DONATION INTER VIVOS
Excise tax
“A gift tax is not a property tax, but an excise tax
imposed on the transfer of property by way of gift inter
vivos.”[Lladoc v. CIR, G.R. No. L-19201, 16 June 1965]
DONATION FOR ELECTION CAMPAIGN
“…Any provision of law to the contrary
notwithstanding any contribution in cash or in kind to
any candidate or political party or coalition of parties for
campaign purposes, duly reported to the Commission
shall not be subject to the payment of any gift tax.” [Sec. 13,
R.A. 7166]
RENUNCIATION / REPUDIATION
Renunciation
“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 donor’s tax whereas general renunciation by an heir, 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 the hereditary estate.” [Sec. 12, Revenue
Regulation 12-2018]
Renunciation of share in net conjugal/communal assets
- Surviving spouse renounce his/her share in net
conjugal/communal properties
- Whether specific or general
- Subject to donor’s tax
- Reason: surviving spouse is the owner
General Renunciation by one of the children
- General renunciation of inheritance cannot be considered as donation.
- Situation 1: There are only two heirs, and one heir
renounced his share.
- Situation 2: There are three or more heirs, and one heir
renounced his share without naming a specific person who will
receive such share.
- Reason: The heir who renounced his share did not acquire
ownership of the property.
Renunciation
Renunciation in favor of specific person is subject to donor’s tax.
Example: Assuming there are three children (heirs)
Hier 1 renounced his Php5,000,000 share in inheritance in favor of
Heir 2.
The Php5,000,000 will be subject to donor’s tax.
EXEMPT FROM DONOR’S TAX
Donation for public use
Non- taxable
Requisites:
- National government or government related entity;
- The entity is not profit oriented;
- The donation is intended for public use.
Note: Donation to GOCC is subject to donor’s tax.
Gifts in favor of an educational and/or charitable, religious, cultural or social
welfare corporation, institution, accredited nongovernment organization,
trust or philanthropic organization or research institution or organization.
Non- taxable
Requisites:
That not more than thirty percent (30%) of said gifts shall be used for administration
purposes;
incorporated as a non-stock entity;
paying no dividends;
governed by trustees who receive no compensation;
devote all its income to the accomplishment and promotion of the purposes
enumerated in its Articles of Incorporation.
RECIPROCITY RULE
RECIPROCITY RULE
Applicable in Donor’s tax
Non-resident alien
Intangible personal property located in Philippines
INCOMPLETE TRANSFER
INCOMPLETE TRANSFER
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 donor’s death.
(See RR 12-2018)
INCOMPLETE TRANSFER
1. Revocable transfer
2. Conditional transfer
REVOCABLE TRANSFER
On 17 March 1995 Famor donated, subject to revocation, a parcel of land
in favor of Rafal. At that time the value of property is Php500,000.
On March 1, 2021, Famor renounced his power to revoke the said
donation. At that ttime the value of the property is Php2,500,000.
The computation of donor’s tax due will be based on Php2,500,000.
CONDITIONAL TRANSFER
Class participation
Using your knowledge in conditional obligation, can you
give example of conditional transfer?
INCOMPLETE TRANSFER
A transfer that remains incomplete at the
time of death of the donor will be subjected to
estate taxation.
INSUFFICIENT CONSIDERATION
TRANSFER OF REAL PROPERTY FOR
INSUFFICIENT CONSIDERATION
If capital asset, it is subject to capital gains tax of 6%
based on fair market value or selling price, whichever
is higher.
If ordinary asset, the difference between fair market
value and the selling price will be subjected to donor’s
tax.
COMPUTING DONOR’S TAX DUE
DONOR’S TAX
Rate: 6%
Tax base: Total net gifts in excess of Php250,000
Note well
DONOR’S TAX
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.
(See RR 12-2018)
DONOR’S TAX
“The law in force at the time of the completion
of the donation shall govern the imposition of
donor’s tax.”
(See RR 12-2018)
VALUATION
Valuation – real property
- Zonal value (BIR) or fair value (Assessor’s office),
whichever is higher.
Valuation – listed shares of stock
- Listed in PSE
- The average of highest and lowest price
Example: The trading price of shares of stock of Payzher Inc., a listed company, as of March 15, 2021:
Highest trading price Php3,500/share
Lowest trading price 2,500/share
Average: 3,500 + 2,500 = 6,000
6,000 ÷ 2 = 3,000
Valuation – non listed shares of stock
Preferred stock - par value
Common stock – book value as per financial statements.
Book value per share formula:
(Total stockholders’ equity – Preferred equity) ÷ Outstanding shares
Valuation
Newly acquired personal property = purchase price
Old personal property = second hand value
Receivables (monetary claims) = amount stated in the contract
THANK YOU!
