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The document discusses key aspects of donor's tax in the Philippines, including:
1) Donor's tax applies to gifts or donations between individuals and entities, regardless of whether the transfer is direct or indirect, in trust, or involves real or personal property.
2) Gifts are subject to donor's tax based on the net economic benefit received by the donee, after deducting any liabilities assumed.
3) For a resident donor, all property within and outside the Philippines is subject to donor's tax, while for a non-resident, only Philippine property is taxed.
4) Several types of gifts are exempt from donor's tax, such as moderate gifts between spouses and donations
The document discusses key aspects of donor's tax in the Philippines, including:
1) Donor's tax applies to gifts or donations between individuals and entities, regardless of whether the transfer is direct or indirect, in trust, or involves real or personal property.
2) Gifts are subject to donor's tax based on the net economic benefit received by the donee, after deducting any liabilities assumed.
3) For a resident donor, all property within and outside the Philippines is subject to donor's tax, while for a non-resident, only Philippine property is taxed.
4) Several types of gifts are exempt from donor's tax, such as moderate gifts between spouses and donations
The document discusses key aspects of donor's tax in the Philippines, including:
1) Donor's tax applies to gifts or donations between individuals and entities, regardless of whether the transfer is direct or indirect, in trust, or involves real or personal property.
2) Gifts are subject to donor's tax based on the net economic benefit received by the donee, after deducting any liabilities assumed.
3) For a resident donor, all property within and outside the Philippines is subject to donor's tax, while for a non-resident, only Philippine property is taxed.
4) Several types of gifts are exempt from donor's tax, such as moderate gifts between spouses and donations
Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer. It shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect and whether the property is real or personal, tangible or intangible. Mean in equal money or in money’s worth of some goods or services capable of being evaluated in money For love and affection, or for services rendered It has no economic value Gifts may be real or personal properties. Personal may be tangible, intangible or mixed. Inclusions: • Citizens or residents: all properties within and without • Non-resident alien: - all real and tangible properties within, and - intangible personal properties, unless there is reciprocity. The net economic benefit from the transfer that accrues to the donee. Accordingly, if a mortgaged property is transferred as a gift, but imposing upon the donee the obligation to pay the mortgage liability, then the net gift is measured by deducting from the FMV of the property the amount of mortgage assumed. A gift occurs when the donor surrenders CONTROL over the property. If the donor retains an unlimited power to revoke the gift, it is clear that no gift has occurred.
Referto Section 24(D) and Section
27(D)(5) of the NIRC). DONOR- the person who gratuitously disposes of his property or right DONEE- the person who receives and accepts the property or right being donated. DONATION MORTIS CAUSA- one which takes effect upon the death of the donor. This is similar to a transfer in contemplation of death, and in the nature of a testamentary disposition which is subject to estate tax, not to gift tax. DONATION INTER VIVOS- gifts made and intended by the donor to take effect during his lifetime and therefore subject to donor’s tax, not to estate tax. Ms. Tan donated her real property to Mr. Lim which will take effect upon the death of Ms. Tan. Is this subject to Estate tax or Donor’s tax? Sincethe transfer will take effect upon the death of Ms. Tan then this serves as a testamentary disposition and therefore, subject to ESTATE TAX. Mr. Lim gave a diamond necklace as a gift to Ms. Tan who immediately accepted the gift. Since the donation took effect while the donor and donee are still alive, this is subject to donor’s tax. 1. Before September 1, 1969 - Only donation made by individual is subject to donor's tax.
2. On or after September 1, 1969
(RA 6110) Donation made by all person, whether natural or juridical, is subject to donor's tax. DONATION OF PERSONAL PROPERTY may be made orally or in writing, except when the value of the donated property exceeds P5,000, in which case, the donation and the acceptance must be in writing. DONATION OF REAL PROPERTY must be in a public document to be valid, specifying therein the property donated and the value of the charges which the donee must satisfy. The acceptance by the donee may be made in the same deed of donation or in a separate instrument, and done during the lifetime of the donor. Capacity of the Donor- Donative intent or the donor’s intent to make a donation Delivery of the gift, actual or constructive, of the subject matter of the donation Acceptance of the gift by the donee. Refers to the condition and legal capacity of the donor to enter a valid contract Donor – must be in capacity Donee - need not be capacitated to receive the gift to make the donation valid provided he must have a duly authorized representative. Jack Taylor, a capacitated philantropist, donated 1M in behalf of a mentally retarded child. The child is represented by his parents to accept the donation. Is the donation valid? Yesbecause donor is capacitated and the acceptance is made by the authorized representative. Refers to the proper declaration of the legal owner of a property or right to transfer ownership to another without consideration Such intent followed by a donative act is essential to constitute a gift especially in cases of direct donation. Verbally – where the value of the personal property (movable) donated is P5,000 or less, the donation can be made orally. An oral donation requires simultaneous delivery of the thing or of the document representing the right donated In Writing – value of personal (movable) property exceeds P5,000; otherwise donation is void. In PUBLIC INSTRUMENT – immovable property donation to be valid it must be made in public document (deed of donation) specifying therein the property donated DONATIVE INTENT is required only in a direct gift But if a gift is indirect by way of sale, exchange or other transfer of property, donative intent is not necessary Object of donation : real property, personal property or even rights Delivery of the object : constructive or actual The delivery made be made to a trustee The completion of the gift = requires delivery of the subject matter of the gift; If physical delivery is impossible, delivery of the instrument of assignment or deed The donee must accept the donation personally or through an authorized person with a special power for that purpose Mr. Tan donated the following properties for the year 2010: Jewelry as a birthday gift to his mother-in-law P 5,000 Land donated to a domestic corp. 100,000 Car given to his son as a wedding gift 200,000 1. WHO ARE THE DONEES? 2. STATE THE RULES for each donation Jewelry amounting to P 5,000. The gift can be orally donated with simultaneous delivery of the donee. Car given to his son exceeds P5,000. Hence, should be in writing to be a valid donation. Land with a value of P100,000 should be in writing Donation of real property should always be in writing , regardless of value, to be valid. The donor’s tax applies to both natural and juridical persons. Every donation between husband and wife during the marriage is declared void by law, except donation mortis causa and moderate gifts which the spouses, on the occasion of any family affair, may give to each other. Gifts coming from the conjugal property made by both spouses are taxable, on half to each donor spouse. Where the property is transferred for less than adequate consideration in money or money’s worth, the amount by which the value of the property exceeds the amount of consideration shall be deemed a gift for purposes of the donor’s tax. The gift tax will apply regardless of whether the transfer is in trust or not, direct or indirect, real or personal property is involved, tangible or intangible. For a resident donor- real properties, tangible and intangible personal properties wherever located. For a non resident donor- real properties, tangible or intangible properties located in the Philippines. 1. Real, intangible and tangible personal properties or mixed, located in the Philippines and outside of the Philippines, depending on the kind of donor. 2. Franchise which must be exercised in the Philippines 3. Shares, obligations or bonds issued by any corporation or partnership, organized in the Philippines in accordance with our laws; 4. Shares, obligations or bonds issued by any foreign corporations, 85% of which is located in the Philippines 5. Shares, obligations or bonds issued by any foreign corporation if such shares, obligations or bonds have acquired a business situs in the Philippines 6. Shares or rights in any partnership, business or industry established in the Philippines. 1. Dowries or gifts of parents on account of marriage made before the marriage or within one year thereafter, in favor of the legitimate, recognized natural or legally adopted children to the extent of the first P10,000. 2. Gifts made to or for the use of the national government or any entity created by any of its agencies, which is not conducted for profit or to any political subdivision of the said government. 3. Gifts in favor of an educational and/or charitable religious, cultural or social welfare corporation, institution, accredited NGO’s xxx, provided that not more than 30% of said gifts shall be used for administration purposes by such donee. 4. Those specifically provided by the donor as a condition of the donation which will diminish the value of the property received by the donee. 5. Encumbrances on the property donated if assumed by the donee in the deed of donation 6. Exempt donation under special laws. 1. Gifts, contributions, donations to social welfare, cultural, or charitable institutions, no part of the net income of which inures to the benefit of any individual, if not more than 30% of said donation shall be used for administrative purposes. (Presidential Decree 507) 2. Gifts, contributions, donations to the government for purposes of scientific, engineering and technological research, invention and development 3. Gifts, contribution, donations to any international civic organization for religious or charitable purposes, provided that said donations shall be for its use, or to be distributed for free and not for sale or barter; 4. GCD to the Aquaculture Department of the Southeast Asian Fisheries Development Center of the Philippines, Internationl Rice Research Institute. 5. GCD to the IBP, Phil-American Cultural Foundation, Phil. Investors Commission, Task Force on Human Settlement on the donation of equipment, materials and services. Exemptions are not to be treated as exclusions but they partake as deductions and therefore, deductible from gross gifts in order to arrive at taxable net gifts. 1. On or before December 31, 1972: a) Donor's and donee's gift taxes were imposed based on graduated rates. b) Gifts made during previous year or years are collated to the present gift and the gift tax computed on the total gift.
2. January 1, 1973 to January 15, 1981 (PD 69)
a) Donor's tax was imposed on graduated rates. b) Gifts made during the previous year or years are computed separately. c) Donor's tax computed on the total gifts made during each calendar year. d) Collation of gifts are made only on gifts made during the same calendar year. 3. January 16, 1981 to July 27, 1992 (PD 1773) a) Tax payable by the donor in favor of relatives are computed based on the graduated rates. b) Tax payable by the donor in favor of stranger is computed at 20% or based on graduated rates, whichever is higher. c) Gifts made during the same calendar year are collated and the donor's tax computed on the total gifts during the calendar year.
4. July 28, 1992 to December 31, 1997 (RA 7499)
a) Tax payable by the donor on gifts made in favor of relatives is computed based on graduated rates. b) Tax payable by the donor on gifts made in favor of strangers is computed at 10% of the net gifts. 5. January 1, 1998 to present (RA 8424) a) Tax payable by the donor on gifts made in favor of relatives is computed based on graduated rates. b) Tax payable by the donor on gifts made in favor of strangers is computed at 30% of the net gifts.
6. Relatives for donor's tax purposes:
a) Spouse, ancestor and lineal decedent b) Brother, sister (whether by whole or half blood) c) Relatives by consanguinity in the collateral lines within the fourth degree of relationship. a) Donations to Relatives (Graduated Table) THE DONOR’S TAX OF EXCESS
SHALL BE PLUS OVER
Exempt
0 2% P100,000
2,000 4% 200,000
14,000 6% 500,000
44,000 8% 1,000,000
204,000 10% 3,000,000
404,000 12% 5,000,000
1,004,000 15% 10,000,000
b) Donations to Stranger - 30%
For purposes of the donor's tax, a "stranger" is a
person who is not a: (1) Brother, sister (whether by whole or half blood), spouse, ancestor, and lineal descendant; or (2) Relative by consanguinity in the collateral line within the fourth degree of relationship. A legally adopted child is entitled to all the rights and obligations provided by law to legitimate children, and therefore, donation to him shall not be considered as donation made to stranger. Donation made between business organizations and those made between an individual and a business organization shall be considered as donation made to a stranger. Any contribution in cash or in kind to any candidate, political party or coalition of parties for campaign purposes, shall be governed by the Election Code, as amended. The application of the rates as provided above is imposed on donations made beginning January 1, 1998, which is the effectivity date of Republic Act No. 8424, otherwise known as “ The Tax Reform Act of 1997”. 1. Requirements (State the following information/data): a) Each gift made during the calendar year which is to be included in computing net gifts; b) Deductions claimed and allowable c) Previous net gifts during the same calendar year d) Name of donee and address e) Relationship of the donor to the donee; and f) Other pertinent information as the Commissioner may require 2. Time of filing: a) Before December 31, 1972: 1) On or before March 1 following the close of the calendar year. b) January 1, 1973 to December 31, 1997 1) Within thirty (30) days after each donation. 2) Extension not exceeding thirty (30) days maybe granted. c) January 1, 1998 to present 1) Within thirty (30) days after each donation- No Extension
3. Place of filing of donor's tax return
a) Commissioner of Internal Revenue b) Revenue District Officer, Collection Officer or duly authorized Treasurer of the municipality where the donor was domiciled at the time of donation. 1. Donor's tax should be paid at the time the return is filed or within thirty (30) days after the date of gift.
2. Extension to pay tax may be granted
not exceeding six (6) months. Effective January 1, 1998 (RA 8424), no extension for the payment of the donor's tax shall be granted. C. Surcharges: (Same as estate tax) D. Interest: (Same as estate tax) . – In order to be exempt from donor’s tax and to claim full deduction of the donation given to qualified donee institutions duly accredited by the Philippine Council for NGO Certification, Inc. (PCNC), the donor engaged in business shall give a notice of donation on every donation worth at least Fifty Thousand Pesos (P50,000) to the Revenue District Office (RDO) which has jurisdiction over his place of business within thirty (30) days after receipt of the qualified donee institution’s duly issued Certificate of Donation, which shall be attached to the said Notice of Donation, stating that not more than thirty percent (30%) of the said donation/gifts for the taxable year shall be used by such accredited non-stock, non-profit corporation/NGO institution (qualified-donee institution) for administration purposes pursuant to the provisions of Section 101(A)(3) and (B)(2) of the Code. GROSS GIFTS P XXX LESS: exemptions xxx NET TAXABLE GIFTS XXX Multiply by tax rate % DONOR’S TAX DUE XXX Thank You! Atty. Israel Lay-at By Edwin Siy
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