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Questions and Answers
What is the final withholding tax rate imposed on withdrawals from a deposit account when the bank has knowledge of the death of a depositor?
What is the final withholding tax rate imposed on withdrawals from a deposit account when the bank has knowledge of the death of a depositor?
What must all withdrawal slips contain when a joint depositor makes a withdrawal?
What must all withdrawal slips contain when a joint depositor makes a withdrawal?
What is one of the learning outcomes after studying Philippine estate taxation?
What is one of the learning outcomes after studying Philippine estate taxation?
Which kind of tax is highlighted as the next focus after completing the study on Philippine estate taxation?
Which kind of tax is highlighted as the next focus after completing the study on Philippine estate taxation?
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What significant event prompted the parents to gift their child a GAC Emkoo GL worth ₱1.5 Million?
What significant event prompted the parents to gift their child a GAC Emkoo GL worth ₱1.5 Million?
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What is a common purpose of donation and succession?
What is a common purpose of donation and succession?
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During what stage of the donor's lifetime does a donation inter vivos take place?
During what stage of the donor's lifetime does a donation inter vivos take place?
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What is the tax rate for donor's tax under the NIRC?
What is the tax rate for donor's tax under the NIRC?
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In what situation is a transfer by a guarantor under a guarantee arrangement considered a gift for donor's tax purposes?
In what situation is a transfer by a guarantor under a guarantee arrangement considered a gift for donor's tax purposes?
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What type of tax is imposed on donations that occur after the donor's death?
What type of tax is imposed on donations that occur after the donor's death?
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What is the threshold for the exempt gift amount under the NIRC for donor's tax purposes?
What is the threshold for the exempt gift amount under the NIRC for donor's tax purposes?
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What does donation mortis causa require that donation inter vivos does not?
What does donation mortis causa require that donation inter vivos does not?
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What is the concept of 'net gift' for donor's tax purposes?
What is the concept of 'net gift' for donor's tax purposes?
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In a situation where a property is transferred as a gift but the donee is obligated to pay the mortgage, how is the 'net gift' calculated?
In a situation where a property is transferred as a gift but the donee is obligated to pay the mortgage, how is the 'net gift' calculated?
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What is considered a 'net taxable gift' in donor's tax computation?
What is considered a 'net taxable gift' in donor's tax computation?
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In Example 1 with Juan and Pedro, what was Juan's donor's tax payable for giving ₱1 Million to Pedro?
In Example 1 with Juan and Pedro, what was Juan's donor's tax payable for giving ₱1 Million to Pedro?
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If Juan had made another donation of ₱200,000 in 2023 to a friend instead of Pedro, what would be his total donor's tax payable for that year?
If Juan had made another donation of ₱200,000 in 2023 to a friend instead of Pedro, what would be his total donor's tax payable for that year?
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What does 'exempt gift for the calendar year' refer to in donor's tax computation?
What does 'exempt gift for the calendar year' refer to in donor's tax computation?
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Study Notes
Donation
- A donation is an act of liberality where a person gratuitously disposes of a thing or right in favor of another, who accepts it.
Donation Inter Vivos vs Donation Mortis Causa
- Donation inter vivos takes place during the lifetime of the donor and is subject to donor's tax.
- Donation mortis causa takes place after the death of the donor and is subject to estate tax.
Donor's Tax
- Applies to all transfers with a donative intent made by any person, resident or not.
- Tax rate is 6% computed on the basis of the total gifts in excess of ₱250,000 exempt gift made during the calendar year.
- Applies whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible.
Net Gift
- For purposes of donor's tax, "net gift" means the net economic benefit from the transfer that accrues to the donee.
- If a mortgaged property is transferred as a gift, the net gift is measured by deducting from the fair market value of the property the amount of mortgage assumed by the donee.
Examples
- Cash gift: if Juan gives ₱1 Million to his nephew Pedro, the donor's tax payable would be ₱45,000 (₱750,000 x 6%).
- Gift of machinery: if Juan gives ₱1 Million worth of machinery to his nephew Pedro, the computation would be the same as the cash gift above.
Other Important Points
- Payment of loan by the guarantor under a guarantee arrangement is considered a gift for donor's tax purposes, unless the guarantee arrangement is onerous (founded by a consideration other than the guarantor's liberality).
- In the case of a bank deposit account, a final withholding tax of 6% applies to withdrawals made after the death of a depositor.
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Description
Test your knowledge on donation inter vivos and donor's tax, exploring the differences between this type of donation and donation mortis causa. Understand the implications of donor's tax on gifts given during the donor's lifetime.
