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PROBLEMS

P3.1. Determine if the following inco~es are subject t~ basic tax, fringe
benefit tax or exempt from tax by putting a check mark in the column
provided below. If the value of the benefit is provid~d, indicate the correct
Subjectto

-
amou~ " · Subjectto Exempt
. Amount
FBT Basic Tax
P120,000 '
1. ' Officer's expense account not

'
subject to liquidation
80,000
-
2. Officer's expense account

-
I
subject to liquidation

3. Personal expenses of the

company officers, paid for or 50,000 I

.,
reimbursed by the company-
_empl9yer '

Ann1,.1al uniform allowances - 6,000

4.
granted to an executive

Housing benefits of officials of 360,000

5.
the Philippi_
ne Army I

6. Housing benefits of officials of 250,000

a domestic corporation -
I

7. Housing unit furnished to an '

employee, where said unit was 45,000
situated inside or adjacent to
8. the premises of the business -

9. Monetized unused vacation 15,000

leave credits not exce~ding 1o
days. .

10. Household personnel benefit 60,000

by an officer of_a domestic
corporation.
-
11. Annual medical cash allowance 1,500
I
to dependents ' -
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P3,2. In 2020, ~arcia Realty Corporation paid P325,000 to Wilderne~s
Resort, representing vacation expenses of Mike, an executive of Garcia
company. ':'-nswer the following?
a. Is this a taxable fringe benefit?
b. How much is the tax base of the fringe benefit?
c. Should the taxable fringe benefit be included in the returnable
income of Mike for the year?
d. How much is the fringe benefit tax collected?
e. When is the fringe benefit tax remitted?
f. Assuming Mike is a rank and file employee, is the fringe benefit
subject to fringe benefit tax?

P3.3. LJ is a resident citizen employed by Chris Sports, Incorporated.

He received the following from his employer during 2020:
Basic compensation income P900,000 ·
th
13 month pay 75,000
P3,000 monthly transportation allowance 36,000
Productivity incentive pay 10,000
Christmas bonus 25,000
Uniform allowance · 16,000
Actual medical allowance 10,000
Rice subsidy , 36,000
Required: Determine LJ's taxable net income

P3.4. Assume the same data in P3.3 except that the productivity
incentive pay amounted to P20,000.
Required: Determine LJ's taxable net income

P3.5. A rank and,file employee received the following compensation and

· benefits received during 2020:
Basic compensation incom·e PS:4-0,000
13th month pay 45,000
Mid-year bonus 22,500
.Christmas gift 10,000
Uniform allowance 7,500
· Actual medical allowance 15,000
Medical allowance to dependents 2,000
Rice subsidy · · · 18,000
Monetized vacation leave for 12 days (P2,000/day) 24,000
Required: Determine the employee's tqxable net income -

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 P3.6. SPECIAL RULES IN COMPUTING THE MONETARY VALUE oi:
FRINGE BENEFITS "d ntial house forthe use of ·its b ranch manag
1. XYZ Co. lease d a res1 e er month er.
The rent per agreement was P165, 000 P ·
· H h • the monetary value of the benefit for the month?
a. ow muc is f"t t the month?. ·
b.How much is ttie ·fringe bene I ax ,or ·

2. XYZ Company owns residential pro~erty wh hich "dis at~sligned to its

. f The following data pertain to t e res1 en 1a property
off1cer or use. p5 000 000
Cost • ,
Fair market value per BIR 4,500,000
Fair market value per Asse~sor's 3,000,000 .
office

a. How -much is the .monetary value of the 9enefit for the

quarter?
b. How much is the fringe benefit tax for the quarter?

3. Using the same data in no. 2, and assuming that XYZ Company
transferred the ownership of the residential property in _the name of the
officer, answer the following:
a.How much is monetary value of the benefit?
· b.How much is the fringe benefit tax?

4: . Chen Company purchased a motor vehicle for the use of its manager.
The vehicle was registered in .manager's name. The cost of the
vehicle was P1 ,200,000 used partly for personal purposes and partly
for the benefit of the company. Compute the following·.
a. Monetary value of the benefit
b. Fringe benefit tax

5. Using the same data in no. 4 and assuming that Chen shouldered only
a portic;m of the cost of the car in the amount of P800,000 and the
balance paid by the manager, determine the following:
· a. Monetary value of the benefit.
b. Fringe benefit tax ·

6. Using the same data in no. 4 and assuming that Chen purchased the
car In_ the name of the manager on installment basis. Determine the
following:
a. Monetary value of the benefit
b. Fringe benefit tax

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TRUE OR FALSE
Write True i_f the statement is correct otherwise write False
1. A fringe benefit is any goods'. service 0 / other benefits furnished or
~ra_n~ed by an employer in cash or in kind, including basic salaries to
ind1v1dual employees.
2. f!' fringe benefit which is subject to the fringe benefit tax is taxable
· income of the employee.
, 3. A fringe benefit which is not subject to the fringe benefit tax is taxable
income of the employee.

4. Fringe be_nefits subject to fringe benefit tax cover only those fringe
b~nefits given or furnished to a managerial or supervisory employee.
5. Fringe benefit tax shall be treated as a final income tax on the
employee withheld and paid by the employer on a quarterly basis.
6. The grossed-up monetary value of the fringe benefit is the actual
amount received by the employee.

7. The grossed-up monetary value of, the fringe benefit shall be

determined by i;:lividing the monetary va·Iue of fringe benefit by the
grossed up monetary value factor. ·
8. The person liable for fringe benefit tax is the employer, whether he is
an individual, professional partnership or a corporation regardless of
whether the corporation is taxable or not or the government and its
instrumentalities · ·
9. A managerial employee is . one who is vested with powers of
prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall discharge, assign or discipline
employees•, or to effectively recommend such managerial actions.

10. The grant of fringe benefits to the employee is exempt from tax if such
grant is required by the nature of, or'necessary to the trade, business
or profession of the employer.
11. The amount on which the fringe benefit tax rate is applied is the
monetary value of the fringe benefit.
12. The amount on which the fringe benefit tax rate is applied is the
amount deductible by the employer from its gross income.

13. Grossed-up monetary value is reflected in the books of accounts as

fringe benefit expense and fringe benefit tax expense.
14. Failure to withhold the required tax on salary is. collectible from the
employer. .
15 Failure to withhold the correct amount due to· false information
· supplied by the employee sha,11 be the liability of the employee.

·;

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(MODIFIED) IDENTIFICATION . . . . · · 1

_Determine ,whether or not the following 1s subJect to fringe benefit tax

Write A if the benefit is subject to fringe benefit tax, otherwise, write ·
13
Assume further that the employee is holding supervisory or manageriai
• I .
position unless· stated otherwise.
1. Fringe benefit req~ired bY: the nature of or necessa(Y to trade or
business of the employer. · ·
?. Fringe benefit for the convenience or advantage of the employer.
3. Car plan for managerial employees. . ·
4. Daily meal allowance for managerial em~loyees ..
5. Monetized unused vacation leave credits of private employees not
exceeding 10 days.

6. Monetized unused vacation leave credits of government employees in

excess of 1O days. _
7. Monetized value of sick leave credits not exceeding 10 days. ·
8. Monetized value of sick leave credits of private employees in excess
of 10 days.
9. , Compensation income of supervisory and managerial employees.
10. Housing units situated inside or adjacent to business or factory
(located within 50 meters froi:n the perimeter of business).

11 . House benefits to the Chief Finance Officer of the company

12. Allowances -received by supervisory and managerial employees not
subject to liquidation.
13. Used by employee of aircraft (including ·helicopters) owned/maintained
by the employer.
st
14. Cost of 1 class/business class airplane· ticket for business travel or
convention abroad in excess of 70% . •
1s. De minim is benefits received by an executive of a company.

16. Educational assistance (Master of $cience in Accountancy) granted to

Fe., the Finance Manager of ABC Company. No written contract was
executed by Fe and ABC.
17. Premiums borne by the employer for tl'ie group insurance of its
employees ,
18. Contributions of the employer for tt\e benefit of the employee to
.retirement, insurance and hospitalization benefit plans.
19. Reimbursement of transportation expenses paid to a messenger of
· the company · ·
20. Contribution~ made by an employer to SSS GSIS and similar
cpntributiohs under existing laws in excess ~f what the law requires as
contributions.

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 MULTIPLE CHOICE
choose t~e letter of the. correct answer.

principles
1. Which of the following statements is correct? ·
I. The fringe benefit tax is a final withholding tax OI') 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 ben~fit 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).
Ill. 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. ·
a. I only . c. · I, II and Ill
b. I and II ohly d. None of the above

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

Statement- 2: Fringe benefits include salaries, services, or other
benefit given by employer to an individual employee. ,
a. Only state[T1ent 1 is correct . ·
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are not correct.,

3. Which of the following statements regarding fringe benefit tax is

wr9ng? · · , ·
a. Fringe benefit tax is impqsed on the employee
b. The employer is the one liable for the payment of fringe benefit
tax
c. Both "a" and ""b"
d. Neither "a" nor "b"
I
4. This income of a resident alien holding managerial position is subject
to basic tax
a. Fringe benefit tax . .
b. Interest income from Philip~ine currency deposit with Security
Bank

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c. P50,000 winnings from peso and Philippine lotto
d. Prizes from S&R (P10,000), Gateway (P10,000), and Glorieta
(P10,000) or a total of P30,000 . --

5. ' Which . of the ·following is a fringe benefit not covered by the fringe
benefit tax ·
a. De minimis -benefit.
b. Housing privileges granted to rank and file employees.
c. Fringe benefits granted as a result of the nature of the
· - business, trade, or-profession of the employer.
d. All of these.

6. The following earnings ar-e subject to fringe benefit tax, except

a. Salary of a rank and file employee ·
b. Housing necessary for trade and for the convenience of the
employer
c. Food allowance for the convenience of the employer and
necessary in the conduct of the busin'es~
d. All of the above

7. The following are exempt fringe benefits, except for one

a. Fringe benefits given to rank and file employee.
b. Fringe benefit given for the convenience of the employee.
c. When the fringe, benefit is required by the nature of or ·
necessary to the trade, business or profession of the
_employer.
d. Rice benefit amounting to P1 ,500 a month.

8. Which of the following benefits is not subject to the fringe benefits tax?
a. Contributions of the employer for the benefit of the employee
to retirement, insurance and hospitalization benefit plans
b. Housing ·
c. Expense account
. d. Vehicle of any kind

9. Statemen! 1: Household of the employee borne by the employer such ·

as salaries of household help, personal driver and other similar
personal expenses are taxable fringe benefits.
Statement 2: A fringe benefit which is not subject to the fringe benefit
tax is returnable income of the employee.
a. · Statements 1 & 2 are false
b. Statement 1 is true but statement 2 is false
c. Statemen~ 1 is false but statement 2 is true
d. Statements 1 and 2 are true

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10. Fringe benefit tax is computed based on the
a. Monetary value of the fringe benefit
b. Book value of the fringe benefit •
c. Gr?ssed-up monetary value of the fringe benefit
d. . Fair value of the fringe benefit

11. Which_ of the following statements regarding grossed-up monetary

value 1s correct?
I. T~e grossed-up monetary value of the fringe benefit is simply
a figure meant to represent the entire income earned by the
employee.
11. The grossed-up monetary value includes the net amount of
mon~y received, . the net monetary value of any property
received, and the amount of fringe benefit tax.
Ill. The grossed-up monetary value of the fringe benefit is
determined by dividing the monetary value of the fringe benefit
by 65% starting January 1, 2018.
a. I only c. I, 11 and Ill
b. I and II only d. None of the above

12. Which statement is wrong? The amount on which ttie fringe benefit tax
rate is applied is: ·
a. The monetary value of the fringe benefit
b. The grossed-up monetary value of fringe benefit
c. The amount deductible by the employer from his/its gross
income
d. Reflected in the books of accounts in the two accounts of
."fringe benefit expense" and "fringe benefit tax expense"

3. If both the fringe benefit expense and the fringe benefit tax expense
are allowed as deductions from gross income of a corporation, the
entry in the books of accounts is
a. Fringe benefit expense XXX
Fringe benefit tax expense XXX
Cash XXX
b. Fringe benefit tax expense XXX
Cash XXX
c. Fringe benefit expense XXX
fringe benefit tax expense· XXX
Income constructively XXX
received
Cash XXX
d. Any of the above

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14.- The monetary value of fringe benefit if given in m~ney is . .

a. Fair market value (BIR) or zonal value whichever 1s higher.
b. Amount granted ·
c. Depreciated value ·
d. Acquisition cost plus other incidental costs

15. Statement 1: if the employer did not withhold the fringe benefit tax
and subsequently discovered and assessed _by the BIR, the related
fringe benefit tax is not allowed as a deduction from the employer's
gross income. · . -
Statement 2: Fringe benefit tax inclu??s additional ·?enefit granted by
the employer to the employees in add1t1on to the basic salary.
a. Statements 1 & 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

16. StatemetJt 1: Th~ exemption of any fringe · benefit from the fringe
benefit tax shall not be interpreted to mean exemption from any other
income tax imposed under the Tax Code except if the same is likewise
expressly exempt from any other income tax imposed under the Tax
Code or under any other existing law. ·

Statement 2: If the fringe benefit is exempted from the fringe benefit

· tax, the same may, however still form part of the employee's gross
compensation income which is subject to income tax, hence, likewise
subject to-withholding _tax on compensation income payment.
a. Statements 1 & 2 are false ·
b. Statement 1 is true but state·ment 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

17. Cost of life or health insurance and other non-life inswrance premiums
bor·l'le by the employer for his employee shall be treated as taxable
fringe benefit, exc~pt
a. Contributions of the employer for the benefit of the employee
pursuant to provision of existing SSS and GSIS laws.
b. Cost of premiums borne by the employer for the' group
insurance of his employees. ·
c. Both "a" a_nd "b".
d. None of the above .

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18. Which of th e follo~ing statements regarding fringe benefit is true?
I. E~penses incurred by the employee but which are paid f<;>r or
reimbursed by the employer are taxable fringe benefits, .
EXCEPT when the expenditures are duly receipted for and in
the name of the employer and the expenditures do not partake
the nature of a personal expense attributable to the employee.
11. Benefi~s given to the rank and file, whether granted under a
collective bargaining agreement or not are subject to fringe
benefit tc;1x.
Ill. The exemption of any fringe benefit from the fringe benefit tax
shall NOT be ir:iterpreted to mean exemption from any other
income tax unless the same is likewise exempt by law.
a. I only c. I, and II only
b. I and Ill only · d. All of the above

19. Fringe benefits NOT SUBJECT to fringe benefit tax include which of
the following? · ·
I. Fringe benefits authorized and exempted from income tax
under the Code or under any special law.
II. Contributions of the employer for the benefit of the employee
to retirement; insurance, and hospitalization benefit plans.
111. Benefits given to the rank and file, whether granted under a
collective, bargaining agreement or not.
IV. De minimis benefits.
a. I and II only c. All of the above
b. II and Ill only d. None of the above

20. Which of the followiog shall be subject to fringe benefits tax?

a. Housing privilege of Armed Forces of the Philippines.
b. Housing units situated inside or adjacent to business or factory
(located within 30 meters from the perimeter of the business.
c. Temporary housing for an employee who stays in the housing
unit for 3 months or less. ,
d. Housing privilege of an alien employee of an offshore banking
unit in the Philippines.

Computation of FBT .
21. How much is the allowable deduction from business income of a
domestic corporation which granted and paid P97,500 fringe benefits
to its key officers in ~020?
a. P150,000 c. P99,000
b. P100,000 d. 65,000

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22. In 2020, ABC Corpora~ion gave the following fringe benefits to its
employees
To managerial employees P1 ,300,000
To rank and file employees 5,000,000

The allowable deduction from the gross i~come of the corporation

for the fringe benefits given to employees 1s ,
a. P2,000,000 c. P6,320,000
b. P2, 148,000 d. P?,000,000

23. In 2020, ABC Corporation provided a 3-day vacati~n in Tag?ytay to all

of its employees of which 80% are rank and file. Total expenses
incurred by the company for · the said vacation amounted to
P1 ,200,000. The fdnge benefit tax expense is
·. a. P470,588 c. P84,000
b. P376,470 d. P129,231

24. Using the above data, the total deductible expeose is

a. P1 ,294, 118 ' c. P1 ,284,000
b. P294,118 d. P1,329,231

Use the following data for the next two questions:

From a managerial employee for taxable year 2020:
Salaries and wages- net of the following P681,200
- SSS and medicare contributions 12,000
- tax withheld 134,800
Total fixed monthly allowance (PS,000/mo .) 60;000
Allowance, not subject to liquidation 48,000
Gasoline allowance, subject to liquidation 30,000
13th month pay · 68,000
Christmas bonus 15,000

25. The gross compensation income subject to graduated rate is

a. P440,000 c. P816,000
b. P681,200 d. P876,000

26 . The fringe benefit tax due from the above benefit is

a. P36,706 . c. P24,941
b. P33,412 d. P25,846

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 c'fter Ee,-@e, - F,-!"f e, l3~ 7'"("
special Rules on the Determination of the Monetary Value for
Housing and Vehicle Benefits

27. For purposes of the fringe benefit tax, the monetary value of a housing
benefit granted by employer to employee where the housing unit
provided for use by the employee as his usual place of residence is
owned by the employer.
a. The amount of depreciation for the housing unit.
b. 50% of the annual value which is 5% of the fair market value
or zonal value, whichever is higher.
c. 50% of the amount of depreciation.
d . Net book value

28. In 2020, Mabuhay Corporation paid for the annual rental . of a

residential house used by its general manager amounting to
P637,500. The deductible amount of Mabuhay Corporation is
a . P637,500 c. P468,750
b. P318,750 d. P809,135

Use the following data for the next five questions:

Included in the compensation package of an executive was the free use of
the company's residential condominium unit in Makati City, Philippines.
Data on the condomin.ium unit for 2020 taxable year follows:

Fair market value in the Real Property Declaration P1,000,000

Zonal value 2,000,000
Fair market valu_e 2,500,000

29. How much is the monetary value of the fringe benefit and the fringe
benefit tax, respectively? .
a. P4, 167; P2,244 C. P2,000,0b0; P705,832
b. P50,000; P26,923 d. P6,127.45; P945,177

30. Assume the residential condominium unit was purchased by the

company in installment for the executive's free use. Acquisition cost
exclusive of interest was P3,000,000. At what amount should the
company report as the monthly monetary value of the fringe benefit
and the fringe benefit tax, respectively?
a. P4, 166.67; P1 ,961 c. P2 ,000,000; P705,832
b. P1 ,500,000; P326,400 d. P6,250; P3,365

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31. Assume the residential condominium unit was purchased by 'the
company in installment, ownership of ~hich will be transferred to the
executive. Acquisition cost exclusive of interest was P3,000,000 with a
zonal value determined at P5,000,000. At what ,amount should the
company report as the monetary value of the fringe benefit and the
fringe benefit tax, respectively?
a. P416,667; P196,078 c. P2,000,000; P705,832
b. P5,000,000;P2,692,308 · d. P75,000; ·P35,294

32 . Assume the residential condominium unit was purchased by the •

company in installment, ownership of which will be transferred to the
executive ..Acquisition cost exclusive of interest was P3,000,000 with a
zonal value determined at P5,000,000. The employee is required to
pay P2,000,000 to the employer before the transfer of ownership is
made. At what amount should the company report as the ·monetary
value of the fringe benefit and the fringe benefit tax, respectively?
.a. P3,000,000; P1,615,385 c. P250,000; P117,647.05
b. P1 ,500,000; P326,400 d. P6,250; P2,941.18

33. Assume the residential condomini\Jr'rl unit is located in Cebu and that
the executive is allowed to use the sarne for a period of three months
while he is completing an evaluation of the over-all performance of the
company'$ Cebu branch. At what amount should the company report
as the monetary value of the fringe benefit and the fringe benefit tax,
respectively?
a. P4,1667.67; P1 ,961 c. P2,00b,000; P705,832
b. P1 ,500,000; P326,400 d. PO; PO

Use the following data for the ·next five questions:

Included in the compensation package of the Chief Accountant is a car -
plan worth P1 ,000,000. The ownership will be transferred in the name of
the employee. · .
34 . Assume the employer purchases the car in the name of the employee.
At what. amount should the employer report as the grossed-up
moneta_ ry value of the fringe benefit and the fringe benefit tax,
respectively?
a. P1 ,538,462; P538,462 C. P735,294; P235,294
b. P1 ,000,000; P320,000 d. PS00,000; P160,000

35. Assume· h. the employer

• . provides P800 •000 to the emp 1oyee
. t o p urchase ·
any ve rcle of hrs interest, Ownership of the car.is placed ,n the narne
of the employee. The employee · purchased a b ran d. new car worth ·
P1,200 ,000 . At what amount should the emp I~yer repo rt as the

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grossed-up monetary value of the fringe benefit and the fringe benefit
tax, respectively?
a. P1,764,706; P564,706 c. P1,230,769; P430,769
b. P1 ,470,588; P470,588 d. P800,000 ; P256,000

36. Assume t.h e employer purchases the car in installment in the name of
the employee. At what amount should the employer report as the
grossed-up monetary value of the fringe benefit and the fringe benefit
tax, respectively?
a. P1 ,470,588; P470,588 c. P130,000; P45,500
b. P1 ,000,000; P320,000 d. P200,000; 64,000

- DE MINIMIS BENEFITS
37. Statement 1: De minimis benefits are Facilities or privileges furnished
or offered by an employer to his employees that are of relatively small
value and are offered or furnished by the employer merely as a means
of promoting the health, goodwill, contentment, or efficiency of his
employees.
Statement 2: De Minimis benefit given to rank and file employ~es or
to managerial or supervisory employees are not subject to final
withholding tax for fringe benefit and creditable withholding tax.
a. Statements 1 & 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

38. Alpha Company grants grocery allowance of P5,000 per semester per
employee payable every June 30 and December 31 based on the
existing Comprehensive Agreement with its employees. The benefit
"granted is: . . -
a. Exempt from basic income tax but subject to 10% creditable
withholding tax. ,
b. Exempt from basic income tax and to creditable withholding
tax .
c. Subject to fringe benefit tax if the recipient :is a rank and file
employee . . . .
d. Subject to fringe benefit tax if the recIpIent Is a managerial
employee

39. Fixed daily meal allowances granted employees are .

a. Exempt from income tax . . . . .
b. Subject to fringe benefit tax 1f the recIpIent Is a rank and file
employee

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c. Subject to fringe benefit tax if the recipient is a managerial
employee . •
d. Subject to basic income tax regardless of employee's rank

40. Statement 1: - Uniforms and clothing allowance not. e~c~eding six

thousand pesos (P6,000) per annum is an exempt de ~mmm1s benefit,
Statement 2: 1 Actual medical benefits not exceeding P10,000 Per
·a nnum is an exempt de minimis benefit. ·
a. Statements 1 & 2 are false ·
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true

41 . Other benefits received by employees from an employer which are not

in the list of de minimis benefits under RR 8'-2012, as amended, are:
a. Treated as de minimis if the benefits are of relatively small
value and are offered or furnished by the employer merely as
a means of promoting the health, goodwill, contentment, or
efficiency of his employees.
b. Treated as de minimis, regardless of the value, if such benefits
are offered or furnished by the employer merely as a means of
promoting the health, goodwill, ~ontentment, or efficiency of
his employees;
c. Not de minimis benefits because the list as provided in the
regulations are all inclusive.
d. None of the above

42. Reasonable business expenses which are paid for by the employer for
the foreign travel of his employee to attend business meetings or
conventions are not taxable as fringe benefits. Which is NOT true?
I. Inland travel expenses (food, beverages, and local
transportation) except lodging cost in a hotel or similar
establishment amounting to an average of US$300 or less per
day, shall not be subject to a fringe benefit tax. ·
II. The cost of economy and b1,1siness class airplane ticket shall
not be subject to a fringe benefit tax. However, 30% of the
cost of first class airline ticket shall be subject to a fringe
benefit tax.
Ill. The expenses ·should be supported by documents proving the
actual occurrences of the meetings or conventions otherwise,
they shall be treated taxable fringe benefit. '
a. I only c. I , II and 111
b. I and II only d. None.of the above

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st
43_ 1 Statement - Ri?e subsidy of two thousand pesos (P2,000) or one
sack of 50 kg . . nee per month amounting to not more than two
th~usand pesos 1s an exempt de minimis benefit.
Z' Statement - Employee achievement awards, e.g., for length . of
service, or safety achievement, which must be in the form of a tangible
personal property other than cash or gift certificate, with an annual
monetary value not exceeding ten thousand pesos received by an
employee under an established written plan which does not
discriminate in favor of highly paid employees is an exempt de minimis
benefit.
a. Statements 1 & 2 are false
b. Statement 1 is tn,1e but statement 2 is false
c. Statement 1 is false but statement ,2 is true
d. Statements 1 and 2 are true

44. The amount of de minimis benefits conformirrg to the ceiling of de

minimis benefits shall be:
a . Exempt from income tax, regardless of the rank of the
employee ,
b. , Not be considered in determining the P90,000 ceiling of other
benefits excluded from the gross income under the Code, as
amended.
c. Both "a" and "b".
d. Neither "a" nor "b"

45. The excess of the de minimis benefits over their respective ceilings
prescribed under the regulations shall be
a. Considered as part of other benefits subject to tax only on the
excess over the P90,000 ceiling.
b. Not be considered in determining the P82,000 ceiling of other
benefits excluded from the gross income under the Code, as
amended.
C. Both "a'. ' and "b''.
d. Neither "a" nor "b"

46. Minimun Wage Earners (MWEs) receiving "other benefits" exceeding

the P90,000 limit shall be
a. Taxable on the excess ben~fits only
b. Taxable on the excess benefits as well as his salaries, .wages
and allowances, just like an employee receiving compensation
income beyond the statutory minimum wage. ·
c. Exempt from income tax
d. None of the above

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47. The amount of .P90,000 under "other benefits" which are excludect
from gross income shall ' . . •d 1
I. · · Not ·be applicable to· self-employed indivi ua s. .
II. Not be applicable to incom·e generated from th e COJ1duct of
trade or business.
Ill. Shall •be applicable to all types of income
a. I only . c. I ,.11 and/!~ b
b. I and II only d. None o ea ove

48. "Other Benefits·· under revenue regulations include

I. Christmas bonus
11. Prod~ctivity incentive bonus
Ill. Loyalty awards · . .
IV. Gifts in cash or in kind and other benefits of s1m1lar nature
actually received by officials and employees · of both
government and private offices
a. I only . · c. I , II and Ill
b. i'and 111 only . d. I , JI, Ill and IV
1h
49. Which of the following statements regarding thirteenth (13 ) month
·pay is correct? ·
a. Thirteenth (13 th > month pay and other benefits received by
officials and employees of public and private entities are
exempt from income tax and creditable withholding tax on
compensation, provided that the total exclusion shall not
exceed pgo;ooo. ,
b. The excess 'of de minimis benefits over the ceiling would form
part of -an individual's gross income only if the total excess
benefits including bonuses· exceeds P90,000 and would be
subject to income tax and applicable final withholding taxes .
c. Statements "a" and "b" are correct
d. Neither statement "a" nor "b" is correct

50: Pedro, single, is a minimum wage earr:ier of EDT Manufacturing

Corporation. In addition to his basic minimum wage of P144,000 for
. 2020 taxable year, he also received the following benefits: ·•
• Holiday pay, P25,000
• 'overtime pay, 12,000
• Night shift differential, 19,000
The income subject to tax should be:
a. P56,000 c. P200,000
b. P31,000 d. nil

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51 _. Pedro, single, is a ·m inimum wage earner of EDT Manufacturing
Corpora_tion. In a~dition to his basic minimum wage of P144,000 for
2020, he also received the following benefits:
• D~hminimis, P60,000 (P20,000 over the ceiling)
• 13 month pay and other benefits, P122,000

Pedro's income tax due should be:

1:1· f20,000 C. P52,000
b. P32,000 d. PO

52. Pedro, senior citizen, is a mrnrmum wage earner . of EDT

Manufacturing Corporation. Pedro is also engaged in trading various
consumer products every weekend. He derived profit therefrom
amounting to P500,000 for 2020 taxable year. In addition to his basic
minimum wage of. P144,000 for 2020 taxable year, he likewise
·received the following additional ·benefits from his employer:
• De minimis, P40,000 (all within the ceiling)
th
· 13 m_onth pay and other benefits, P35,000

Pedro's taxable income should be:

a. P644,000 · c. P500,000
b. P594,000 , d. P350,000 .

I .

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