Donor’s tax and

intro to tax
remedies 1
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Learning
Objectives
At the end of this topic, we will realize and
learn the following:
▪ Basic Concepts of Donor’s taxation
▪ Definition of terms, Donor’s tax rates
▪ Underlying laws that govern Donor’s
taxation
▪ Intro to Tax remedies

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TRANSFER TAXES on
Gratuitous transfer
(GIFT) Donor’s taxation

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DONOR’S
TAX
CONCEPTS

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DONOR’S
TAX
CONCEPTS

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 COMPOSITION OF TAXABLE GROSS GRIFTS

GIFT Resident or Citizen Donor Non-resident Alien Donor

Personal properties Wherever situated Situated in the Philippines

Real properties Wherever situated Situated in the Philippines

DONOR’S
TAX
CONCEPTS

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 RULE OF RECIPROCITY

DONOR’S DONOR’S TAX RATES

TAX
CONCEPTS

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DONOR’S
TAX
CONCEPTS

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DONOR’S
TAX
CONCEPTS

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 DONOR’S
TAX
CHANGES
PER
TRAIN LAW

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DONOR’S
TAX
CONCEPTS

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 FORMULA UNDER THE LAW TO COMPUTE FOR DONOR’S TAX

TAXABLE GROSS GIFT XXX

Less:
Allowable Deductions (xxx)

DONOR’S Taxable Net Gift xxx

TAX
CONCEPTS Less: 250,000 exemption (250,000)

Net Gift subject to tax xxx

X Donor’s tax rate 6%

DONOR’S TAX DUE XXX

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 FORMULA TO COMPUTE FOR DONOR’S TAX ON COMULATIVE GIFTS

TAXABLE GROSS GIFT, Second XXX

Less:
Allowable Deductions (xxx)

Taxable Net Gift xxx

DONOR’S
Add: Previous net gift (xxx)
TAX Total net gift xxx
CONCEPTS Less: 250,000 exemption (250,000)
X Donor’s tax rate 6%

DONOR’S TAX DUE XXX

Less: Previous payment (xxx)
Donor’s tax payable XXX

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 OTHER DEDUCTIONS
Resident or Non-Resident Alien
ALLOWED DEDUCTIONS Citizen Donor Donor

a. Encumbrance on the property donated if assumed Allowed Allowed

by the donee
b. Those specifically provided by the donor as a Allowed Allowed
diminution from the property donated
EXERCISE. Determine the gross gift and deduction. Gross gift Deduction
DONOR’S a) Real property donated valued at P1,500,000 with unpaid mortgage
TAX of P300,000 assumed by the done –
CONCEPTS
b) Real property donated valued at P1,200,000 with unpaid real estate
tax of P150,000 not assumed by the done
c) Real property donated valued at P1,500,000, the donee agreed to
assume the applicable donor’s tax of P450,000
d) Personal property donated valued at P100,000, the donor provided
that P10,000 of the property donated be transferred by the donee to a
social welfare organization

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DONOR’S
TAX
CONCEPTS

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DONOR’S
TAX
CONCEPTS

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 ILLUSTRATIONS: Determine whether or not the following is subject to Y/N
Donor’s tax
a. Husband donated conjugal property with the consent of the wife to charity event
(charitable institution’s administration expenses exceed 30% of the gifts)
b. Wife donated community property without the consent of the husband on
occasion of their legitimate child’s birthday (amount of gift is moderate)
c. Husband gifted his wife a diamond ring on occasion of her birthday

DONOR’S d. Wife gifted her husband a branded shirt of account of his birthday (amount is
TAX moderate)
CONCEPTS e. Husband transferred some of his exclusive property to his wife, transfer to take
effect after his death
f. Surviving spouse renounced his share in the conjugal partnership in favor of the
heirs of the deceased spouse
g. An heir renounced his share in the hereditary estate in favor of no one in
particular
h. Taxpayer donated to the campaign fund of a candidate, duly reported to the
COMELEC
I Donee failed to indicate his acceptances of the donation before the transferor died
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DONOR’S
TAX
CONCEPTS

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 Mode of payment

DONOR’S
TAX
CONCEPTS

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DONOR’S
TAX
CONCEPTS

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 1. A citizen donor donated to a Philippine domestic corporation a property located abroad
valued at P500,000. The foreign donor’s tax on the donation was P100,000. A donation earlier
within the same calendar year, was donated to a legitimate daughter, a property valued at
P300,000.

Determine the ff:

1. Gross gift
DONOR’S 2. Allowed donor’s Tax credit from foreign donation
TAX 3. Donor’s tax payable
CONCEPTS
(Cases)

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 1. On January 15, 2019, Reana gave a piece of land to her brother-in-law who is getting married
on February 14, 2019. The assessed value and zonal value of the land were P750,000 and
P1,000,000 respectively. The land had an unpaid mortgage of P200,000, which was not
assumed by the donee and an unpaid realty tax of P10,000 which was assumed by the donee.

Questions -
1. What value shall be reflected in the gross gift?
DONOR’S 2 - How much shall be the total deductions?
TAX 3 – How much was the taxable gift?
CONCEPTS 4 - How much was the donor’s tax due?
(Cases) 5 - When shall be the due date for the filing of donor’s tax return?

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INTRO TO TAX
REMEDIES
BIR VS TAXPAYER

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 TAX REMEDIES , DEFINED

▪ On the part of the taxpayer, these are legal actions which a taxpayer can
avail of to seek relief from the undue burden or oppressive effect of tax
laws, or as a means to check possible excesses by revenue officers in the
performance of their duties.

▪ On the part of the government, these are courses of action provided by or

TAX
REMEDIES
allowed in the law to implement the tax laws or enforce tax collection.

LETTER OF AUTHORITY
▪ An official document that empowers or authorizes a revenue officer to
examine and scrutinize a taxpayer’s books of accounts and other accounting
records, in order to determine the taxpayer’s correct internal revenue tax
liabilities.

▪ In the absence of such an authority, the assessment or examination is VOID.

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 Powers and Duties of the Bureau of Internal Revenue -

The Bureau of Internal Revenue shall be :

❑ under the supervision and control of the Department of Finance and its
powers and duties
❑ shall comprehend the assessment and collection of all national internal
TAX
revenue taxes, fees, and charges, and the enforcement of all forfeitures,
REMEDIES penalties, and fines connected therewith, including the execution of
judgments in all cases decided in its favor by the Court of Tax Appeals and the
ordinary courts.
❑ The Bureau shall give effect to and administer the supervisory and police
powers conferred to it by this Code or other laws.

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 Power of the Commissioner to Interpret Tax Laws and to Decide Tax
Cases

❑ The power to interpret the provisions of this Code and other tax
laws shall be under the exclusive and original jurisdiction of the
Commissioner, subject to review by the Secretary of Finance.
TAX
REMEDIES ❑ The power to decide disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in
relation thereto, or other matters

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 Power of the Commissioner to Obtain Information, and to Summon,
Examine, and Take Testimony of Persons

❑ To examine any book, paper, record, or other data which may be relevant or
material to such inquiry;
❑ To obtain on a regular basis from any person other than the person whose
internal revenue tax liability is subject to audit or investigation, or from any
government office
TAX ❑ To summon the person liable for tax or required to file a return, or any officer
REMEDIES or employee of such person, or any person having possession, custody, or
care of the books of accounts
❑ To take such testimony of the person concerned, under oath, as may be
relevant or material to such inquiry;
❑ To cause revenue officers and employees to make a canvass from time to
time of any revenue district or region and inquire after and concerning all
persons therein who may be liable to pay any internal revenue tax, and all
persons owning or having the care, management or possession of any object
with respect to which a tax is imposed. TREY
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 Power of the Commissioner to Make Assessments and Prescribe
Additional Requirements for Tax Administration and Enforcement

❑ Authorize or delegate examination of Return and Determination

of Tax Due
❑ Assess the proper tax on the best evidence obtainable for failure
of taxpayer to Submit Required Returns, Statements, Reports and
TAX other Documents
REMEDIES ❑ Authority to Conduct Inventory-taking, Surveillance and to
Prescribe Presumptive Gross Sales and Receipts.

❑ Authority to Terminate Taxable Period.

❑ Authority of the Commissioner to Prescribe Real Property Values.

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 Power of the Commissioner to Make Assessments and Prescribe
Additional Requirements for Tax Administration and Enforcement

❑ Authority of the Commissioner to Inquire into Bank Deposit

Accounts and Other Related Information Held by Financial
Institutions

TAX ❑ Authority to Accredit and Register Tax Agents

REMEDIES
❑ Authority of the Commissioner to Prescribe Additional Procedural
or Documentary Requirements

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 PERSONS AUTHORIZED TO ISSUE LETTER OF AUTHORITY

TAXPAYER PERSON AUTHORIZED

Under the jurisdiction of the National Commissioner of Internal Revenue
Office (Large Taxpayer) ( CIR)
Under the jurisdiction of the Regional CIR through its Regional director
offices
TAX
REMEDIES
EFFECT OF THE ISSUANCE OF LA

▪ A filed tax return can no longer be amended/corrected when an LA is

issued for that year.

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 TAX
REMEDIES

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 TAX
REMEDIES

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DONOR’S
TAX
CONCEPTS
(Cases)

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DONOR’S
TAX
CONCEPTS
(Cases)

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DONOR’S
TAX
CONCEPTS
(Cases)

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Thank
You

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