- The donors tax is not a property tax, but is a tax imposed on the transfer of property by way of gift inter

vivos. (Lladoc vs. Commissioner of Internal Revenue, L- 19201, June 16, 1965; 14 SCRA, 292) The donors tax shall not apply unless and until there is a completed gift. The transfer of property by gift is perfected from the moment the donor knows of the acceptance by the donee; it is completed by the delivery, either actually or constructively, of the donated property to the donee. Thus, the law in force at the time of the perfection/completion of the donation shall govern the imposition of the donors tax.

 In

order that the donation of an immovable may be valid, it must be made in a public document specifying therein the property donated. The acceptance may be made in the same Deed of Donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

A gift that is incomplete because of reserved powers, becomes complete when either: (1) the donor renounces the power; or (2) his right to exercise the reserved power ceases because of the happening of some event or contingency or the fulfilment of some condition, other than because of the donors death

 Gift

tax is an excise on the transfer by a living person to another of money or other property without consideration. is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.

Donation

1.

Transfer of property without consideration. It also includes sales, exchanges and other dispositions of property for a consideration to the extent that the value of the property transferred does not exceeds the value in money or money's worth of the consideration received therefor.

2.

1.

Consideration must be measurable in money or money's worth. Mere legal consideration is not sufficient. The consideration must flow to the donor, mere detriment to the donee does not satisfy the purpose of the statute.

2.

 Marriage

is not a consideration reducible to money value. If a person transfers a property to a trust in consideration of marriage, a gift is made because no money consideration flows to the transferor/donor. Donative intent on the part of the tranferor is not an essential element for the imposition of the gift tax to the transfer.

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.

Referr

to Section 24(D) and Section 27(D)(5) of the NIRC).

 1.

Capacity of the donor

2. Donative intent (Except gift under Section 93 NIRC) 3. Acceptance by the donee, and 4. Delivery of the gift to the donee, actually or constructively.

1. Inter-vivos Art. 729. When the donor intends that the donation shall take effect during the lifetime of the donor, though the property shall not be delivered till after the donor's death, this shall be a donation inter vivos. The fruits of the property from the time of the acceptance of the donation, shall pertain to the donee, unless the donor provides otherwise. 2. Mortis causa A gift in prospect of death. When a person in sickness, apprehending his dissolution near, delivers, or causes to be delivered to another, the possession of any personal goods, to keep as his own, in case of the donor's decease. 3. Indirect donation (Except real property referred to in Section 24(D) and Section 27(D)(5) of the NIRC).

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.

1. Composition -(Same as in estate tax) 2. Valuation - At the time the gift was made (Same as in estate tax)

1.

2. 3.

4. 5.

6.

Dowries or gifts by parents to children on account of marriage, before its celebration or within one (1) year thereafter to the extent ofP10,000. Gifts to the National Government or any of its agencies. Gifts made in favor of an educational, and/or charitable, religious, cultural or social welfare corporation, foundation, trust or philanthropic organization or research institution or organization. Encumbrance on the property donated if assumed by the donee in the deed of donation. Those specifically provided by the donor as a condition of the donation which will diminish the value of the property received by the donee. Exempt donation under special laws.

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. 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.

2.

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)

OF EXCESS PLUS OVER

THE DONORS TAX SHALL BE Exempt 0 2,000 14,000 44,000 204,000 404,000 1,004,000 2% 4% 6% 8% 10% 12% 15%

P100,000 200,000 500,000 1,000,000 3,000,000 5,000,000 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 e) 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.

Surcharges: (Same as estate tax) D. Interest: (Same as estate tax)

C.

. In order to be exempt from donors 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 institutions 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.