NET TAXABLE ESTATE 4.

Those purchased with exclusive money of life/husband

Gross Estate Pxxx PROCEEDS OF LIFE INSURANCE:

Less: Deductions Pxxx
Net Taxable Estate Pxxx 1. Before Marriage:
 Premiums were fully paid by decedent spouse – exclusive (d)
TAX RATES (PRE-TRAIN)  Premiums were fully paid by surviving spouse – exclusive (s)
 Premiums were paid partly with exclusive and conjugal funds – conjugal
0 to 200,000 = Exempt 2. During Marriage – conjugal
200,000 to 500,000 = 0 + 5% of the excess over 200,000
500,000 to 2,000,000 = 15,000 + 8% of the excess over 500,000 PRO-FORMA COMPUTATION:
2,000,000 to 5,000,000 = 135,000 + 11% of the excess over 2,000,000
5,000,000 to 10,000,000 = 465,000 + 15% of the excess over 5,000,000 Exclusive Conjugal Total
10,000,000 to above = 1,215,000 + 20% of the excess over 10,000,000 Conjugal Properties
Family Home Pxxx
TAX RATES (TRAIN) Real Properties Pxxx Pxxx
Exclusive Properties Pxxx Pxxx Pxxx
Fixed 6% Gross Estate Pxxx Pxxx Pxxx
Less: Deductions
CONJUGAL PARTNERSHIP OF GAINS Ordinary Deductions
- shall govern marriages contracted before August 3, 1988 in the absence of Conjugal Deductions
marriage settlements or when the regime agreed upon is void. Funeral Expenses Pxxx Pxxx
Other Deductions Pxxx Pxxx
CONJUGAL PARTNERSHIP PROPERTIES:
Total Conjugal Deductions Pxxx Pxxx
1. Those acquired by onerous title during marriage at the expense of common fund Net Conjugal Estate Pxxx
2. Those obtained from labor, industry, work or profession of either or both of spouses Exclusive Deductions Pxxx
3. The fruits due or received during marriage from common or exclusive property Special Deductions
Family Home Pxxx
4. Share of either spouse in the hidden treasure which the law awards to finder/owner
Standard Deduction Pxxx
of property
Medical Expenses Pxxx
5. Those acquired through occupation such as fishing or hunting Total Deductions Pxxx
6. Livestock existing upon dissolution of partnership Net Estate Pxxx
7. Those acquired by chance, such as winnings from gambling or betting. However, Less: ½ Share of Surviving Spouse
losses shall be borne by loser-spouse Gross Conjugal Estate Pxxx
Conjugal Deductions (xxx)
EXCLUSIVE PROPERTIES OF EACH SPOUSE:
Net Conjugal Estate Pxxx
1. Those brought to the marriage as his or her own Net Conjugal Estate / 2 Pxxx
2. Those acquired during marriage by gratuitous title Net Taxable Estate Pxxx
3. Those acquired by right of redemption, barter, or exchange with property belonging
to only one of spouses
ABSOLUTE COMMUNITY OF PROPERTY PRO-FORMA COMPUTATION:
- shall govern marriages contracted on or after August 3, 1998 in the absence of
Exclusive Communal Total
marriage settlement or when regime agreed upon is void.
Community Properties
COMMUNAL PROPERTIES: Family Home Pxxx
Real Properties Pxxx Pxxx
1. Properties owned by spouses at the time of celebration of marriage or acquired Exclusive Properties Pxxx Pxxx Pxxx
thereafter Gross Estate Pxxx Pxxx Pxxx
2. Properties acquired during the marriage, unless it is proved that it is one of those Less: Deductions
excluded thereon Ordinary Deductions
Community Deductions
EXCLUSIVE PROPERTIES OF EACH SPOUSE: Funeral Expenses Pxxx Pxxx
Other Deductions Pxxx Pxxx
1. Property acquired during marriage by gratuitous title and the fruits as well as the
Total Community Pxxx Pxxx
income thereof, unless expressly provided by donor, testator or grantor that they
Deductions
shall form part of communal property
Net Community Estate Pxxx
2. Property for personal and exclusive use of either spouse; however, jewelry shall Exclusive Deductions Pxxx
form part of communal property Special Deductions
3. Property acquired before marriage by either spouse who has legitimate descedants Family Home Pxxx
by former marriage and the fruits as well as the income, if any Standard Deduction Pxxx
Medical Expenses Pxxx
PROCEEDS OF LIFE INSURANCE:
Total Deductions Pxxx
1. Before Marriage: Net Estate Pxxx
 Premiums were fully paid by decedent spouse – exclusive (d) Less: ½ Share of Surviving Spouse
Gross Community Estate Pxxx
 Premiums were fully paid by surviving spouse – exclusive (s)
Community Deductions (xxx)
 Premiums were paid partly with exclusive and conjugal funds – conjugal Net Community Estate Pxxx
2. During Marriage – conjugal Net Community Estate / 2 Pxxx
Net Taxable Estate Pxxx

TAX CREDIT FOR FOREIGN ESTATE TAX

- refers to the taxpayer’s right to deduct from the tax due the amount of tax he/it
was paid to a foreign country subject to limitations. Non-resident alien decedents are not
entitled to tax credit.

PHILIPPINE ESTATE TAX DUE

Estate Tax Payable xxx

Less: TCFET or Tax Actually Paid (whichever is xxx*
lower)
 Phil. Estate Tax Due xxx NOTICE OF DEATH

 Executor/administrator/legal heirs shall send a written notice of death to the

*LIMITATIONS ON CREDIT FOR FOREIGN ESTATE TAXES
1. For estate taxes paid to one foreign country
Entire Net Estate x Estate Tax Rate = Phil. Estate Tax
Commissioner within 2 months after decedent’s death or within the period after
qualifying as executor/administrator
 Also applies to exempt transfers whenever the gross estate exceeds P20,000
 TRAIN law repeals the notice of death

ESTATE TAX RETURNS

Net Estate per Foreign
Country x Phil. Estate Tax = Allowed Tax Credit  Return must be filed on the following cases:
Entire Net Estate 1. In all cases of transfers subject to tax
2. Exempt transfers (value of GE exceeds P200k)
Tax Credit = whichever is lower between Allowed Tax Credit and Tax Actually Paid 3. Transfers regardless of value of GE where the estate consists of
registered/registrable property which a clearance form from BIR is required as a
2. For estate taxes paid to two or more foreign countries prerequisite for the transfer of ownership
 Return shall contain the following:
Entire Net Estate x Estate Tax Rate = Phil. Estate Tax 1. Value of GE at the time of death
2. Deductions allowed
Limitation 1: 3. Other information that may be necessary
 If return shows that the value of GE exceeds P2,000,000 (TRAIN: exceeds
Net Estate per Foreign P5,000,000), a statement duly certified by CPA containing the ff. is required:
Country x Phil. Estate Tax = Allowed Tax Credit 1. Itemized assets of decedent
Entire Net Estate 2. Itemized deductions
3. Amount of tax due whether paid or still due and outstanding
Tax Credit = whichever is lower between Allowed Tax Credit and Tax Actually Paid
TIME FOR FILING TAX RETURNS
Limitation 2:
 PRE-TRAIN: estate tax return shall be filed within 6 months from decedent’s death
Net Estate all Foreign Countries  TRAIN: estate tax return shall be filed within 1 year from decedent’s death
x Phil. Estate Tax = Allowed Tax Credit
Entire Net Estate EXTENSION OF TIME TO FILE ESTATE TAX RETURNS

Tax Credit = whichever is lower between Allowed Tax Credit and Taxes Actually  Not exceeding 30 days
Paid  Application for extension must be filed with the RDO where the estate is required to
secure its TIN and file tax returns of estate
Tax Credit = whichever is lower between Limitation 1 and Limitation 2
PLACE OF FILING TGE RETURN AND PAYMENT OF TAX

ADMINISTRATIVE PROVISIONS (ESTATE)

  Resident Citizen – heirs/administrator/executor shall register the estate where the
decedent was domiciled at the time of death and shall file the estate tax return and
pay the corresponding tax with the:
1. AAB
2. RCO
3. Treasurer of the City or Municipality
 Non-Resident Citizen
1. With an executor/administrator in PH – ETR shall be files where such
executor/administrator is registered or is domiciled (if not yet registered)
2. With no executor/administrator in PH – ETR shall be filed under jurisdiction of
RDO 39-South Quezon City
ELECTRONIC BUREAU OF INTERAL REVENUE FORMS (eBIRForms)
 Prescribed form in preparation and filing of all tax returns by non-electronic filing or
payment system (non-eFPS)
 Non-eFPS filers may opt to submit tax returns manually using eBIRForms offline
package at their respective RDO or electronically through the use of online
eBIRForms systems
TIME FOR PAYMENT OF ESTATE TAX
- shall be paid at the time the return is filed by executor/administrator/heirs
EXTENSION OF TIME TO PAY ESTATE TAX
 Estate is settled through the courts: not to exceed 5 years
 Estate is settled extrajudicially: not to exceed 2 years
 Application for extension must be filed with the RDO where the estate is required to
secure its TIN and file tax returns of estate, shall be approved by Commissioner
 Any amount paid after statutory due date of tax, but within the extension period,
shall be subject to interest but not to surcharge
 No extension: request for extension by reason of negligence, intentional disregard
of rules and regulations or fraud
PAYMENT OF ESTATE TAX BY INSTALLMENT
 Clearance (Certificated Authorizing Registration) shall be released only with respect
to property the corresponding/computed tax on which has been paid
 Amount paid after statutory due date: penalty
 Payment after statutory due date is approved by Commissioner: interest only
 TRAIN: payment by installment shall be allowed within 2 years from statutory date
for its payment without civil penalty or interest
LIABILITY FOR PAYMENT
 Estate tax shall be paid by executor/administrator before delivery of distributive
share in inheritance to any heir/beneficiary
 Where there are 2 or more executors, all of them are severally liable
 Executor/administrator – primary liable; Heir/beneficiary – subsidiary liable (but
liability shall not exceed the value of his share)
RESPOSIBILITIES OF RDO AND DOCUMENT PROCESSING DIVISION (DPD)
 Exempt estate tax returns – shall be received by RDO; estate tax returns with
payment – shall be received by RCO; the RCO/RDO shall not receive those not
properly accomplished
 Within 5 days of discovery of any missing/incomplete information for tax returns,
the DPD head shall transmit a list of ETR with missing/incomplete information
 Within 5 days from receipt of list, RDO shall view and print the returns and shall
notify the heir (and the likes) of such fact and require amendment of return within 5
days from receipt of written notice
DUTIES OF CERTAIN PERSONS
 No judge shall authorize executor/administrator to deliver distributive share to any
party interested, unless a certification from Commissioner that the estate tax has
been paid is shown.
 Register of Deeds shall not register in the Registry of Property any document
transferring real property or real rights, unless a certification from Commissioner
that the estate tax has been paid is shown.
 Any lawyer , notary public, or government officer who intervenes in the preparation
or acknowledgement of documents regarding partition/disposal of donation, shall
furnish Commissioner (and the like) of the place where he may have his principal
office, with copies of documents
  A debtor of deceased shall not pay his debts to heirs (and the like), unless a  Formalities – donation of movable may be made orally or in writing (however, if it
certification from Commissioner that the estate tax has been paid is shown, but he exceeds P5,000, it shall be made in writing); donation of immovable must be made
may pay his debt w/out certification if the credit is included in inventory of estate of in public instrument
deceased
DONOR’S TAX OR GIFT TAX
 Any person shall not transfer to any new owner in the books of any corporation,
- tax imposed on the gratuitous transfer of property between 2 or more persons
unless a certification from Commissioner that the estate tax has been paid is shown
who are living at the time of transfer; an excise (privilege) tax; imposed on the privilege of
 A bank having knowledge of death of depositor who maintained a bank deposit shall
donor to make gift
not allow any withdrawal from said deposit, unless a certification from
Commissioner that the estate tax has been paid is shown. However, in the absence
of such certification and upon authorization by Commissioner, the
administrator/executor/heir may withdraw an amount not exceeding P20,000.
GROSS GIFT
BASIC CONCEPTS OF DONATION
RC, NRC, RA DONORS (wherever situated)
GIFT
- intentional transfer of property from transferor out of generosity  Real or immovable property
 Tangible personal property
DONATION  Intangible personal property
- act of liberality whereby a person (donor) disposes gratuitously of a thing or right  Personal property classified as capital asset (FMV > Value of consideration)
in favor of another (done), who accepts it Gift Gain
- does not include donation of personal service or donation of a right to use FMV Pxxx Selling Price Pxxx
property Less: Consideration Pxxx Less: Cost Pxxx
Deemed Gift Pxxx Gain Pxxx
DONATION INTER VIVOS vs. DONATION MORTIS CAUSA

 Donation Inter Vivos – made between living persons and which is perfected from NRA DONORS (only his property located in Ph)
the moment the donor knows of the acceptance of the done
 Donation Mortis Causa – take effect upon the death of donor or partake of nature of NR FOREIGN CORPORATION DONORS (only his property located in Ph)
testamentary provision VALUATION
ELEMENTS OF DONATION
 Personal Property – FMV at the time of gift
 Consent – agreement between the parties.  Real Property – whichever is higher between FMV as determined by Commissioner
 Object – present property of the donor, or part thereof, provided he reserves, in full and FMV as shown in the schedule of values fixed by Provincial or City Assessors
ownership or in usufruct. Donations cannot comprehend future property. DEDUCTIONS FROM GROSS GIFT
 Cause – may also be on account of donee’s merits or services not constituting a
demandable debt or burden which is less than value of thing given; donative intent GIFTS MADE BY RESIDENT OR CITIZEN DONOR
is not essential at all
  Dowries or gifts made on account of marriage and before its celebration or within PHILIPPINE DONOR’S TAX DUE
one year thereafter by parents to each of their legitimate or adopted children to the
Donor’s Tax Payable xxx
extent of first P10,000 (TRAIN: dowries are no longer exempt from donor’s tax)
Less: TCFDT or Tax Actually Paid (whichever is lower) xxx*
 Gifts made to or for use of National Government or any entity which is not Phil. Donor’s Tax Due xxx
conducted for profit or any political subdivision of said Government
 Gifts in favor of educational/charitable organizations, provided that not more than
30% of said gifts shall be used by such done for administrative purposes *LIMITATIONS ON CREDIT FOR FOREIGN ESTATE TAXES
 Encumbrance on the property donated, if assumed by donee (e.g. mortgage) 1. For donor’s taxes paid to one foreign country
 Those specifically provided by donor as diminution of property donated (e.g.
donate) Entire Net Gift x Donor’s Tax Rate = Phil. Donor’s Tax
GIFTS MADE BY NRA DONOR
- may also deduct from his taxable gross gift all those enumerated above except Net Gift per Foreign Country
x Phil. Donor’s Tax = Allowed Tax Credit
Entire Net Gift
dowries

NET GIFT AND DONOR’S TAX Tax Credit = whichever is lower between Allowed Tax Credit and Tax Actually Paid

RATE OF DONOR’S TAX (PRE-TRAIN) 2. For donor’s taxes paid to two or more foreign countries
 Donee is not a stranger
Entire Net Gift x Donor’s Tax Rate = Phil. Donor’s Tax
0 to 100,000 = Exempt
100,000 to 200,000 = 0 + 2% of the excess over 100,000 Limitation 1:
200,000 to 500,000 = 2,000 + 4% of the excess over 200,000
500,000 to 1,000,000 = 14,000 + 6% of the excess over 500,000 Net Gift per Foreign Country
1,000,000 to 3,000,000 = 44,000 + 8% of the excess over 1,000,000 x Phil. Donor’s Tax = Allowed Tax Credit
Entire Net Gift
3,000,000 to 5,000,000 = 204,000 + 10% of the excess over 3,000,000
5,000,000 to 10,000,000 = 404,000 + 12% of the excess over 5,000,000
Tax Credit = whichever is lower between Allowed Tax Credit and Tax Actually Paid
10,000,000 to above = 1,004,000 + 15% of the excess over 10,000,000
Limitation 2:
 Donee is stranger – fixed 30%
 Any contribution in cash or in kind to any candidate, political party or coalition of
Net Gift all Foreign Countries Phil. Donor’s
parties for campaign purposes – not subject to donor’s tax x = Allowed Tax Credit
Entire Net Gift Tax
RATE OF DONOR’S TAX (TRAIN)
Tax Credit = whichever is lower between Allowed Tax Credit and Taxes Actually
Donor’s tax rate is now at 6% uniform rate in excess of P250,000 exempt gift Paid
FOREIGN DONOR’S TAX CREDIT. FILING AND PAYMENT OF DONOR’S TAX

FOREIGN DONOR’S TAX CREDIT Tax Credit = whichever is lower between Limitation 1 and Limitation 2
FILING AND PAYMENT OF DONOR’S TAX

 Same with the filing and payment of estate tax

 Notice of Donation by donor engaged in business
In order to be exempt from donor’s tax and to claim full deduction of donation
given to qualified-donee, the donor engaged in business shall give notice on every
donation worth at least P50,000 to RDO within 30 days after receipt of Certificate of
Donation, which shall be attached to the said Notice of Donation, stating that not
more than 30% of said donation/gift shall be used for administrative purposes.