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DONOR’S TAX / GIFT TAX

1.

ATTY. MACMOD

Definition and characteristics of the tax.

2. Requisites of a valid donation
a. _____________________
b. _____________________
c. _____________________
d. _____________________
e. _____________________
3. Classification of Donor’s and composition of the gross gift:
a. Resident or Citizens of the Philippines _____________
____________________________________________
b. Not a resident – not a citizens of the Phil. (NRA)
Without Reciprocity Law ________________________
With Reciprocity Law ___________________________
4. Other transactions subject to donor’s tax
a. ______________________________
b. ______________________________
5. Requisites of Transfer with insufficient consideration
a. _______________________________
b. _______________________________
c. _______________________________
6. Valuation of gross gift
a. Personal Property _________________
b. Real Property _____________________
7. Deduction from the gross gift:
a. Under the Tax Code:
(1) Dowries
(2) Donations to the government or any of its agencies or instrumentalities
(3) Donations to educational, charitable, religious, cultural, social welfare institution,
accredited NGO’s, trust on philanthropic organizations, research institutions,
etc. provided that no more than 30% of the donation/gift shall be used by the
donee institution for its administrative purposes; Requisites: _____________
_____________________________________________________________

H - 002

“Imagination is more powerful than knowledge.”
- Einstein

Gifts to educational. Donations to the following special non-stock-non-profit institutions duly recognized by the government pursuant to a special law are exempt: (1) International Rice Research Institute (2) Ramon Magsaysay Award Foundation (3) Southern Philippines Development Administration (4) Philippines American Cultural Foundation (5) Integrated Bar of the Philippines (6) Development Academy of the Philippines (7) National Social Action Council (8) Museum of the Philippine Costumes (9) Aqua-culture Department of South East Asia Fisheries Development Center of the Philippines (10) Intramuros Administration 8. Mortgage assumed Diminution Citizen or resident Allowed Allowed Allowed Allowed Allowed NRA Not allowed Allowed Allowed Allowed Allowed TAX CREDIT FOR FOREIGN DONOR’S TAX In order to minimize or lessen the harsh of effect of taxing the same gift twice. the donor is allowed to claim the gift tax paid in the foreign country as a tax credit against the gift tax paid in the Philippines... Formula for computation of Taxable net gift gate and gift tax due 9. only W/in the Phils.. H .Donor’s Tax Page 2 b. Donor’s tax Credit (Same concept as in estate tax credit) 10.. only W/in the Phils.002 . Administrative provisions Summary of properties comprising gross gift: Real Property Tangible Personal Intangible Personal Citizen or Resident ALL ALL ALL NRA w/ reciprocity W/in the Phils. It can only be claimed of Citizen or resident of the Philippines at the time the donation was made. only W/in the Phils.only NONE NRA w/o reciprocity W/in the Phils. only Summary deductions allowed: Dowry Gifts to the Nat’l Gov’t. Under BIR Rulings: (1) Encumbrances on the property donated.. Under Special Laws. charitable institution etc. if assumed by the donee (2) Diminutions on the property donated specifically provided by the donor c.

000 200.000 1. b.000 3.000 14.002 Donor’s Tax Page 4 . Not a relative by consanguinity in the collateral line within the fourth degree of relationship.000 200.000.X Philippine Donor’s Tax Total net gifts DONOR’S TAX RATES a.000 Plus -----------— 2% 4% 6% 8% 10% 12% 15% Of excess over ---------------— P 100.000. the tax shall be 30% of the net gifts. When the donee is stranger.000.000 200. H .000 404.000 44.000 1.000 3.000 500.000.000. Not a brother or sister (whether by the whole or half blood).Donor’s Tax Page 3 AMOUNT OF TAX CREDIT The tax credit is the amount of donor’s tax paid to the foreign country. but not exceed the limit prescribed by law: LIMIT A: Net gifts (per foreign country) -------------------------------------.000 204.000.000. ancestor and lineal descendant.000 5.000. A STRANGER is a person who is: a.000.000 500. as amended.000.000 But not over ------------------P 100. In general If the net gifts is: Over ----------------P 100.000 10. spouse. political party or coalition of parties for campaign purpose shall be governed by Election Code.000. c.000 3.000.000 5. Any contribution in cash or in kind to any candidate.004.000 10.X Philippine Donor’ Tax Total Net Gifts LIMIT B: Net gifts (all foreign countries) -------------------------------------.000 — The tax shall be -----------Exempt 0 2.000 1.000 10.000 b.000 5.000 1.000 500.

Subsequent donation/s during the same year: Gross Gifts Less: Exemptions (Deductions) Net gifts Add: All prior net gifts during the same year Total (aggregate) net gifts Donor’s tax on the total net gifts Less: Donor’s tax on all prior net gifts Donor’s tax due. c. or if there be no legal residence in the Philippines. 4) The name of the donees. e. 3) Any previous net gifts made during the same calendar year. The donor’s tax return is filed within 30 days from date of each donation. with the Office of the Commissioner. In the case of gifts by a non-resident. b. the return may be filed with: 1) Philippine Embassy or Consulate in the country where he is domiciled at the time of the transfer. this gift P xxx xxx P xxx xxx P xxx P xxx xxx P xxx ADMINISTRATIVE PROVISIONS: *FILING AND PAYMENT OF TAX a. or. Any individual who makes any transfer by gift shall.FORMAT OF COMPUTATION a. FIRST DONATION OF THE YEAR Gross Gift Less: Exemption Taxable Net Gift P xxx xxx P xxx b. and 5) Such further information as may be required by rules and regulations made pursuant to law. the return shall be filed and the tax paid to: 1) An authorized agent bank 2) Revenue District Officer 3) Revenue Collection Officer or. d. 2) The deduction claimed and allowable. for the purpose of the said tax make a return in duplicate. H – 002 Donor’s Tax Page 5 . Except in cases where the Commissioner otherwise permits. The return shall set forth: 1) Each gift made during the calendar year which is to be included in computing net gifts. The tax is paid as the return is files (pay-as-you-file). 4) Duly authorized Treasurer of the city or municipality Where the donor was domiciled at the time of the transfer. 2) Directly with the office of the Commissioner.

000 3. Donation mortis causa of a land with FMV of P 1M left by the decedent. malice or fraudulent intent on the taxpayer. 8. 7. after marriage Jekky P50. 2 mos. Land donated w/ FMV of P 2M w/ unpaid real estate tax of P 400. Dowry out of common property of the couple to their 2 sons. Donation to Mla. but 50% was spent for office expenses.000 5.000 6. P 500. DONOR’S TAX: MULTIPLE CHOICE – THEORITICAL Page 6 . H .000. P 100. after the marriage 50.000 Within 1 yr.000. 9. Civil penalties and interest 1) Penalty of 25% if there is no false or fraudulent intent on the taxpayer. thereafter 50.000 given by grandfather to her granddaughter 2 wks. Land with FMV. 2. Dowry by a mother to her daughter During the marriage P 5.000 but 50% was spent for office expenses alone. 3) Interest of 20% on the unpaid amount of tax from the date computed until fully paid.002 Donor’s Tax B. after the marriage.000 Emong 70.000 Maribel 20. Dowry by a mother to her daughters during their marriages: Alexi P 8. Donation intervivos to son on account of topping the CPA Exam. all assumed by the donor. In each of the following. Donation to Philippine National Red Cross.000 15 mos.000 4.f.000 Maricel 12. 2) Penalty of 50% if there is false.000 subject to the condition that a son will pay the donor’s tax on the said donation. determine the allowable deduction from the Gross Gift: 1. Exercise / Problems – Donor’s tax a. Dowry by a father to his legitimate son Before Marriage P 8.000 During Marriage 5. ¼ assumed by the donee & unpaid mortgage of P 1M. 10. City Hall – P 300.000 Abegael 5. Dowry of P 100.

30% of the net gifts c. Uncle b.000 net gift exempt. political party or coalition or parties for campaign purposes shall be subject to donor’s tax. First statement: The donor’s tax shall apply. Brother or sister c. Second statement: Any contribution in cash or in kind to any candidate. the tax payable by the donor shall be: a. Only the first statement is correct d. in all cases. Estate tax c. d. Donor’s tax b. Estate tax c. a. Only the second statement is correct 5. Gift tax b. Estate tax c. Income tax d. 7. Income tax d. First distinction is wrong. Based on the graduated rates with the first P 100. Spouse d. a. the second is correct. Son-in-law 8. tangible or intangible. Daughter of the donor’s nephew b. d. A privilege tax imposed on onerous transfers inter vivos: a.000 while in estate tax it is P 100. b. the exemption is P 200. An excise tax on gratuitous transfers mortis causa a. even if the transfer is merely in trust. Based on the graduated rates with the first P 100. Second distinction: In donor’s tax. Which is the exception? . One of the following is not a relative by consanguinity in the collateral line within the fourth degree of relationship. Second cousin of the donor H – 002 Donor’s Tax Page 7 9. Both statements are correct b. whether the gift is direct or indirect.1. 30% of the gross gifts b. First distinction is correct. Donor’s tax 2. c.000. the second is wrong. Donor’s tax 4. a. When the donee or beneficiary is stranger. and whether the property is real or personal. Both statements are incorrect c. Niece of the donor d. An excise tax on gratuitous transfer inter vivos: a.000 net gift exempt or 30% of the net gifts whichever is higher. one of the following is a stranger: a. Three of the following are exempt or excluded from the donor’s tax. Gift tax b. 6. For donor’s tax purposes. Both distinctions are correct. Income tax d. Both distinctions are wrong. Donor’s tax 3. Donor’s tax is distinguished from the estate tax First distinction: The rated for donor’s tax are lower than those for estate tax. First cousin of the donor c.

13. Page 8 .a. b. One of the following statements is false: a.002 Donor’s Tax In the following questions choose: a. b. Donation to Integrated Bar of the Philippines b. There is a taxable gift of P 200. First statement: Gifts in favor of an educational and/or religious organizations are exempt from donor’s tax. Donations between persons guilty of adultery or concubinage are void. Only second statement is correct 11. not a subject to gift tax. a. Both statements are correct c. which of the following statements is correct? a. c. Second statement: Gifts on account of a person’s merits or services rendered are taxable whether the services are demandable debt or not. Only the 1st statement is correct. John sold his car to Sam. The car was sold for P 200. H . b. c. d. Both statement are incorrect d. d. P 200. d. c. b. P 150. d.000 donation to a non-profit school. Both are incorrect.000. Donation of a condominium in Hongkong to a Filipina by a British national not residing in the Philippines. c. John’s car cost P 300. 1st statement: A donation can be both a part of the gross gift of the donor and a taxable income to the donee. The transfer is for insufficient consideration.000. Macapagal in view of her public office is void in all cases. 2nd statement: A donation may be exempt from donor’s tax but not necessarily a deduction from the donor’s gross income. Donation to Philippine Institute of Certified Public Accountants d. hence. The transfer involves a personal property. Donations to conceived or unborn children are valid. All of the following except one are exempt from the gift tax under the special laws: a. 14. hence. For donor’s tax purposes.000 and has a fair market value of P 400. Only first statement is correct b.000 cash given by a resident alien donor to his legitimate son who is getting married in the Philippines. P 10.000 at the same time of sale.000. Donation to Development Academy of the Philippines c. If only the first statement is correct. Contracts of donation between husband and wife are void in all cases. Donation to International Rice Research Institute 12. The donation by Chavit to Pres. There is taxable gift of P 300. not subject to gift tax.000 cash given by a non-resident alien donor to his legitimate son who is getting married in the Philippines to a Filipina. Only the 2nd statement is correct. 10. a. Both statements are correct.

P 1.950. land in Pampanga worth P 300. Minors can be a donor or a donee 2nd statement: 17. c. PLDT shares amounting to P 150.000 FMV P 300.000. 16. Lapu-Lapu. C. An inofficious donation is voidable. To Shahida. Multiple Choice – Problems Donor’s Tax: Multiple Choice Problems Turkina.600.000 assumed by the donee. her gross gift is: a. their legitimate son. P 1. a building in Italy P 1.000 H . If she is a NRA non-resident Egyptian.000 22.000 in Cubao.000. No person may receive or give by way of donation more than he may give or receive. jewelry worth P 100. 1st statement: 2nd statement: Donative intent as a request of a valid donation is absolute. 1st statement: As a general rule all persons who may contract and dispose of their property may donate. a land worth P 450. P 650.000 2. All onerous donations are not subjected to donor’s tax.000 cash.000. 20. and Mrs.100. d. Donation of a real property is valid if made in writing even if not notarised.950.000 Car.000 in Hongkong. Makati P 200. P 2. and there is reciprocity law.000 d.000 b. If she is resident Alien her gross gift is: a. If only the second statement is correct.002 Donor’s Tax Page 9 Questions 23 to 26 are based on the following data: Mr. 18. on account of marriage last 1/20/2003. a Filipina princess made the following donations. made the following donations: 1/25/2006 – To Magellan.000 d. To Hejia. P 300. PNB New York to Charlie She has also transferred the following properties: Selling Price Car. Gift splitting is a form of tax evasion. If both statements are correct. 15.000 Land. To Goliath.000.000 c. USA 300. 1st statement: 2nd statement: The pay as you file system is not followed in donor’s taxation. .000 21.b. f. 1st statement: 2nd statement: Donation of a personal property worth P 5. e. 19. a. d.000 must be in writing. b. P 850. P 700. 1st statement: 2nd statement: Renunciation of one’s share in the legitime is a taxable gift.000 200. P 3.000 b.050. To Zaida. c. P 2.000. If both statement are incorrect.000 c. Philippines 1. 1st statement: 2nd statement: A person can donate all his present property unconditionally. To Haida.000 mortgaged for P 50.

P 7.000 but mortgaged for P 200. July 18. 2006 is: a.000 28. 2006 is: a.000.000 on account of marriage 6 months ago of Napoleon with a condition that the donee will pay the donor’s tax thereon. 5/31/2006 – To Napoleon.600 b. P 2. legally adopted child on acct. of marriage last week. Lapu-Lapu as of May 31.000 b. 2005 car. P 36.000 25. ½ of which was assumed by the donee. made the following donations for the year 2006: April 15 – To Natalie.000 in Philippines. 2006: a. – To Daylan.200 d.000. his capital property worth P 200. 2006 is: a.000 & P 15. P 44.000 c. P 6. They paid $ 200 donor’s tax in the US ($1 – P 45) July 20 – To Tiffany niece in Manila. And P 500. – To Nora. on account of her marriage 12 months ago. of marriage in Cebu. brother of Mr. P 33. car worth P 710. P 35. Lapu-Lapu as of July 15. P 54.car worth P 400.000 d. P 17. P 3.000.000. P 30. P 4. 7/15/2006 – To Donita.000 c. Mrs. and Mrs. The gift tax due after credit on April 15.000 mortgage.000 c. 27.800 d.600 c.800 b. legitimate daughter on acct. 8/20/2006 – To Donita on account of the same marriage conjugal car of the couple worth P 400. his daughter.000.000 Questions 27 & 28 are based on the following data: Mr.000 & P 18.000 H .000 & P 18. ½ was assumed by the donee. Lapu-Lapu on August 20.000 b. P 30. P 2. The gift tax due of their kumpare is: a. 23. P 80. P 45. P 69.000 d. P 40.000 worth of personal property. P 54. P 200. Lapu-Lapu’s paraphernal property worth P 100. worth P 400.800 b. P 15.600 24. 20% of which was owned by their kumpare who agreed to donate his share thru a public document.000 d.000 c. Lapu-Lapu. Pinya. P 84.000 unpaid mortgage. P 10.000 & P 18. The gift tax due on July 20. The gift tax due of Mr.800 c. with P 200.800 d. The gift taxes due of Mr.002 Donor’s Tax Page 10 .800 26. ½ assumed by Donita.000 b. Lapu-Lapu by former marriage. with P 200. The gift tax of Mrs.000 worth of land to their four sons on account of their graduation. daughter of Mrs. P 8. car in USA worth P 300. 2006 is: a. P 7.

000 P 500.100 b.00 b. 2005. on account of her schedules marriage on October 25. P500. and Rose. On September 30.000 dowry to his daughter Gina.000 on November 23. donated the following: Sept. the gift tax payable on the October 9 gift of the husband is : a.600.000.00 c.00 c. P 400.000. Romano can claim a total deduction / exemption of: a. P 87. 30. P150. P 4.000 d. Using the data in no. Romano donated a total amount P 500. P150.000 P 250.247 d.000 to Karen. 2007. P 84. Porontong made the following gifts to his relatives: Phiis. Mikey’s bride. on account of her marriage celebrated on May 1. P 7. P 1. 30.29.600. How much is the total net gifts? a. Mr. his daughter. Reyes.63 33.000 to his father.000 10. P 4. Jecky gave a property with a fair market value of P 550. and Mrs.000 b. P 38.000 Donor’s Tax 36. it was verified that the charitable institution’s total receipts from donation amounted to P 10M and its total administrative expenses reached P 4M. P 2. Who is not subject to the donor’s tax? c.00 32.460.00 b. P 33. The gift tax payable on the September 25 gifts of the husband is: a.907. Reyes.000 Deductions 250. P 150. P 5. Mr. During the current year. non-resident citizens. a legitimate son. P430.000 12. 25: To Bea a legitimate child.600 b.000 The gift tax due after credit is: a. P 9.353 31.600 c. FMV. P 15. USA UK Gross gift P 750. On July 18.100 d. Upon inquiry. P 1. P 35. on account of their marriage celebrated on January 3. P 500.000 d.000 c. on account of marriage. 2005. In 2006.000 Tax paid — 25. The gift tax payable of the wife is: a.600 c. P 5. a parcel of land worth. Mr. P450. FMV. 3.000 150. subject to the condition that the father would assume the mortgage indebtedness of Maynard in the amount of P40.000 35. and another wedding gift worth P20. last month a conjugal property located in the Philippines. P460.600. 2004. P 25. Maynard made the following gifts: 1.000 d.000.000 150. P 100. P None 30.63 d.000.000 200.660. On June 1. To Jessica niece of Mr. The donor’s tax payable is: a. 2006.000 (gift tax in USA. P 3.500) Oct. P 3. P 200. 2005. a legitimate child. 2.000 b.520 Italy P 500. conjugal property in the Philippines.000 Page 11 . FMV.00 d. 2006.000 to Mikey. on account of marriage. 2005. Using the data in no. P 39.000 c. a property located in the USA exclusively owned by the husband. Mr. P 250. P 13. On July 10.800 34. P180.200. ½ to the Quezon City Hall and ½ to a charitable institution TAHANAN NI GLORIA. 9 : To Gail.800. Mr. P 3.600 b.

P31.000 c. P30. A partnership making a donation.000 still assumed by the donor.000. with unpaid mortgage of P20. gave a property with a fair market value of P200.000 d. The allowable deduction is: a. 37. The donor’s tax due based on the above problem is: a. P 0 38. P40. on account of her marriage 13 months ago. P10.000 b. d. c. An individual making a donation. P 2. J. b.000 c.002 .000 b. P32. A corporation making a donation. C. An employer who pays premiums on the life insurance of its employee.a.800 H . and Jay’s bride Tina.000 d. P20. to Jay his son.