Professional Documents
Culture Documents
I. Nature of Donor’s Tax – a tax on the privilege of the donor to give; it is not a property tax but is a tax imposed
on the transfer of property by way of gift during the life time of the donor. The donor’s tax shall not apply
unless and until there is a completed gift. It is an excise tax imposed upon the right of a person to transfer
property gratuitously during his lifetime.
Note:
a. The transfer of property is completed by delivery, either actually or constructively, of the
donated property to the donee.
b. The transfer of property by gift is perfected from the moment the donor knows of the
acceptance of the donee.
c. The composition and valuation of gross gift is the same as the composition and valuation of
gross estate.
On first donation:
Gross Gift xx
Less: Deductions from gross gift (xx)
Net gift xx
Times the Applicable rate* %
Donor’s tax due and payable xx
Less: Tax Credit (xx)
Donor’s Tax Payable xx
On subsequent donation:
Gross gift made this month xx
Less: Deductions from gross gift (xx)
Net gifts, current xx
Add: ALL prior net gift w/in the year xx
Aggregate net gifts xx
Times applicable Tax rate %
Donor’s Tax Due xx
Less: Donor’s Tax paid on prior gifts (xx)
Tax Credits (xx)
Donor’s Tax Due and Payable xx
V. Gross Gift
1. Direct Gift (donor to donee)
2. Gift through creation of trust
3. Condonation of debt
4. Repudiation of inheritance if:
a. Specifically and categorically done in favor of identified heirs; and
b. To the exclusion or disadvantage of other co-heirs.
5. Renunciation by the surviving spouse of his/her share in the conjugal partnership or absolute
community after the dissolution of the marriage in favor of the heirs of the deceased spouse or
any other person/s
6. Transfer for insufficient consideration, provided that it is not in contemplation of death,
revocable transfer or transfer under general power of appointment. Otherwise, it will be subject
to estate tax.
7. Rules to observe:
a. As a rule, the value of the property/right donated shall be the fair market value existing
when the gift was made (as of the time of donation).
b. The time to value is the moment when the donation has been completed and perfected
(delivered and accepted).
c. When the donation is subject to a suspensive condition, the value of the gift is to be
determined only at the time when the stipulated condition is fulfilled, subject to the time
of delivery and acceptance of the gift.
8. Valuation Methods:
a. Real properties are valued at the assessed value or zonal value, whichever is higher.
b. Personal properties are valued at current market price or fair market value.
c. Right to use or usufructuary is valued based on the Basic Standard Mortality Rate Table
(BSMT) with the consideration of the present value using the prevailing market interest rate
at the time of donation.
d. Shares of stocks are valued at:
i. If traded – Closing price
ii. If not traded – using the adjusted net asset method
VII. Political Contributions (Omnibus Election Code (OEC) and Repulic Act No. 7166)
1. As a rule, any contributions given to candidates, political parties or coalition of parties are not subject
to donor’s tax as long as the following conditions are met:
2. The contribution is for campaign purposes; and
LECTURE 5: DONOR’S TAX
XIII. Attachments
1. Based on the BIR Form 1800, the following documents shall be attached:
2. Sworn statement of the relationship of the donor to the donee;
3. Proof of tax claimed tax credit, if applicable;
4. Certified true copy of the Original/Transfer/Condominium Certificate of Title (OCT, TCT, CCT) of the
donated property (for real properties);
5. Certified true copy of the latest Tax Declaration of lot and/or improvement, if applicable (for market
value purposes);
6. Certificate of No Improvement issued by the Assessor’s Office where the donated real property/ies
have not declared improvements, if applicable;
7. Proof of valuation of shares of stock at the time of donation, if applicable;
8. For listed stocks – newspaper clippings/certification issued by the Stock Exchange as to the value of
per share
9. For unlisted stocks – latest audited Financial Statements of the issuing corporation with the
computation of the book value per share.
10. Proof of valuation of other types of personal properties, if applicable;
11. Proof of claimed deductions, if applicable; and
12. Proof of the Tax Debit Memo used as payment.