 941

6. Gerry, the chairman of the board, presented the following expense accounts which were
reimbursed to him by his employer, U Corporation:
Monthly representation allowance P30, 600
Grocery Items 17, 000
Pants and T-shirt 3, 400
Gasoline of company car 6, 800

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 The fringe benefit tax would be
a. P27, 200. c. P20, 400.
b. P24, 000. d. P 9, 600.

Andoy, an employee of P Finance Co., borrowed money from the company amounting to
P88,400. The companys policy is to charge 3% per amount to its employees instead of its
regular interest rate of 1.5% per month.

7. If Andoy is a rank-in-fie employee, how much is the fringe benefit tax on the interest benefits?
a. P6,240 c. P1,248
b. P3,744 d. P -0-

8. If Ando is a managerial employee, how much is the fringe benefit tax on the interest benefits?
a. P6,240 c. P1,248
b. P3,744 d. P -0-

9. Leah Salonga, a resident Filipino, is employed as a manager of a regional operating headquarters

of Walmart Multinational Corporation here in the Philippines. Her position is normally occupied
only by expatriate. She received P170,000 cash as fringe benefits. The fringe benefit tax would
be
a. P80,000 c. P37,500
b. P62,500 d. P30,000

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Quizzer 006 Page 2 of 4 K.T. Tegio

1. Problem 6 39
A. 1. Monetary value P68,000

2. FBT (P68,000/68%) x 32% P32,000

B. 1. Down payment P200,000

Add: Present value of P180,000 installment at 18% per
year:
Yr. 1: (P180,000 x 0.8475) 152,550
Yr. 2: (P180,000 x 0.7182) 129,276
Yr. 3: (P180,000 x 0.6086) 109,548
Yr. 4: (P180,000 x 0.5158) 92,844
Yr. 5: (P180,000 x 0.4371) 78,678 562,896
Acquisition cost P762,896
Divided by 5
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 13
1. 2. Letter A
Grossed-up monetary value (P6,000,000 x 5% x 50%)/68% P220,588
Multiplied by FBT rate 32%
Fringe benefit tax P 70,588

2. 3. Letter B
Down payment P2,000,000
Present value of 4 installments (P1,000,000 x 3.037) 3,037,000
Total P5,037,000

GMV (P5,037,000 x 5% x 50%)/68% P185,183

Multiplied by FBT rate 32%
Fringe benefit tax P 59,258

Problem 6 18

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1. 4. Letter A
Grossed-up monetary value [(P1,000,000/5) x 50%] /68% P147,059
Multiplied by FBT rate 32%
Fringe benefit tax P 47,059

2. 5. Letter C
Grossed-up monetary value (P1,000,000/5)/68% P294,117
Multiplied by FBT rate 32%
Fringe benefit tax P 94,117

6. Problem 6 22 D
Grocery items P17,000
Pants and T-shirt 3,400
Total monetary value of FB P20,400

Problem 6 26
1. 7. Letter D
There is no FBT for rank-in-file employee.

2. 8. Letter B
Benchmark interest (P88,400 x 12%) P10,608
Less: Actual interest charge (P88,400 x 3%) 2,652
Difference P 7,956

FBT (P7,956/68%) x 32% P 3,744

9. Problem 6 33 D
Grossed-up monetary value (P170,000/85%) P200,000
Multiplied by applicable FBT rate 15%
Fringe benefit tax P 30,000

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