Govern The Imposition of The Donor's Tax

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Lladoc vs CIR
Whether or not the imposition of gift tax despite the fact the Fr. Lldoc was not the Parish priest at the time of donation, catholic parish priest of Victorias did not have juridical personality as the constitutional exemption for religious purpose is valid.
The Law Governing Donor’s Tax
 
The donor’s tax is not a property tax, but is a tax imposed on the transfer of
property by way of gift inter vivos.
The donor’s 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 perfection/ completion of the donation shall
govern the imposition of the donor’s 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.
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 is subject to d
onor’s tax whereas general
renunciation by an heirs, including the surviving spouse, of his/her share in the hereditary
estate left by the decedent is not subject to donor’s tax , unless specifically and
categorically done in favor of identified heir/s to the exclusion or disadvantage of the other co-heirs in hereditary estate.
Imposition of Tax
 A. There shall be levied, assessed, collected and paid upon the transfer by any person, resident or nonresident, of the property by gift, a tax computed as provided in Section 99. B. The tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible.
Situs of Taxation
In income tax law, the rule is that:
 Only the resident citizen and domestic corporations are subject to tax on income from within and without the Philippines
 Others are subject to tax on income only from within the Philippines.
 
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Donor’s Tax
 
To compute for donor’s tax due and payable, we follow
this FORMULA: Gross Gift XX Less: Deductions (XX) Net Gift XX Multiply: Rate % Taxable Net Gift XX Less: Tax Credit (XX)
DONOR’S TAX PAYABLE
 XX ======
For purposes of the donor’s tax, “NET GIFT” shall mean the net economic
 benefit from the transfer that accrues to the donee.  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 fulfillment of some condition, other than
because of the donor’s death
 
Rates of Tax Payable by Donors The tax for each calendar year shall be computed on the basis of the total net gift made during the calendar year in accordance with following schedule: if the net gift is: Over But not over The tax shall be plus Of the excess over 100,000 Exempt 100,000 200,000 0 2% 100,000 200,000 500,000 2,000 4% 200,000 500,000 1,000,000 14,000 6% 500,000 1,000,000 3,000,000 44,000 8% 1,000,000 3,000,000 5,000,000 204,000 10% 3,000,000 5,000,000 10,000,000 404,000 12% 5,000,000 10,000,000 1,004,000 15% 10,000,000 Methods Cumulative
- donations within the calendar year.
Splitting
 –
 donations during different calendar years.
Tax Payable by Donor if Donee is a Stranger
When the done or beneficiary is stranger, the tax payable by the donor shall be thirty percent (30%) of the net gifts. For the purpose of this 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.
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Rate of Donor’s Tax
 Under the Train Law
The donor’s tax for each calendar year shall be six
percent (6%) computed on the basis of the total gifts in excess of Two hundred fifty thousand pesos (250,000) exempt gift made during the calendar year.
Contribution for election campaign
 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.
Donations (under the Election Code)
 Donations to a candidate, political party or coalition shall be governed by the Election Code.
 
Donation in exempt from donor’s tax if donation is reported to
COMELEC. Transfer for inadequate consideration
 
 Applies to both estate tax or donor’s tax.
 
 
6% capital gains tax on real property vs. donor’s tax
 Where property, other than real property referred to in Section 24(D), is transferred for
less than the 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 adequate and full
consideration in money or money’s worth.
 
(amended by TRAIN LAW).
 
Exempted Gifts (by Residents)
 
Gifts to children on the account of marriage (Dowries)
 Gift to government
 Gifts in favor of accredited organizations like
 Accredited NGOs Charitable
 Cultural
 Educational
 Philantrophic
 Religious
 Research Institutions
 Social Welfare
Exempted Gifts (by NON-Residents)
 
 Gift to government
 Gifts in favor of accredited organizations like
 Accredited NGOs Charitable
 Cultural
 Educational
 Philantrophic
 Religious
 Research Institutions
 Social Welfare
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Dowries - Removed Under TRAIN LAW
1) Dowries or gifts made on account of marriage and before its celebration or within one year thereafter by parents to each of their legitimate, recognized natural, or adopted children to the extent of the first ten thousand pesos (10,000):
Gifts to Government
2) 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;
Gross Gift Valuation
Zonal Value xx  Assessed Value xx Use: whichever is higher xx
Procedure
File 30 days after the date of the gift is made Payment 30 days after the date of the gift is made Place of filing and payment -any authorized Banks -RDO/RCO -Duly authorized city/municipality treasurer where the donor is domiciled at the time of the transfer
Requirements
 
 –
 any person making a donation (whether direct or indirect), unless the donation is specifically exempt under the Code or other special law, is required, for every
donation, to accomplish under oath a donor’s tax return in duplicate. The return shall set
forth:
 Each gift made during the calendar year which is to be included in computing net gift;
 The deductions claimed and allowable;
 The name of the donee;
 Any previous net gifts made during the same calendar year; Relationship of the donor to the donee; and
 Such further information as the Commissioner may require.
Time and Place of filing and payment
 
 
The donor’s tax return shall be filed with 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 authorized agent bank, the Revenue District Officer, Revenue Collection Officer or duly authorized Treasurer of the city or municipality where the donor was domiciled at the time of the transfer, or if there be no legal residence in the Philippines, with the Office of the Commissioner.
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