CHAPT-6 FB TAX - 27 INCOME TAXATION 5TH Edition (BY:...

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SUGGESTED ANSWERS Chapter 6: Fringe Benefits Tax CHAPTER 6 FRINGE BENEFITS TAX Problem  6  – 1  TRUE OR FALSE 1. True 2. False  – These  are  benefits  other  than  salaries. 3. False  – Wage  and  salaries  are  not  subject  to reduction  once  given  regardless  of the   financial  condition  of the  employer. 4. True 5. False  – This  a definition  of fringe  benefits  not  of fringe  benefit  tax. 6. False  – The  corporate  income  tax  rate  is 35%  while  the  fringe  benefit  tax  is a final  tax   rate  of 32%. 7. True,  unless  these  are  deminimis 8. False  – FBT is a final  tax  of the  employee. 9. True 10. True 11. True 12. True 13. True 14. True 15. True 16. False  – Some  housing  fringe  benefit  is not  subject  to income  tax.  Ex.  Temporary  housing   for three  months  or housing  benefit  under  the  employer’s  benefit  rule. Problem  6  – 2  TRUE OR FALSE 1. True 2. False  – If in the  name  of an  officer  employee  and  reimburse  or paid  by the  employer. 3. False  -  Fringe benefit which are necessary for the business and required for the convenience of the employer are not subject to fringe benefit tax. 4. True 5. False  – Scholarship  grants  to employees  not  related  to business  is taxable. 6. False  –  These are among those exempted from fringe benefit tax. 7. False  – Fringe  benefits  of rank- in- file employee,  not  mentioned  in  the  exemptions,  are   subject  to income  tax  on  wages  but  not  subject  to fringe  benefit  tax. 8. False  – Rank- in- file employees’ fringe  benefits  are  subject  to income  tax  on  wages. 9. True 10. True 11. False  – medical  allowance  of P750  per  semester 12. False  – Daily meal  allowance  for overtime 13. True Problem  6  – 3   1.  A 7.  A 2.  B 8.  C 3.  B 9.  C 4.  D 10.  A 5.  D 11.  D 6.  D 12.  D Problem  6  – 4A 27
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SUGGESTED ANSWERS Chapter 6: Fringe Benefits Tax Case  1:  C   Taxable Nontaxable Basic  salary P240,000 13 th  month  pay P20,000 De minimis  within  ceiling  (P1,500  x 12) 18,000 Other  benefits  - excess  of de  minimis  (P24,000  – P18,000)              .     6,000 Total   P240,000 P44,000 Note:  The  13 th  month  pay  and  other  benefits  amount  only  to P26,000  (P20,000  + P6,000),   hence,  nontaxable. Case  2:  D All of the  given  items  of income  for MWE are  not  subject  to income  tax  and  within  the  prescribed   nontaxable  ceiling. Case  3:  B   Taxable Nontaxable Total  basic  salary P108,000 Overtime  pay 30,000 Hazard  pay 2,000 Holiday  pay 1,000 De minimis:      Nontaxable  rice  subsidy  (P1,500  x 12) P18,000      Nontaxable  clothing  allowance   4,000 13th  month  pay  and  other  benefits: Nontaxable        13 th  month  pay P  9,000
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This note was uploaded on 01/03/2012 for the course ACC 284 taught by Professor Sevton during the Spring '11 term at Abraham Baldwin Agricultural College.

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CHAPT-6 FB TAX - 27 INCOME TAXATION 5TH Edition (BY:...

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