Donation Law Overview
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Questions and Answers

What is a donation defined as?

  • A sales transaction between two parties
  • A mandatory payment to the government
  • An act of liberality involving the transfer of property (correct)
  • A loan given by one person to another

    • Which of the following is NOT an essential requisite of donation?

  • Intention to donate
  • Acceptance by the donee
  • Written agreement (correct)
  • Capacity of the donor

    • What type of donation is made directly from the donor to the donee?

  • Trust donation
  • Direct donation (correct)
  • Contingent donation
  • Indirect donation

    • Which of the following is a requirement for a revocable indirect donation?

    <p>It must not be completed</p> Signup and view all the answers

    Which type of donor is taxable only on donations made in the Philippines?

    <p>Non-resident alien</p> Signup and view all the answers

    What document is generally required for the donation of real property?

    <p>Public instrument</p> Signup and view all the answers

    Which of the following types of personal property does NOT require a public instrument if the amount exceeds 5,000?

    <p>Intangible personal property</p> Signup and view all the answers

    Which of the following best describes taxable donations for resident citizens?

    <p>Taxable on global donations, regardless of location</p> Signup and view all the answers

    What type of tax is a donor's tax considered?

    <p>Revenue or fiscal tax</p> Signup and view all the answers

    Which of the following is NOT considered exempt under the donor's tax?

    <p>Donations to private individuals</p> Signup and view all the answers

    What is one of the rationales for imposing a donor's tax?

    <p>To control tax evasion of estate tax</p> Signup and view all the answers

    Which of the following organizations is a recognized exempt donee under special laws?

    <p>Development Academy of the Philippines</p> Signup and view all the answers

    Which of the following types of tax is NOT classified under donor's tax?

    <p>Income tax</p> Signup and view all the answers

    What is the exemption status of donations involving real property classified as capital assets?

    <p>They are never exempt</p> Signup and view all the answers

    Why might a donor reserve powers in a donation?

    <p>To maintain control over the property after donation</p> Signup and view all the answers

    Which of the following is a feature of donations subject to donor's tax?

    <p>They involve transfers without regard to property type</p> Signup and view all the answers

    What must donations for election campaigns be reported to for exemption from donor’s tax?

    <p>Commission on Elections</p> Signup and view all the answers

    What is the status of transfers involving real property classified as capital assets regarding donor’s tax?

    <p>Exempt from donor’s tax</p> Signup and view all the answers

    What type of renunciation occurs when an heir renounces their share in an estate in favor of no particular coheir?

    <p>General Renunciation</p> Signup and view all the answers

    What type of donation involves the transfer of ownership depending on a future event?

    <p>Reserved Donation</p> Signup and view all the answers

    Which situation causes a general renunciation of inheritance to be considered taxable?

    <p>Renunciation by a surviving spouse</p> Signup and view all the answers

    If a donation is made to a political party during elections, what principle does this support?

    <p>Political freedom</p> Signup and view all the answers

    What is the tax implication for the difference between fair value and selling price for properties not classified as capital assets?

    <p>Subject to donor’s tax</p> Signup and view all the answers

    What distinguishes a specific renunciation from a general renunciation?

    <p>General renunciation cannot favor particular coheirs</p> Signup and view all the answers

    What is a requirement for a donation to be exempt to an accredited non-profit institution?

    <p>Not more than 30% of the gift can be used for administrative purposes.</p> Signup and view all the answers

    Which type of donation is NOT subject to donor's tax?

    <p>Void donations</p> Signup and view all the answers

    Which agency accredits charitable and social welfare organizations?

    <p>Department of Social Welfare and Development</p> Signup and view all the answers

    Donations of property situated in a foreign country by non-resident alien donors are subject to what tax?

    <p>None, they are exempt from donor's tax</p> Signup and view all the answers

    Which of the following is NOT a criterion for a donation to be exempt to an accredited non-profit institution?

    <p>The donee entity's board of trustees earns compensation.</p> Signup and view all the answers

    Which type of gifts are exempt from donor's tax when made to national government entities?

    <p>Gifts for public use by government entities</p> Signup and view all the answers

    What does 'quasi-transfers' refer to in the context of gifts?

    <p>Transfers of property that will never result in ownership transfer.</p> Signup and view all the answers

    For a donation to be exempt, which of the following must be true regarding the use of the gift by the donee entity?

    <p>Not more than 30% can be used for administrative purposes.</p> Signup and view all the answers

    Study Notes

    Donation

    • Defined as a gratuitous transfer of property from a living donor to a donee.
    • Requires the donor's capacity, intent to donate, a donative act or delivery, and acceptance by the donee.
    • Formal requirements depend on the property type and value. Real property requires a public instrument; tangible personal property exceeding ₱5,000 needs a written instrument; while those below ₱5,000 can be oral. Intangible personal property requires a public instrument.

    Types of Donations

    • Direct Donation: The donor gives directly to the donee.
    • Indirect Donation: Property transferred through a trust. Irrevocable indirect donations are taxable, while revocable ones are not.

    Types of Donors and Taxability

    • Resident Citizens/Aliens: Taxable on global donations.
    • Non-Resident Aliens: Taxable on Philippine donations, except intangible personal property (subject to reciprocity).

    Taxable Donations Summary

    Donor Type Real Property Tangible Personal Property Intangible Personal Property
    Resident/Citizen (Within/Abroad) Yes Yes Yes
    Non-Resident Alien (No Reciprocity) - Within Yes Yes Yes
    Non-Resident Alien (No Reciprocity) - Abroad No No No
    Non-Resident Alien (Reciprocity) - Within Yes Yes No
    Non-Resident Alien (Reciprocity) - Abroad No No No

    Donor's Tax

    • A tax on gratuitous property transfers between living persons.
    • Nature: Privilege, proportional, annual, ad valorem, national, and revenue tax.
    • Rationale: Controls tax evasion of estate and income taxes; recoups future income tax revenue loss.

    Exempt Gifts

    • Donations to specific exempt donees (listed below).
    • Donations for election campaigns (must be reported to the Commission on Elections).
    • Transfers for insufficient consideration involving real property classified as capital assets (already subject to capital gains tax).
    • General renunciation of inheritance (under specific conditions).
    • Donations with reserved powers (conditional or revocable).
    • Donations to the government for public use.
    • Donations to accredited non-profit institutions (meeting specific requirements: less than 30% for administration, non-stock, no dividends, unpaid trustees, income devoted to stated purposes).
    • Quasi-transfers (no ownership transfer).
    • Void donations.
    • Foreign donations by non-resident alien donors.
    • Donations of property exempt under reciprocity.

    Exempt Donees (Partial List)

    • Aquaculture Department of SEAFDEC
    • Aurora Pacific Economic Zone and Freeport Authority
    • Development Academy of the Philippines
    • Girl Scouts of the Philippines
    • Integrated Bar of the Philippines
    • International Rice Research Institute
    • National Commission for Culture and the Arts
    • National Social Action Council
    • National Water Quality Management Fund
    • People’s Television Network, Inc.
    • People’s Survival Fund
    • Philippine-American Cultural Foundation
    • Philippine Normal University
    • Philippine Investor Commission
    • Philippine Red Cross
    • Ramon Magsaysay Award Foundation
    • Rural Farm School
    • Task Force on Human Settlements
    • Tubbataha Reefs Natural Park
    • University of the Philippines

    Accrediting Agencies for Non-Profit Donations

    • Department of Social Welfare and Development (charitable and social welfare)
    • Department of Science and Technology (research and scientific activities)
    • Philippine Sports Commission (sports development)
    • National Council for Culture and the Arts (cultural activities)
    • Commission on Higher Education (educational activities)

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    Related Documents

    Introduction To Donor's Tax - PDF

    Description

    Explore the intricacies of donation law, including the definition of a donation, types of donations, and the tax implications associated with different donor types. This quiz will help you understand the requirements for making a valid donation and the associated legalities.

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