Fringe Benefit Tax

• Fringe benefits pertain to all other benefits or incentives of employees other than basic pay.
• fringe benefits that are fixed every payroll period are considered regular compensation
• fringe benefits that are variable and performance-based are considered supplemental compensation
• Fringe benefits in the form of incentives are considered 13th month pay and other benefits
• fringe benefits furnished for the employer's convenience or necessity are exempt from income tax
• When the employer incurs expenses which is purported partly for business and partly for employee incentive, only 50% of the expense representing the employee incentive is subject to the fringe benefit tax.
• Exempt fringe benefits include: (1) Mandatory benefits; (2) Benefits required by the nature of, or necessary to the profession; (3) Benefits for the convenience of the employer; (4) Contributions of the employer for the benefit of the employee to rih benefit plans; (5) Benefits given to rank and file employees; and (6) De minimis benefits within their legal limits.
• The fringe benefit tax is a final tax imposed on the fringe benefit furnished, granted or paid by the employer to the employee.
• The fringe benefit is a final tax which is withheld by the employer at source
• The fringe benefit tax is due for remittance quarterly based on the account period selected by the employer
• Monetary value refers to the taxable amount of benefits taken home or realized by the managerial or supervisory employee
• The procedure in computing the fringe benefit tax:

  1. Determine the monetary value
  2. Gross-up
  3. Compute fringe benefit tax