ANTE User Manual

Set Up Fringe Benefit Tax

Your company pays a title allowance to certain employees and bears the Fringe Benefit Tax (FBT) on it, so the employee receives the whole allowance. This tutorial explains every setting, shows with real figures what each one does to the tax, and ends with what a monthly run and the quarterly return produce.

Before You Start

  • Permission. You need the Disbursement Create/Edit permission to change anything on the Fringe Benefit Tax page.
  • Two account codes for the tax: an expense account that is debited and a payable account that is credited with the tax your company bears. A run cannot be computed without both.
  • Two account codes for the allowance itself: the expense and the payable that payroll pays out. These go on the Fringe benefit run type.
  • The grade table from your policy: each grade's monthly title allowance and any hardship allowance.
  • Who gets which grade, and from what date.
Info

The examples use the statutory rates (35% on a value grossed up by 65%), a monthly de minimis of ₱2,899.67, and two grades: GRADE-A (title allowance ₱15,000.00, no hardship) and GRADE-B (₱9,000.00 plus ₱1,500.00 hardship). Every figure was computed by the same calculation the monthly run uses.

How the Tax Is Worked Out

Each month, for every employee assigned to a grade, the run takes the allowance, sets the exempt de minimis part aside, grosses up the rest and applies the rate. For a GRADE-A employee with full attendance:

GRADE-A, one full month
Title allowanceFrom the grade; reduced for absences when pro-ration is on₱15,000.00
Hardship + extra allowanceNever reduced for absences+₱0.00
Total allowance=₱15,000.00
De minimis (exempt)Up to the monthly de minimis total; never taxed−₱2,899.67
Taxable fringe benefit=₱12,100.33
Grossed-up valueGross-up divisor÷ 65%₱18,615.89
Fringe Benefit TaxFBT rate — borne by the company× 35%₱6,515.56
The employee receives the whole ₱15,000.00 (₱12,100.33 taxable fringe + ₱2,899.67 de minimis). The company also pays ₱6,515.56 of tax.

Why Companies Use Fringe Benefit Tax

A title allowance paid to managers and supervisors is a fringe benefit. Philippine tax law (Section 33 of the Tax Code and Revenue Regulations 3-98) taxes it once, as a final tax the company pays on the employee's behalf, instead of adding it to the employee's taxable pay. That one rule is what makes the arrangement attractive to both sides.

For the Employee

  • The whole allowance is received. Nothing is withheld from it: a GRADE-A employee gets ₱15,000.00 in full.
  • It never enters their taxable income. The taxable fringe is left out of payroll withholding, the year-end true-up, the alphalist and the BIR 2316, so it cannot push the employee into a higher bracket or create a tax due in December. The de minimis part is reported on the 2316 as exempt.
  • No further tax is owed on it, because the tax the company pays is final.

For the Company

  • A known, fixed cost. The tax per grade is shown in advance on the Grades tab, so the cost of a promotion or a new grade is known before it is approved.
  • Deductible. Both the allowance and the tax paid on it are business expenses for the company.
  • De minimis lowers it. Every peso of exempt de minimis removes about 54 centavos of tax.
  • One simple filing. The tax is booked by each monthly run and filed once a quarter on the BIR 1603Q, separately from payroll withholding.
The same ₱15,000.00 allowance, two ways
Paid asEmployee receivesTaxWho pays the taxCost to the company
Ordinary taxable pay, 35% bracket₱10,764.88₱4,235.12 withheldThe employee₱15,000.00
Fringe benefit with FBT₱15,000.00₱6,515.56 FBTThe company₱21,515.56
In both rows the ₱2,899.67 de minimis is exempt and the tax falls on the remaining ₱12,100.33. FBT is not a discount: its 65% gross-up matches the 35% top bracket, so the tax is what the company would pay if it grossed up the allowance itself. What changes is who carries it — the company, so the employee keeps the full allowance.
Info

FBT applies to fringe benefits of managerial and supervisory employees. The same benefits given to rank-and-file employees are ordinary compensation and go through payroll. Check with your tax adviser which allowances your policy treats as fringe benefits.

What the Employee Sees and What the Company Sees

The same GRADE-A month looks very different from each side. The employee sees only the money they receive; the company sees that money plus the tax it bears.

Line of the runAmountOn the employee's payslipIn the company's books
Title allowance (taxable fringe)₱12,100.33Shown, paid outAllowance expense
Title allowance (de minimis)₱2,899.67Shown, paid outAllowance expense
Fringe benefit tax₱6,515.56Not shownFBT expense, owed to the BIR until the 1603Q is filed
Total₱15,000.00 received₱21,515.56 cost

The Employee's View

A released run appears on the payslip of the cutoff that contains its pay date, under Other payments this period. The employee opens it from the payslip card on their Dashboard. Payroll staff see the very same payslip in Payslip Center, which is where this screenshot was taken.

A GRADE-A employee's payslip: the fringe benefit is listed, the tax is not
  1. 1Net pay of the cutoff — the fringe benefit is not added to it
  2. 2Taxable fringe: ₱12,100.33
  3. 3De minimis: ₱2,899.67
  4. 4Paid outside payroll; not in gross pay, deductions or net pay
What a GRADE-A employee receives for the month
Title allowance (taxable fringe)₱12,100.33
Title allowance (de minimis)+₱2,899.67
Tax withheld from the employeeThe FBT line is not on the payslip−₱0.00
Employee receives=₱15,000.00
The amounts are paid by the fringe benefit run, not by payroll, so the cutoff's gross pay, deductions and net pay stay exactly as they were.

The Company's View

On the run in Disbursements, each employee has three lines. The first two are paid out through the bank file or cash list; the third is marked Accrual only: it is never paid to anyone, it only goes to the journal as the company's tax expense and its debt to the BIR.

The same month on the run: paid lines plus the accrual-only tax
  1. 1Paid to employees (₱38,000.00 for the three example employees)
  2. 2Accrual only: the tax the company bears (₱15,777.46)
  3. 3Journal (ACC06) — the only file that carries the tax lines
  4. 4GRADE-A taxable fringe and de minimis — paid
  5. 5GRADE-A tax — Accrual only, not paid out
What a GRADE-A employee costs the company for the month
Allowance paid to the employeeDr Allowance expense / Cr Allowance payable — paid through the bank file or cash list₱15,000.00
Fringe benefit taxDr FBT expense / Cr FBT payable — remitted with the quarter's 1603Q+₱6,515.56
Cost to the company=₱21,515.56
For the three example employees the month costs ₱38,000.00 paid out plus ₱15,777.46 of tax — the same ₱15,777.46 that the 1603Q reports for the month.
Every setting, and what it does to the tax
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Go to Manpower → Payroll Setup → Fringe Benefit. The page has three tabs: Setup, Grades and Assignments. The Tutorial button at the top, and in the grade and assignment dialogs, opens this guide.

Ready to run?
Counts how many of the six steps are in place: the tax rate, the de minimis total, the FBT accounts, the run type, active grades and employee assignments. A Fringe benefit run needs all six. A green tick means done; an amber mark says what is missing.
Open Grades / Open Assignments
Jump to the tab that still needs work.
Example line
The calculation above, for your first active grade, with the numbers currently on screen — it changes as you type, before you save.
What you see with the example setup
Checklist6 of 6 steps in place
Example lineGRADE-A: ₱15,000.00 − ₱2,899.67 = ₱12,100.33 ÷ 65% = ₱18,615.89 × 35% = ₱6,515.56
The Setup tab: the checklist and the live example
  1. 1Tutorial — opens this guide in a new tab
  2. 2Each step is ticked once it is in place
  3. 3Open Grades / Open Assignments
  4. 4Live example: allowance − de minimis = taxable ÷ divisor × rate = FBT

Paying It Through Payroll Instead

A grade can be paid by the regular payroll instead of a Fringe benefit run: set its Paid through to Payroll cutoff (in the grade dialog), and pick which cutoff of the month carries it on the Setup tab. The figures do not change — the same calculation runs, only the place it is paid moves.

Paid throughDisbursement run (default) · Payroll cutoff
Per grade. An employee's month follows their latest grade in that month, and is paid one way only: a run skips employees whose payroll cutoff already carried the month, and the payroll cutoff skips employees a live run already paid that month.
Payroll cutoff (Paid on)First cutoff of the month · Last cutoff of the month (default)
On the Setup tab, shown once a grade is paid through payroll. On a semi-monthly or weekly payroll the whole month is paid on this one cutoff; absences are counted over one payroll month ending with it. A monthly payroll always uses its one cutoff.
Paid through is set per grade, in the grade dialog
  1. 1Paid through: Payroll cutoff
  2. 2What the payroll does with it
  3. 3The table shows where each grade is paid
The Payroll cutoff card appears once a grade is paid through payroll
  1. 1Also the payroll journal default for the FBT pair
  2. 2Which cutoff of the month carries it

What the payroll team sees on the cutoff that carries the month (Payroll Center → the cutoff → the employee):

The cutoff that carries the month: net pay includes the taxable fringe, gross pay does not
  1. 1Net pay ₱16,750.00 = gross ₱4,649.67 + taxable fringe ₱12,100.33
  2. 2Gross pay holds the ₱2,899.67 de minimis, not the taxable fringe
The same month in the payroll statement — the company tax is shown to payroll staff, never deducted
  1. 1Total allowance includes the de minimis part
  2. 2De minimis ₱2,899.67
  3. 3Taxable fringe ₱12,100.33, added to net pay
  4. 4FBT ₱6,515.56, borne by the company
The same GRADE-A month, paid through the payroll cutoff
De minimis part — an allowance in the earningsInside gross pay, exempt (BIR 2316 de minimis)₱2,899.67
Taxable fringe — added to net payAfter deductions; outside gross pay, taxable income and contribution bases+₱12,100.33
Added to the employee's pay=₱15,000.00
Fringe benefit tax — company onlyPayroll journal: Dr Fringe benefit tax (employer expense) / Cr Fringe benefit tax payable; 1603Q from the posted cutoff₱6,515.56
The payslip shows the de minimis among the allowances and the taxable fringe under Fringe benefit added to net pay; the tax is not shown and never deducted.
Where each part goes, by Paid through
PartDisbursement runPayroll cutoff
₱12,100.33 taxable fringeRun line, payslip “Other payments this period”Net pay, payslip “Fringe benefit added to net pay”
₱2,899.67 de minimisRun line (exempt)Allowance inside gross pay (exempt)
₱6,515.56 FBTAccrual-only run line → journal (ACC06)Payroll journal FBT expense / payable pair
BIR 1603Q monthRun pay dateCutoff pay date (POSTED cutoffs)

Common Questions

Why can I not compute a Fringe benefit run?

Both FBT expense account code and FBT payable account code must be set on the Setup tab, and the Fringe benefit run type must exist. The checklist tells you which is missing.

Why can I not delete a grade?

Employees still hold it. Move them to another grade on the Assignments tab, or switch the grade off (Active) to stop new assignments.

Why is Assign employee disabled?

There is no active grade yet. Create at least one on the Grades tab first.

Why does Save setup stay disabled?

A field is invalid. Look for the highlighted field: a rate outside 0 to 100, a divisor outside 1 to 100, or grace days outside 0 to 31.

An employee changes grade mid-year. What do I do?

Set an end date on the current assignment and add a new assignment starting after it. Months already computed are not rewritten. In the month of the change each grade is paid for its own days, the hardship and extra allowance once, and one de minimis is shared.

Does the tax reduce what the employee receives?

No. The employee receives the whole allowance (₱15,000.00 for GRADE-A). The tax (₱6,515.56) is borne by the company and booked to the FBT accounts. See What the Employee Sees and What the Company Sees.

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