TAXATION ATTY. MACMOD, C.P.A.

Donors Tax

LECTURE NOTES
1. Definition and characteristics of the tax. 8. Formula for computation of Taxable net gift gate and
gift tax due
2. Requisites of a valid donation 9. Donors tax Credit (Same concept as in estate tax
a. _____________________ credit)
b. _____________________ 10. Administrative provisions
_____________________
d. _____________________ Summary of properties comprising gross gift:
e._____________________ Real Tangible Intangible
Property Personal Personal
3. Classification of Donors and composition of the gross Citizen or
gift: Resident ALL ALL ALL
a. Resident or Citizens of the Philippines NRA w/ W/in the W/in the NONE
_________________________________________ reciprocity Phils., only Phils.,only
________________ NRA w/o W/in the W/in the W/in the
b. Not a resident not a citizens of the Phil. (NRA) reciprocity Phils., only Phils., only Phils., only
Without Reciprocity Law
_____________________________________ Summary deductions allowed:
With Reciprocity Law Citizen or NRA
___________________________ resident
Dowry Allowed none
4. Other transactions subject to donors tax Gifts to the Natl Govt. Allowed Allowed
a. ______________________________ Gifts to educational, charitable
b. ______________________________ institution etc. Allowed Allowed
Mortgage assumed by donee Allowed Allowed
5. Requisites of Transfer with insufficient consideration Diminution Allowed Allowed
a. _______________________________
b. _______________________________ TAX CREDIT FOR FOREIGN DONORS TAX
c. _______________________________ In order to minimize or lessen the harsh of effect of
taxing the same gift twice, the donor is allowed to claim the
6. Valuation of gross gift gift tax paid in the foreign country as a tax credit against
a. Personal Property _________________ the gift tax paid in the Philippines. It can only be claimed of
b. Real Property _____________________ Citizen or resident of the Philippines at the time the
donation was made.
7. Deduction from the gross gift:
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 ---------------------------------- X Philippine Donor Tax
more than 30% of the donation/gift shall be Total Net Gifts
used by the donee institution for its
administrative purposes; Requisites: LIMIT B:
______________________________________ Net gifts (all foreign countries)
______________________________________ ----------------------------------- X Philippine Donors Tax
____________________________ Total net gifts

DONORS TAX RATES

b. Under BIR Rulings: a. In general
(1) Encumbrances on the property donated, if If the net gifts is:
assumed by the donee But not The tax Of excess
(2) Diminutions on the property donated Over over shall be Plus over
specifically provided by the donor P 100,000 Exempt
P100,000 200,000 0 2% P100,000
c. Under Special Laws. Donations to the following 200,000 500,000 2,000 4% 200,000
special non-stock-non-profit institutions duly 500,000 1,000,000 14,000 6% 500,000
recognized by the government pursuant to a special 1,000,000 3,000,000 44,000 8% 1,000,000
law are exempt: 3,000,000 5,000,000 204,000 10% 3,000,000
(1) International Rice Research Institute 5,000,000 10,000,000 404,000 12% 5,000,000
(2) Ramon Magsaysay Award Foundation
(3) Southern Philippines Development
Administration b. When the donee is stranger, the tax shall be 30% of the
(4) Philippines American Cultural Foundation net gifts.
(5) Integrated Bar of the Philippines
(6) Development Academy of the Philippines A STRANGER is a person who is:
(7) National Social Action Council a. Not a brother or sister (whether by the whole or
(8) Museum of the Philippine Costumes half blood), spouse, ancestor and lineal
(9) Aqua-culture Department of South East Asia descendant;
Fisheries Development Center of the Philippines b. Not a relative by consanguinity in the collateral line
(10) Intramuros Administration within the fourth degree of relationship.
 c. Any contribution in cash or in kind to any 2) The deduction claimed and allowable;
candidate, political party or coalition of 3) Any previous net gifts made during the
parties for campaign purpose shall be same calendar year;
governed by Election Code, as amended. 4) The name of the donees; and
5) Such further information as may be
FORMAT OF COMPUTATION required by rules and regulations made
a. FIRST DONATION OF THE YEAR pursuant to law.
Gross Gift P
xxx b. The donors tax return is filed within 30 days
Less: Exemption from date of each donation.
xxx c. The tax is paid as the return is files (pay-as-
Taxable Net Gift P you-file).
xxx d. Except in cases where the Commissioner
otherwise permits, the return shall be filed
b. Subsequent donation/s during the same and the tax paid to:
year: 1) An authorized agent bank
Gross Gifts P 2) Revenue District Officer
xxx 3) Revenue Collection Officer or;
Less: Exemptions (Deductions) 4) Duly authorized Treasurer of the city or
xxx municipality
Net gifts P
xxx Where the donor was domiciled at the time of the
Add: All prior net gifts transfer, or if there be no legal residence in the
during the same year Philippines, with the Office of the Commissioner.
xxx e. In the case of gifts by a non-resident, the
Total (aggregate) net gifts P return may be filed with:
xxx 1) Philippine Embassy or Consulate in the
Donors tax on the total net country where he is domiciled at the
gifts P time of the transfer, or;
xxx 2) Directly with the office of the
Less: Donors tax on all prior Commissioner.
net gifts
xxx
Donors tax due or payable P f. Civil penalties and interest
xxx 1) Penalty of 25% if there is no false or
fraudulent intent on the taxpayer.
ADMINISTRATIVE PROVISIONS: 2) Penalty of 50% if there is false, malice
*FILING AND PAYMENT OF TAX or fraudulent intent on the taxpayer.
a. Any individual who makes any transfer by 3) Interest of 20% on the unpaid amount
gift shall, for the purpose of the said tax of tax from the date computed until fully
make a return in duplicate. The return shall paid.
set forth:
1) Each gift made during the calendar year
which is to be included in computing net
gifts;
- done

EXERCISE/PROBLEMS

a. In each of the following, determine the allowable g.

deduction from the Gross Gift: 1. Dowry by a mother to her daughter
b. h. During the marriage
1. Dowry of P 100,000 given by grandfather to P 5,000
her granddaughter 2 wks. after the marriage. i. 15 mos. after the marriage
c. 50,000
1. Dowry by a father to his legitimate son j.
d. Before Marriage P 1. Dowry by a mother to her daughters during
8,000 their marriages:
e. During Marriage k. Alexi
5,000 P42,000
f. Within 1 yr. thereafter l. Maribel
50,000 50,000
 m. Maricel or parties for campaign purposes shall be subject
22,000 to donors tax.
n. Abegael a. Both statements are correct
55,000 b. Both statements are incorrect
o. c. Only the first statement is correct
1. Dowry out of common property of the couple d. Only the second statement is correct
to their 2 sons; 2 mos. after marriage am.
p. Jekky an.
P150,000 ao. 5. Donors tax is distinguished from the
q. Emong estate tax
170,000 ap. First distinction: The rates for donors tax are
1. Donation to Philippine National Red Cross, lower than those for estate tax, as a rule.
P100,000 but 50% was spent for office aq. Second distinction: In donors tax, the
expenses alone. exemption is P200,000 while in estate tax it is P
r. 100,000.
1. Donation to Mla. City Hall P 300,000, but a. Both distinctions are correct.
50% was spent for office expenses. b. Both distinctions are wrong.
s. c. First distinction is correct, the second is wrong.
1. Land donated w/ FMV of P 2M w/ unpaid real d. First distinction is wrong, the second is correct.
estate tax of P 400,000, assumed by the ar.

as. 6. When the donee or beneficiary is stranger, the

donee & unpaid mortgage of P 1M, all assumed
tax payable by the donor shall be:
by the donor.
a. 30% of the gross gifts
t.
b. 30% of the net gifts
1. Donation mortis causa of a land with FMV of P
c. Based on the graduated rates with the first
1M left by the decedent and given inter vivos
P100,000 net gift exempt.
car worth p250,000 pledged for p100,000,30%
d. Based on the graduated rates with the first
assumed by the donee.
P100,000 net gift exempt or 30% of the net
u.
gifts whichever is higher.
1. Donation intervivos to son on account of at.
topping the CPA Exam. Land with FMV, P au. 7. For donors tax purposes, one of the following
500,000 subject to the condition that a son will is a stranger:
pay the donors tax on the said donation. a. Brother or sister c. Uncle
v. b. Spouse d. Son-in-law
w. B. DONORS TAX: MULTIPLE CHOICE av.

aw. 8. One of the following is a relative by

THEORITICAL
consanguinity in the collateral line in the third
x. 1. A privilege tax imposed on onerous transfers
degree of relationship.
inter vivos:
a. Daughter of the donors nephew
y. a. Gift tax c. Income
b. First cousin of the donor
tax
c. Niece of the donor
z. b. Estate tax d. Donors
d. Second cousin of the donor
tax ax.
aa. ay. 9. Three of the following are exempt or
ab. 2. An excise tax on gratuitous transfers mortis excluded from the donors tax. Which is the
causa exception?
ac. a. Gift tax c. Income a. P200,000 cash given by a non-resident alien
tax donor to his legitimate son who is getting
ad. b. Estate tax d. Donors married in the Philippines to a Filipina.
tax b. P10,000 cash given by a resident alien donor
ae. to his legitimate son who is getting married in
af. 3. An excise tax on gratuitous transfer the Philippines.
inter vivos: c. Donation of a condominium in Hongkong to a
ag. a. Donees tax c. Income Filipina by a British national not residing in the
tax Philippines.
ah. b. Estate tax d. Donors d. P150,000 donation to a non-profit school.
tax az.
ai. ba. 10. First statement: Gifts in favor of an
aj. 4. First statement: The donors tax shall apply, educational and/or religious organizations are
whether the gift is direct or indirect, and whether exempt from donors tax.
the property is real or personal, tangible or bb. Second statement: Gifts on account of
intangible, even if the transfer is merely in trust. a persons merits or services rendered are taxable
ak. whether the services are demandable debt or not.
al. Second statement: Any contribution in cash or a. Both statements are correct
in kind to any candidate, political party or coalition b. Both statement are incorrect
c. Only first statement is correct
 d. Only second statement is correct bu. 17. 1st statement: A person can donate all his
bc.
present property unconditionally.
bd. 11. All of the following except one are exempt
bv. 2nd statement: No person may receive or give
from the gift tax under the special laws:
by way of donation more than he
a. Donation to Integrated Bar of the Philippines
may give or receive.
b. Donation to Development Academy of the
bw.
Philippines
bx. 18. 1st statement: The pay as you file system is
c. Donation to Philippine Institute of Certified
not followed in donors taxation.
Public Accountants
by. 2nd statement: Donations by juridical persons
d. Donation to International Rice Research
are deemed made by a stranger.
Institute
be. bz.
bf. 12. John sold his car to Sam. Johns car cost ca. 19. 1st statement: Renunciation of ones share in
P300,000 and has a fair market value of the legitime is a taxable gift.
cb. 2nd statement: Gift splitting is a form of tax
bg. P400,000 at the same time of sale. The car
evasion.
was sold for P200,000. For donors tax purposes, cc.
which of the following statements is correct? cd. 20. 1st statement: Donation of a personal
a. There is taxable gift of P300,000. property worth P 50,000 must be
b. There is a taxable gift of P200,000. notarized.
c. The transfer is subject to capital gains tax ce. 2nd statement: Donation of a real property is
d. The transfer involves a personal property, valid if made in writing even if not
hence, not a subject to gift tax. notarised.
bh.
cf.
bi. 13. One of the following statements is false:
cg. C. Multiple Choice Problems
a. Contracts of donation between husband and
ch. Donors Tax: Multiple Choice Problems
wife are void always.
ci. Turkina, a Filipina princess made the following
b. The donation by a businessman to a govt
donations.
officer in view of his public office is void ab
a. To Zaida, a land worth P 450,000 in Cubao.
ibnitio.
b. To Hejia, jewelry worth P 100,000 in
c. Donations between persons guilty of adultery
Hongkong.
or concubinage are void.
c. To Shahida, PLDT shares amounting to P
d. Donations to conceived or unborn children are
150,000.
valid.
d. To Haida, a building in Italy P 1,600,000
bj. 14. 1st statement: A donation can be both a
mortgaged for P 50,000 assumed by the
part of the gross gift of the donor and a taxable
donee.
income to the donee.
e. To Goliath, land in Pampanga worth P 300,000.
bk. 2nd statement: A donation may be
f. P 300,000 cash, PNB New York to Charlie
exempt from donors tax but not necessarily a
g. P200,000 receivable,50% condoned by Turkina
deduction from the donors gross income.
cj.
a. Only the 1st statement is correct.
ck. She has also transferred the following
b. Only the 2nd statement is correct.
properties:
c. Both statements are correct.
cl. Selling Price
d. Both are incorrect.
FMV
bl.
cm. Car, Makati P
bm. In the following questions choose:
200,000 P 300,000
a. If only the first statement is correct.
cn. Car, USA
b. If only the second statement is correct.
300,000 200,000
c. If both statements are correct.
co. Res. Land,Mla.
d. If both statement are incorrect.
1,000,000
bn.
2,000,000
bo. 15. 1st statement: Donative intent as a
cp.
requisite of a valid donation is
cq. 21. If she is resident Alien her gross gift is:
absolute.
cr. a. P 2,100,000 c. P
bp. 2nd statement: An inofficious donation is
3,100,000
voidable.
cs. b. P 1,950,000 d. P
bq.
3,000,000
br. 16. 1st statement: As a general rule all
ct.
persons who may contract and
cu. 22. If she is a NRA non-resident Egyptian, and
dispose of their property may
there is reciprocity law, her gross gift is:
donate.
cv. a. P 850,000 c. P
bs. 2nd statement: Minors can be a donor or a
1,050,000
donee
cw. b. P 950,000 d. P 700,000
bt.

cx.
 cy. Questions 23 to 26 are based on the following dz. To Daylan, his daughter, car in USA
data: worth P 300,000. They paid $ 200 donors
cz. Mr. and Mrs. Lapu-Lapu, made the following tax in the US ($1 P 45)
donations: ea.
da. 1/25/2012 To Magellan, their legitimate eb. July 20 To Tiffany niece in Manila, P
son, on account of marriage last 200,000 worth of personal property.
1/20/2011, car worth P400,000, with P ec. To Nora, legitimate daughter on acct. of
200,000 mortgage, was assumed by marriage in Cebu, July 18, 2008 car, worth
the donee. P 400,000 but mortgaged for P 200,000,
db. 5/31/2012 To Napoleon, brother of Mr. Lapu- of which was assumed by the donee.
Lapu, his capital property worth P ed.
200,000 on account of marriage 6 ee. 27. The gift tax due after credit on April 15,
months ago of Napoleon with a condition 2012 is:
that the donee will pay the donors tax ef. a. P 30,800 c. P 44,000
thereon. eg. b. P 35,000 d. P 33,000
dc. eh.
dd. 7/15/2012 To Donita, daughter of Mrs.
Lapu-Lapu by former marriage, on ei. 28. The gift tax due on July 20, 2012 is:
account of her marriage 12 months ago, ej. a. P 40,000 c. P 84,000
Mrs. Lapu-Lapus paraphernal property ek. b. P 36,000 d. P 80,000
worth P 100,000. el.
de. em. 29. Mr. Romano donated a total amount P
df. 8/20/12 conjugal car of the couple worth P 500,000, 40% to the Quezon City Hall and 60% to
400,000, with P 200,000 unpaid a charitable institution TAHANAN NI GLORIA. Upon
mortgage, assumed by Donita. And P inquiry, it was verified that the charitable
500,000 worth of land to their four sons institutions total receipts from donation amounted
on account of their graduation, 20% of to P 10M and its total administrative expenses
which was owned by their kumpare who reached P 4M. Mr. Romano can claim a total
agreed to donate his share thru a public deduction / exemption of:
document. en. a. P 300,000 c. P 200,000
dg. eo. b. P 500,000 d. P None
dh. 23. The gift tax due of Mr. Lapu-Lapu as of May ep.
31, 2012 is: eq. 30. During the current year, Mr. and Mrs.
di. a. P 8,000 c. P 7,200 Reyes, non-resident citizens, donated the
dj. b. P 7,000 d. P 6,600 following:
dk. er. Sept. 25: To Bea a legitimate child, on
dl. 24. The gift tax of Mrs. Lapu-Lapu as of July account of marriage, last month a
15, 2012 is: conjugal property located in the
dm. a. P 3,600 c. P 2,800 Philippines, FMV, P 400,000.
es. To Jessica niece of Mr. Reyes, on
dn. b. P 2,600 d. P 4,000 account of marriage, a property
do. located in the USA exclusively owned
dp. 25. The gift taxes due of Mr. and Mrs. by the husband, FMV, P 150,000 (gift
Lapu-Lapu on August 20, 2012: tax in USA, P 5,500)
a. P 69,000 & P 18,800 c. P 54,000 & P et.
15,800 eu. Oct. 9 : To Gail, a legitimate child, conjugal
b. P 17,000 & P 18,800 d. P 54,000 & P property in the Philippines, FMV,
18,800 ev. P 100,000.
dq. ew.
dr. 26. The gift tax due of their kumpare is: ex. The gift tax payable on the September 25 gifts
ds. a. P 30,000 c. P 45,000 of the husband is:
dt. b. P 10,000 d. P 15,000 ey. a. P 7,600 c. P 4,247
du. ez. b. P 2,600 d. P 3,353
dv. Questions 27 & 28 are based on the following fa.
data: fb. 31. Using the data in no. 30, the gift tax
dw. Mr. Pinya, made the following donations for the payable on the October 9 gift of the husband is:
year 2012: fc. a. P 9,600.00 c. P 1,660.63
dx. fd. b. P 5,907.00 d. P
dy. April 15 To Natalie, legally adopted 4,600.00
child on acct. of marriage last week, car fe. 32. Using the data in no. 30. The gift tax
worth P 710,000 in Philippines. payable of the wife is:
ff. a. P 1,800.00 c. P
13,200.00
 fg. b. P 3,600.00 d. P 2. On July 10, 2014, a parcel of land worth,
3,460.63 P180,000 to his father, subject to the condition
fh. that the father would assume the mortgage
fi. 33. On July 18, 2015, Mr. Jecky gave a indebtedness of Maynard in the amount of
property with a fair market value of P 550,000 to P40,000.
Mikey, a legitimate son, and Rose, Mikeys bride, on 3. On September 30, 2014, P150,000 dowry to
account of their marriage celebrated on January 3, his daughter Gina, on account of her scheduled
2015. The donors tax payable is: marriage on October 25, 2015, and another
fj. a. P 87,100 c. P 84,100 wedding gift worth P20,000 on November 23,
2014.
fk. b. P 38,000 d. P 15,800 gn.
fl. go. How much is the total net gifts?
fm. 34. Mr. Porontong made the following gifts to gp. a. P500,000 c. P430,000
his relatives: gq. b. P450,000 d. P300,000
fn. fo. Ph fp. U fq. U gr.
ils. S K gs. 36. Who is not subject to the donors tax?
A a. An individual making a donation.
b. A corporation making a donation.
c. A partnership making a donation.
fs. Gr ft. P7 fu. P fv. P d. An employer who pays premiums on the life
os 50 5 2 insurance of its employee.
s ,0 0 5 gt.
gif 00 0 0 gu. 37. J. C. gave a property with a fair market
t , , value of P200,000, with unpaid mortgage of
0 0 P20,000 still assumed by the donor, to Jay his son,
0 0 and Jays bride Tina, on account of her marriage 13
0 0 months ago.
fx. D fy. 25 fz. 2 ga. 1 gv.
ed 0, 0 5 gw. The allowable deduction is:
uc 00 0 0 a. P10,000 c. P40,000
tio 0 , , b. P20,000 d. P 0
ns 0 0 gx.
0 0 gy. 38. The donors tax due based on the above
0 0 problem is:
gc. Ta gd. ge. 2 gf. 1 a. P32,000 c. P 2,000
x 5 2 b. P30,000 d. P31,800
pa , , gz.
id 0 0 ha.
0 0 hb. Whether you know it or not, today you are
0 0 placing an order for your tomorrows from the
gh. catalogue of the Universe. Your predominant
thoughts and feelings today are creating a
frequency that is automatically determining
gi. The gift tax due after credit is: your life tomorrow. Feel good now and for the
gj. a. P 35,600 c. P 33,520 rest of the day, and make your tomorrows
gk. b. P 25,600 d. P 39,000 magnificent.
gl. hc.
gm. 35. In 2014, Maynard made the following gifts:
1. On June 1, 2014, P150,000 to Karen, his hd. -The Secrets by
daughter, on account of her marriage Rhonda Byrne
celebrated on May 1, 2010.