Podcast
Questions and Answers
Under the TRAIN Law, what is the donor's tax rate for gifts exceeding P250,000?
Under the TRAIN Law, what is the donor's tax rate for gifts exceeding P250,000?
- 8%
- 10%
- 4%
- 6% (correct)
How does the TRAIN Law change the structure of donor's tax rates compared to the old tax rules?
How does the TRAIN Law change the structure of donor's tax rates compared to the old tax rules?
- It maintains the graduated tax rates based on the amount of the gift.
- It increases the tax rates for gifts to strangers.
- It introduces a single tax rate for all gifts exceeding a certain threshold. (correct)
- It eliminates donor's tax altogether.
Which of the following transfers is subject to donor's tax?
Which of the following transfers is subject to donor's tax?
- A transfer of property in the ordinary course of business with bona fide intent.
- A gratuitous transfer of real property between two living individuals. (correct)
- A sale of property at fair market value.
- A transfer of property where the consideration is adequate and full.
According to the TRAIN Law, what is the documentary stamp tax implication for donations of real property?
According to the TRAIN Law, what is the documentary stamp tax implication for donations of real property?
A father decides to sell a piece of land to his son for significantly less than its fair market value. How is this transaction treated for tax purposes?
A father decides to sell a piece of land to his son for significantly less than its fair market value. How is this transaction treated for tax purposes?
Which of the following was repealed under the TRAIN Law regarding exemptions on gifts?
Which of the following was repealed under the TRAIN Law regarding exemptions on gifts?
What constitutes a transfer for less than adequate and full consideration?
What constitutes a transfer for less than adequate and full consideration?
If an individual makes total gifts of P300,000 in a calendar year, what amount is subject to donor's tax under the TRAIN Law?
If an individual makes total gifts of P300,000 in a calendar year, what amount is subject to donor's tax under the TRAIN Law?
Under old tax rules, how was donor's tax calculated for net gifts over P100,000 but not over P200,000?
Under old tax rules, how was donor's tax calculated for net gifts over P100,000 but not over P200,000?
Under the TRAIN law, are transfers exempt from donor's tax also exempt from Documentary Stamp Tax (DST)?
Under the TRAIN law, are transfers exempt from donor's tax also exempt from Documentary Stamp Tax (DST)?
Flashcards
Donor's Tax
Donor's Tax
A tax on a donation or gift, imposed on the transfer of property between living persons.
Donor's Tax Rate (TRAIN Law)
Donor's Tax Rate (TRAIN Law)
Under the TRAIN Law, donor's tax is 6% of total gifts exceeding P250,000 in a calendar year.
Transfer for Less Than Adequate Consideration
Transfer for Less Than Adequate Consideration
The amount by which the fair market value of property exceeds the consideration received is deemed a gift.
Dowries (under TRAIN)
Dowries (under TRAIN)
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Gifts to National Gov't
Gifts to National Gov't
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Exempt Transfers
Exempt Transfers
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Bona Fide Transaction
Bona Fide Transaction
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Documentary Stamp Tax
Documentary Stamp Tax
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Study Notes
- Donor's Tax is imposed on the gratuitous transfer of property between two or more living persons at the time of transfer.
- It applies to transfers in trust or otherwise, direct or indirect gifts, and real or personal property.
- Republic Act No. 10963 is also known as the TRAIN Law.
Old Tax Rules for Donor's Tax Rates
- Net Gift Over of ₱100,000.00 is exempt.
- Net Gift Over of ₱100,000.00 to ₱200,000.00 has a 2% tax.
- Net Gift Over of ₱200,000.00 to ₱500,000.00 has a tax of ₱2,000.00 + 4% excess over ₱200,000.00.
- Net Gift Over of ₱500,000.00 to ₱1,000,000.00 has a tax of ₱14,000.00 + 6% excess over ₱500,000.00.
- Net Gift Over of ₱1,000,000.00 to ₱3,000,000.00 has a tax of ₱44,000.00 + 8% excess over ₱1,000,000.00.
- Net Gift Over of ₱3,000,000.00 to ₱5,000,000.00 has a tax of ₱204,000.00 + 10% excess over ₱3,000,000.00.
- Net Gift Over of ₱5,000,000.00 to ₱10,000,000.00 has a tax of ₱404,000.00 + 12% excess over ₱5,000,000.00.
- Stranger's tax is 30% based on net gifts.
TRAIN Law on Donor's Tax
- Donor's tax for each calendar year is 6% based on the total gifts exceeding ₱250,000.
- This applies regardless of whether the donee is a stranger (i.e. related or unrelated).
- The donor's tax table has been removed.
Transfer for Less Than Adequate Consideration
- The amount by which the fair market value exceeds the value of the consideration in a property transfer is considered a gift.
- An additional provision states that a sale, exchange, or transfer in the ordinary course of business (bona fide transaction, at arm's length, and free from donative intent) is considered made for adequate consideration.
Exemption of Certain Gifts
- Dowries used to be exempt for resident gifts, but this has been repealed under the TRAIN Law.
- Gifts made to the National Government are still exempt.
- Gifts to educational, charitable, religious, cultural, or social welfare institutions are still exempt.
Documentary Stamp Tax on Donation of Real Property
- Donations are subject to documentary stamp tax under the TRAIN Law.
- The tax is ₱15.00 for donations not exceeding ₱1,000.00.
- An additional ₱15.00 is charged for each additional ₱1,000.00.
- Transfers exempt from donor’s tax are also exempt from Documentary Stamp Tax (DST).
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