Donors' Tax
Donors' Tax
Donors' Tax
Donors Tax
LECTURE NOTES
1. Definition and characteristics of the tax. (10) Intramuros Administration
2. Requisites of a valid donation 8. Formula for computation of Taxable net gift gate and gift
a. _____________________ tax due
b. _____________________ 9. Donors tax Credit (Same concept as in estate tax credit)
c. _____________________ 10. Administrative provisions
d. _____________________
e. _____________________ Summary of properties comprising gross gift:
Real Tangible Intangible
3. Classification of Donors and composition of the gross Property Personal Personal
gift: Citizen or
a. Resident or Citizens of the Philippines Resident ALL ALL ALL
_________________________________________ NRA w/ W/in the W/in the NONE
________________ reciprocity Phils., only Phils.,only
b. Not a resident not a citizens of the Phil. (NRA) NRA w/o W/in the W/in the W/in the
Without Reciprocity Law reciprocity Phils., only Phils., only Phils., only
_____________________________________
With Reciprocity Law Summary deductions allowed:
___________________________ Citizen or NRA
resident
4. Other transactions subject to donors tax Dowry Allowed none
a. ______________________________ Gifts to the Natl Govt. Allowed Allowed
b. ______________________________ Gifts to educational, charitable
institution etc. Allowed Allowed
5. Requisites of Transfer with insufficient consideration Mortgage assumed by donee Allowed Allowed
a. _______________________________ Diminution Allowed Allowed
b. _______________________________
c. _______________________________ TAX CREDIT FOR FOREIGN DONORS TAX
In order to minimize or lessen the harsh of effect of
6. Valuation of gross gift taxing the same gift twice, the donor is allowed to claim the
a. Personal Property _________________ gift tax paid in the foreign country as a tax credit against the
b. Real Property _____________________ gift tax paid in the Philippines. It can only be claimed of
Citizen or resident of the Philippines at the time the donation
7. Deduction from the gross gift: was made.
a. Under the Tax Code:
(1) Dowries AMOUNT OF TAX CREDIT
(2) Donations to the government or any of its The tax credit is the amount of donors tax paid to the
agencies or instrumentalities foreign country, but not exceed the limit prescribed by law:
(3) Donations to educational, charitable, religious,
cultural, social welfare institution, accredited LIMIT A:
NGOs, trust on philanthropic organizations, Net gifts (per foreign country)
research institutions, etc. provided that no more ---------------------------------- X Philippine Donor Tax
than 30% of the donation/gift shall be used by Total Net Gifts
the donee institution for its administrative
purposes; Requisites: LIMIT B:
_____________________________________ Net gifts (all foreign countries)
_____________________________________ ----------------------------------- X Philippine Donors Tax
______________________________ Total net gifts
EXERCISE/PROBLEMS
2. Dowry by a father to his legitimate son B. DONORS TAX: MULTIPLE CHOICE THEORITICAL
Before Marriage P 8,000 1. A privilege tax imposed on onerous transfers inter vivos:
During Marriage 5,000 a. Gift tax c. Income tax
Within 1 yr. thereafter 50,000 b. Estate tax d. Donors tax
3. Dowry by a mother to her daughter 2. An excise tax on gratuitous transfers mortis causa
During the marriage P 5,000 a. Gift tax c. Income tax
15 mos. after the marriage 50,000 b. Estate tax d. Donors tax
4. Dowry by a mother to her daughters during their 3. An excise tax on gratuitous transfer inter vivos:
marriages: a. Donees tax c. Income tax
Alexi P42,000 b. Estate tax d. Donors tax
Maribel 50,000
Maricel 22,000 4. First statement: The donors tax shall apply, whether the
Abegael 55,000 gift is direct or indirect, and whether the property is real or
personal, tangible or intangible, even if the transfer is
5. Dowry out of common property of the couple to their merely in trust.
2 sons; 2 mos. after marriage
Jekky P150,000 Second statement: Any contribution in cash or in kind to
Emong 170,000 any candidate, political party or coalition or parties for
6. Donation to Philippine National Red Cross, P100,000 campaign purposes shall be subject to donors tax.
but 50% was spent for office expenses alone. a. Both statements are correct
b. Both statements are incorrect
7. Donation to Mla. City Hall P 300,000, but 50% was c. Only the first statement is correct
spent for office expenses. d. Only the second statement is correct
9. Three of the following are exempt or excluded from the 18. 1st statement: The pay as you file system is not followed
donors tax. Which is the exception? in donors taxation.
a. P200,000 cash given by a non-resident alien donor to 2nd statement: Donations by juridical persons are
his legitimate son who is getting married in the deemed made by a stranger.
Philippines to a Filipina.
b. P10,000 cash given by a resident alien donor to his 19. 1st statement: Renunciation of ones share in the
legitimate son who is getting married in the legitime is a taxable gift.
Philippines. 2nd statement: Gift splitting is a form of tax evasion.
c. Donation of a condominium in Hongkong to a Filipina
20. 1st statement: Donation of a personal property worth P
by a British national not residing in the Philippines.
50,000 must be notarized.
d. P150,000 donation to a non-profit school.
2nd statement: Donation of a real property is valid if made
10. First statement: Gifts in favor of an educational and/or in writing even if not notarised.
religious organizations are exempt from donors tax.
Second statement: Gifts on account of a persons merits or C. Multiple Choice Problems
services rendered are taxable whether the services are Donors Tax: Multiple Choice Problems
demandable debt or not. Turkina, a Filipina princess made the following donations.
a. Both statements are correct a. To Zaida, a land worth P 450,000 in Cubao.
b. Both statement are incorrect b. To Hejia, jewelry worth P 100,000 in Hongkong.
c. Only first statement is correct c. To Shahida, PLDT shares amounting to P 150,000.
d. Only second statement is correct d. To Haida, a building in Italy P 1,600,000 mortgaged
for P 50,000 assumed by the donee.
11. All of the following except one are exempt from the gift tax e. To Goliath, land in Pampanga worth P 300,000.
under the special laws: f. P 300,000 cash, PNB New York to Charlie
a. Donation to Integrated Bar of the Philippines g. P200,000 receivable,50% condoned by Turkina
b. Donation to Development Academy of the Philippines
c. Donation to Philippine Institute of Certified Public She has also transferred the following properties:
Accountants Selling Price FMV
d. Donation to International Rice Research Institute Car, Makati P 200,000 P 300,000
12. John sold his car to Sam. Johns car cost P300,000 and has Car, USA 300,000 200,000
a fair market value of Res. Land,Mla. 1,000,000 2,000,000
P400,000 at the same time of sale. The car was sold for 21. If she is resident Alien her gross gift is:
P200,000. For donors tax purposes, which of the following a. P 2,100,000 c. P 3,100,000
statements is correct? b. P 1,950,000 d. P 3,000,000
a. There is taxable gift of P300,000.
b. There is a taxable gift of P200,000. 22. If she is a NRA non-resident Egyptian, and there is
c. The transfer is subject to capital gains tax reciprocity law, her gross gift is:
d. The transfer involves a personal property, hence, not a. P 850,000 c. P 1,050,000
a subject to gift tax. b. P 950,000 d. P 700,000
13. One of the following statements is false: Questions 23 to 26 are based on the following data:
a. Contracts of donation between husband and wife are Mr. and Mrs. Lapu-Lapu, made the following donations:
void always. 1/25/2012 To Magellan, their legitimate son, on account of
b. The donation by a businessman to a govt officer in marriage last 1/20/2011, car worth P400,000,
view of his public office is void ab ibnitio. with P 200,000 mortgage, was assumed by
c. Donations between persons guilty of adultery or the donee.
concubinage are void. 5/31/2012 To Napoleon, brother of Mr. Lapu-Lapu, his capital
d. Donations to conceived or unborn children are valid. property worth P 200,000 on account of
14. 1st statement: A donation can be both a part of the gross marriage 6 months ago of Napoleon with a
gift of the donor and a taxable income to the donee. condition that the donee will pay the donors tax
2nd statement: A donation may be exempt from donors tax thereon.
but not necessarily a deduction from the donors gross
income. 7/15/2012 To Donita, daughter of Mrs. Lapu-Lapu by
a. Only the 1st statement is correct. former marriage, on account of her marriage 12
b. Only the 2nd statement is correct. months ago, Mrs. Lapu-Lapus paraphernal
c. Both statements are correct. property worth P 100,000.
d. Both are incorrect.
8/20/12 conjugal car of the couple worth P 400,000, with P a. P 9,600.00 c. P 1,660.63
200,000 unpaid mortgage, assumed by b. P 5,907.00 d. P 4,600.00
Donita. And P 500,000 worth of land to their four 32. Using the data in no. 30. The gift tax payable of the wife
sons on account of their graduation, 20% of is:
which was owned by their kumpare who agreed a. P 1,800.00 c. P 13,200.00
to donate his share thru a public document. b. P 3,600.00 d. P 3,460.63
23. The gift tax due of Mr. Lapu-Lapu as of May 31, 2012 is: 33. On July 18, 2015, Mr. Jecky gave a property with a fair
a. P 8,000 c. P 7,200 market value of P 550,000 to Mikey, a legitimate son, and
b. P 7,000 d. P 6,600 Rose, Mikeys bride, on account of their marriage
celebrated on January 3, 2015. The donors tax payable is:
24. The gift tax of Mrs. Lapu-Lapu as of July 15, 2012 is: a. P 87,100 c. P 84,100
a. P 3,600 c. P 2,800 b. P 38,000 d. P 15,800
b. P 2,600 d. P 4,000
34. Mr. Porontong made the following gifts to his relatives:
25. The gift taxes due of Mr. and Mrs. Lapu-Lapu on August Phils. USA UK Italy
20, 2012: Gross gift P750,000 P500,000 P250,000 P500,000
a. P 69,000 & P 18,800 c. P 54,000 & P 15,800 Deductions 250,000 200,000 150,000 150,000
b. P 17,000 & P 18,800 d. P 54,000 & P 18,800 Tax paid 25,000 12,000 10,000
26. The gift tax due of their kumpare is: The gift tax due after credit is:
a. P 30,000 c. P 45,000 a. P 35,600 c. P 33,520
b. P 10,000 d. P 15,000 b. P 25,600 d. P 39,000
Questions 27 & 28 are based on the following data: 35. In 2014, Maynard made the following gifts:
Mr. Pinya, made the following donations for the year 2012: 1. On June 1, 2014, P150,000 to Karen, his daughter, on
account of her marriage celebrated on May 1, 2010.
April 15 To Natalie, legally adopted child on acct. of 2. On July 10, 2014, a parcel of land worth, P180,000 to
marriage last week, car worth P 710,000 in his father, subject to the condition that the father
Philippines. would assume the mortgage indebtedness of Maynard
To Daylan, his daughter, car in USA worth P in the amount of P40,000.
300,000. They paid $ 200 donors tax in the US 3. On September 30, 2014, P150,000 dowry to his
($1 P 45) daughter Gina, on account of her scheduled marriage
on October 25, 2015, and another wedding gift worth
July 20 To Tiffany niece in Manila, P 200,000 worth of P20,000 on November 23, 2014.
personal property.
To Nora, legitimate daughter on acct. of marriage How much is the total net gifts?
in Cebu, July 18, 2008 car, worth P 400,000 but a. P500,000 c. P430,000
mortgaged for P 200,000, of which was b. P450,000 d. P300,000
assumed by the donee.
36. Who is not subject to the donors tax?
27. The gift tax due after credit on April 15, 2012 is: a. An individual making a donation.
a. P 30,800 c. P 44,000 b. A corporation making a donation.
b. P 35,000 d. P 33,000 c. A partnership making a donation.
d. An employer who pays premiums on the life insurance
28. The gift tax due on July 20, 2012 is: of its employee.
a. P 40,000 c. P 84,000
b. P 36,000 d. P 80,000 37. J. C. gave a property with a fair market value of P200,000,
with unpaid mortgage of P20,000 still assumed by the
29. Mr. Romano donated a total amount P 500,000, 40% to the donor, to Jay his son, and Jays bride Tina, on account of
Quezon City Hall and 60% to a charitable institution her marriage 13 months ago.
TAHANAN NI GLORIA. Upon inquiry, it was verified that the
charitable institutions total receipts from donation The allowable deduction is:
amounted to P 10M and its total administrative expenses a. P10,000 c. P40,000
reached P 4M. Mr. Romano can claim a total deduction / b. P20,000 d. P 0
exemption of:
a. P 300,000 c. P 200,000 38. The donors tax due based on the above problem is:
b. P 500,000 d. P None a. P32,000 c. P 2,000
b. P30,000 d. P31,800
30. During the current year, Mr. and Mrs. Reyes, non-resident
citizens, donated the following:
Sept. 25: To Bea a legitimate child, on account of Whether you know it or not, today you are placing an
marriage, last month a conjugal property order for your tomorrows from the catalogue of the
located in the Philippines, FMV, P 400,000. Universe. Your predominant thoughts and feelings today
To Jessica niece of Mr. Reyes, on account of are creating a frequency that is automatically determining
marriage, a property located in the USA your life tomorrow. Feel good now and for the rest of the
exclusively owned by the husband, FMV, P day, and make your tomorrows magnificent.
150,000 (gift tax in USA, P 5,500)
-The Secrets by Rhonda Byrne
Oct. 9 : To Gail, a legitimate child, conjugal property
in the Philippines, FMV,
P 100,000.
31. Using the data in no. 30, the gift tax payable on the
October 9 gift of the husband is: