Donors Tax Computation Under Train Law
Donors Tax Computation Under Train Law
Donors Tax Computation Under Train Law
Where property, other than a real property that has been subjected to
the final capital gains tax, is transferred for less than an adequate and
full consideration in money or money’s worth, then the amount by which
the fair market value of the property at the time of the execution of the
Contract to Sell or execution of the Deed of Sale which is not preceded
by a Contract to Sell exceeded the value of the agreed or actual
consideration or selling price shall be deemed a gift, and shall be
included in computing the amount of gifts made during the calendar
year.
The law in force at the time of the completion of the donation shall
govern the imposition of donor’s tax.
For purposes of the donor’s tax, “NET GIFT” shall mean 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 fair market value of the property
the amount of mortgage assumed.
Illustration:
Donations were made on January 30, 2018 at P2,000,000; on March 30,
2018 at P1,000,000; and August 15, 2018 at P500,000.
Total = 2,750,000
Tax Due Thereon 165,000
Total =3,250,000
3. Any previous net gifts made during the same calendar year;
(B) Time and place of filing and payment. – The donor’s tax return shall be
filed within thirty (30) days after the date the gift is made or completed
and the tax due thereon shall be paid at the same time that the return is
filed. Unless the Commissioner otherwise permits, the return shall be
filed and the tax paid to an AAB, the Revenue District Officer and
Revenue Collection Officer having jurisdiction over the place where the
donor is domiciled at the time of the transfer, or if there be no legal
residence in the Philippines, with the Office of the Commissioner. In the
case of gifts made by a non-resident, the return may be filed with the
Philippine Embassy or Consulate in the country where he is domiciled at
the time of the transfer, or directly with the Office of the Commissioner.
For this purpose, the term “OFFICE OF THE COMMISSIONER” shall
refer to the Revenue District Office (RDO) having jurisdiction over the
BIR-National Office Building which houses the Office of the
Commissioner, or presently, to the Revenue District Office No. 39-South
Quezon City.
(C) Notice of donation by a donor engaged in business. – In order to be
exempt from donor’s tax and to claim full deduction of the donation given
to qualified-donee institutions duly accredited, 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 NIRC.
SEC. 16. TRANSFER FOR LESS THAN ADEQUATE AND
FULL CONSIDERATION. – Where property, other than real property
referred to in Section 24(D), is transferred for less than an adequate and
full consideration in money or money’s worth, then the amount by which
the fair market value of the property exceeded the value of the
consideration shall, for the purpose of the tax imposed by this Chapter,
be deemed a gift, and shall be included in computing the amount of gifts
made during the calendar year: Provided, however, that a sale,
exchange, or other transfer of property made in the ordinary course of
business (a transaction which is a bona fide, at arm’s length, and free
from any donative intent) will be considered as made for an adequate
and full consideration in money or money’s worth.
SEC. 17. EXEMPTION OF CERTAIN GIFTS. – The following are exempt
from the donor’s tax:
1. 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; and
SEC. 18. REPEALING CLAUSE. – All existing rules and regulations or parts
thereof, which are inconsistent with the provisions of these regulations,
are hereby repealed, amended or modified accordingly.
SEC. 19. SEPARABILITY CLAUSE. – If any clause, sentence, provision or
section of these Rules shall be held invalid or unconstitutional, the
remaining parts thereof shall not be affected thereby.
SEC. 20. EFFECTIVITY. – These regulations are effective beginning
January 1, 2018, the effectivity of the TRAIN Law.
Source: Bureau of Internal Revenue (BIR), Department of Finance Philippines
(DOF)
Read these other informative TRAIN-related posts:
All about TRAIN Tax Law and BIR Guidelines and Regulations
What’s included in the approved Philippine Tax Reform of 2018?
New Personal Income Tax Rates and Income Tax Tables in the Philippines
(2018)
BIR Sample Computations of Taxes under TRAIN