Republic of the Philippines
Laguna State Polytechnic University Santa Cruz Campus
Province of Laguna
REVIEWER ON TRANSFER AND BUSINESS TAXATION
Reviewer by: Harlene A. Cambel
Book by: Enrico D. Tabag, CPA, MBA & Earl Jimson R. Garcia, CPA, MBA
CHAPTER 6: DONOR’S TAX It is determined with reference to all
the donor’s gifts.
DONATION - an act of liberality whereby a
person disposes gratuitously of a thing or
right in favor of another, who accepts it. PURPOSE OF DONOR’S TAX
The law considers donation as a 1. To prevent avoidance of estate tax.
contract because: 1. t requires 2. To compensate for the loss of the
acceptance and 2. rules of progressive rates of income tax.
obligations and contracts apply to it
as suppletory law. ELEMENTS OF DONATION
1. Capacity of the donor to make
NATURE OF DONOR’S TAX donation.
The donor’s tax shall be imposed to Refers to the condition and
the transfer of property by gift whether the legal competence of the
transfer is in trust or otherwise, whether the donor to enter into a contract
gift is direct or indirect, and whether the Capacity to make a contract
property is real or personal, tangible or and capacity to dispose a
intangible. property
Capacity of the donor is
DONOR’S TAX - Also called as “Gift Tax” determined at the perfection
and is a tax levied, assessed, collected and of the donation
paid upon the transfer by any person, 2. Donative intent.
resident or non-resident, of the property by Refers to the proper
gift - It is a tax imposed on the exercise of the declaration of the legal owner
donor’s right during lifetime to transfer of a property or right to
property to others in the form of gift - Donor’s transfer ownership to another
tax is an excise tax. without consideration
It is an excise tax imposed on the o Consideration means
transfer of property by way of gift money or equal value
inter-vivos or some goods or
And is also a direct tax. service capable of
The tax is imposed on the donor
, being evaluated in Completion and Perfection of Donation
money The donor’s tax shall not apply unless
Must be followed by a and until there is a completed gift (RR 12-
donative act to constitute a 2018).
gift
No strained and artificial FORMALITIES
construction of a DONATION OF MOVABLE PROPERTY
supplementary statute should Donation is a formal contract,
be included to tax as gift a thus, those which are not in
transfer actually lacking of accordance with the formalities
donative intent as required by the law shall be
Donative intent is required considered void.
only in direct gifts Oral Donation
The intention to donate is o Requires simultaneous
known by observing the forms delivery of the thing or
required by the law to make it document
valid Donation in Writing
o Applied when value of
property donated exceeds
3. Delivery P5,000, otherwise, VOID
It is completed by the
delivery, either actual o DONATION OF IMMOVABLE PROPERTY
constructively, of the donated Must be in a public instrument
property or instrument to the It must specify: 1. Property donated
donee 2. Value of the charges which the
The law in force at the time of donee must satisfy
perfection or completion shall If not complied, considered VOID
govern the imposition of Acceptance may be made in the
donor’s tax based on the fair same deed of donation OR in a
market value of the property separate public document but it shall
not take effect unless it is done during
4. Acceptance the lifetime of the donor
Donation is perfected from
the time of knowledge of the CHARACTERISTICS OF DONOR’S TAX
donor that the donee has Excise tax
accepted the same o it is a right imposed on the
Delivery and acceptance is “right” or “privilege” to transfer
required to consummate property by way of gift inter-
donation vivos
Acceptance must be made It is a contract
DURING the lifetime of both o does not apply until there is a
the donee and the donor completed gift - It is
completed by delivery of
Laguna State Polytechnic University Santa Cruz Campus
Province of Laguna
REVIEWER ON TRANSFER AND BUSINESS TAXATION
Reviewer by: Harlene A. Cambel
Book by: Enrico D. Tabag, CPA, MBA & Earl Jimson R. Garcia, CPA, MBA
CHAPTER 6: DONOR’S TAX It is determined with reference to all
the donor’s gifts.
DONATION - an act of liberality whereby a
person disposes gratuitously of a thing or
right in favor of another, who accepts it. PURPOSE OF DONOR’S TAX
The law considers donation as a 1. To prevent avoidance of estate tax.
contract because: 1. t requires 2. To compensate for the loss of the
acceptance and 2. rules of progressive rates of income tax.
obligations and contracts apply to it
as suppletory law. ELEMENTS OF DONATION
1. Capacity of the donor to make
NATURE OF DONOR’S TAX donation.
The donor’s tax shall be imposed to Refers to the condition and
the transfer of property by gift whether the legal competence of the
transfer is in trust or otherwise, whether the donor to enter into a contract
gift is direct or indirect, and whether the Capacity to make a contract
property is real or personal, tangible or and capacity to dispose a
intangible. property
Capacity of the donor is
DONOR’S TAX - Also called as “Gift Tax” determined at the perfection
and is a tax levied, assessed, collected and of the donation
paid upon the transfer by any person, 2. Donative intent.
resident or non-resident, of the property by Refers to the proper
gift - It is a tax imposed on the exercise of the declaration of the legal owner
donor’s right during lifetime to transfer of a property or right to
property to others in the form of gift - Donor’s transfer ownership to another
tax is an excise tax. without consideration
It is an excise tax imposed on the o Consideration means
transfer of property by way of gift money or equal value
inter-vivos or some goods or
And is also a direct tax. service capable of
The tax is imposed on the donor
, being evaluated in Completion and Perfection of Donation
money The donor’s tax shall not apply unless
Must be followed by a and until there is a completed gift (RR 12-
donative act to constitute a 2018).
gift
No strained and artificial FORMALITIES
construction of a DONATION OF MOVABLE PROPERTY
supplementary statute should Donation is a formal contract,
be included to tax as gift a thus, those which are not in
transfer actually lacking of accordance with the formalities
donative intent as required by the law shall be
Donative intent is required considered void.
only in direct gifts Oral Donation
The intention to donate is o Requires simultaneous
known by observing the forms delivery of the thing or
required by the law to make it document
valid Donation in Writing
o Applied when value of
property donated exceeds
3. Delivery P5,000, otherwise, VOID
It is completed by the
delivery, either actual o DONATION OF IMMOVABLE PROPERTY
constructively, of the donated Must be in a public instrument
property or instrument to the It must specify: 1. Property donated
donee 2. Value of the charges which the
The law in force at the time of donee must satisfy
perfection or completion shall If not complied, considered VOID
govern the imposition of Acceptance may be made in the
donor’s tax based on the fair same deed of donation OR in a
market value of the property separate public document but it shall
not take effect unless it is done during
4. Acceptance the lifetime of the donor
Donation is perfected from
the time of knowledge of the CHARACTERISTICS OF DONOR’S TAX
donor that the donee has Excise tax
accepted the same o it is a right imposed on the
Delivery and acceptance is “right” or “privilege” to transfer
required to consummate property by way of gift inter-
donation vivos
Acceptance must be made It is a contract
DURING the lifetime of both o does not apply until there is a
the donee and the donor completed gift - It is
completed by delivery of
