Question

Which of the following is true about fringe benefits?

Which of the following is true about fringe benefits?

• They represent additional compensation given for services performed
• They are only available for employees.
• The amount of the fringe benefit is never subject to income tax.
• They represent additional cash paid directly to employees.

Answer 1

Correct Answer:

Option(2) or fringe benefits are only available for employees is correct answer because the fringe benefits are the befits given to employees apart from their salary or wages such as medical insurance,Company Car,educational allowance, housing allowance and so on. So they are given to only the employees of the organizations.

Incorrect answers:

Option(1) is incorrect answer because fringe benefits are not the additional compensation given for services performed.But they are paid outside the compensations such as medical insurance, educational allowance, housing allowance and so on.

Option(3) is incorrect answer because certain fringe benefits are subject to income tax.Generally 30% tax rate is charged on fringe benefits.

Option(4) is incorrect answer because it does not include the additional cash paid to directly to employees.These fringe benefits are paid to employees in non cash form.

So correct answer is option(2)