Donor's Tax

• Donor's tax


  A tax imposed on the transfer of property by way of gift inter vivos
• Donation


  • Perfected from the moment the donor knows of the acceptance by the donee
  • Completed by the delivery, either actually or constructively, of the donated property to the donee
• For a donation of an immovable to be valid, it must be made in a public document specifying 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
• Renunciation by the surviving spouse of his/her share in the conjugal partnership or absolute community is subject to donor's tax
• General renunciation by an heir, including the surviving spouse, of his/her share in the hereditary estate is not subject to donor's tax, unless specifically and categorically done in favor of identified heir/s
• Where property is transferred for less than an adequate and full consideration, the amount by which the fair market value exceeds the consideration shall be deemed a gift
• Net gift


  The net economic benefit from the transfer that accrues to the donee
• Valuation of gifts in the form of property

  Follows the rules set forth in Section 6, with the reckoning point being the date the donation is made
• Computation of the donor's tax

  1. Donations made before January 1, 1998 are subject to the old rates

  2. Donations made January 1, 1998 to December 31, 2017 are subject to the amended rates

  3. Only donations made on or after January 1, 2018 are subject to the TRAIN Law rates
• Husband and wife are considered separate taxpayers for donor's tax purposes
• Filing of donor's tax return

  1. Required to be filed within 30 days after the date the gift is made or completed

  2. Tax due shall be paid at the same time the return is filed

  3. Return shall be filed and tax paid to an AAB, the Revenue District Officer or Revenue Collection Officer having jurisdiction over the donor's domicile
• Transfers for less than adequate and full consideration are deemed gifts, except for bona fide, arm's length transactions in the ordinary course of business
• Gifts exempt from donor's tax

  • Gifts to the National Government or any of its non-profit entities
  • Gifts to educational, charitable, religious, cultural or social welfare non-profit organizations, provided not more than 30% is used for administration
• DONATION INTER VIVOS (Donor’s Tax)

  • A transfer of property while the donor is still alive.
• Elements of Taxable Donation

  • CAPACITY – means that the donor/donee must be right in terms of age, mental state, etc. The donor must also have the capability to donate.
  • DONATIVE INTENT – it must be voluntary on part of the donor; you can’t force the donee to accept your donation.
  • DELIVERY – the transfer of the property is completed by the deliver, either actually or constructively, of the donated property to the donee.
  • ACCEPTANCE
• INCOMPLETE GIFT

  A gift that is incomplete because of reserved powers becomes complete when either:

  1. Donor renounces the power; or
  2. The donor's right to exercise the power ceases because of the happening of some event or contingency or the fulfillment of some condition, other than the death of the donor.
• The Law that Governs the imposition of Donor’s Tax

  • The law in force at the time of the perfection/completion of the donation shall govern the imposition of donor's tax
• The transfer is perfected from the moment the donor knows of the acceptance of the donee.
• Donor’s tax is a direct tax because the tax is imposed on the donor and determined with reference to all the donor's gifts.
• Transfer for insufficient consideration


  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