Pay Theory and Donor's Tax Quiz with Flashcards

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Questions and Answers

According to the 'state-partnership theory', why should the government impose transfer taxes?

Taxation is one of the tools used to redistribute wealth from the rich to the poor.

The government is an indirect partner behind all forms of wealth accumulation. (correct)

Transfer taxes are imposed to tax the properties being transferred.

Transferring properties is a manifestation of a person's capability to pay tax.

What is the key difference between transfer taxes and taxes on properties?

Transfer taxes are a type of sales tax, while taxes on properties are a type of property tax.

Transfer taxes are imposed on the exercise of the privilege to transfer properties, not on the properties themselves. (correct)

Transfer taxes are paid by the recipient of the transferred property, while taxes on properties are paid by the owner.

Transfer taxes are a form of income tax, while taxes on properties are a form of wealth tax.

According to the 'ability to pay theory', why should the government impose transfer taxes?

Transferring properties is a manifestation of a person's capability to pay tax. (correct)

Transfer taxes are imposed to tax the exercise of a person's right to transfer.

Taxation is one of the tools used to redistribute wealth from the rich to the poor.

The government is an indirect partner behind all forms of wealth accumulation.

According to the 'wealth redistribution theory', why should the government impose transfer taxes?

Taxation is one of the tools used to redistribute wealth from the rich to the poor. Signup and view all the answers

What type of transactions are subject to transfer taxes strictly?

Gratuitous transfers Signup and view all the answers

In a unilateral transaction, what is the nature of consideration?

Merely the generosity of one party Signup and view all the answers

What is an example of an onerous/bilateral transaction subject to income tax?

Sales Signup and view all the answers

In a donation scenario, who is responsible for paying donor's tax?

Donor Signup and view all the answers

When is estate tax imposed in a mortis-causa transfer?

Upon death of the decedent Signup and view all the answers

What is the deadline for filing and payment in donor's tax cases?

30 days from donation Signup and view all the answers

What type of donation is considered a donation mortis-causa and subject to estate tax?

Donation made in contemplation of death by the decedent Signup and view all the answers

When does net estate become subject to estate tax?

Above P5,000,000 pesos Signup and view all the answers

A complex transfer involves what kind of transactions?

A transfer involving two transactions - a donation and a sale Signup and view all the answers

What type of donation is not subject to estate tax?

Donation made as part of estate planning Signup and view all the answers

What is the purpose of estate tax?

To tax net properties left by the decedent for the heirs or beneficiaries Signup and view all the answers

What is a transfer to take effect upon death considered as?

A donation mortis-causa subject to estate tax Signup and view all the answers

Study Notes

Transfer Taxation

Transfer taxation is the taxation of transfers, specifically gratuitous transfers.
Transfer taxes are not imposed to tax properties, but to tax the exercise of a person's right to transfer.

Types of Transfer Taxes

Donor's Tax:
- Inter-vivos transfer (transfer by a living donor to a living donee)
- Annual tax
- Taxpayer is the donor
- Value subject to tax is the net gift after 250,000 pesos
- Deadline for filing and payment is 30 days from the date of donation
Estate Tax:
- Mortis-causa transfer (transfer upon death of the decedent)
- One-time tax
- Taxpayer is the estate (heirs or beneficiaries)
- Value subject to tax is the net estate (after P5,000,000 pesos)
- Deadline for filing and payment is 1 year from the date of death

Theories of Transfer Taxation

State-Partnership Theory: The government is an indirect partner behind all forms of wealth accumulation and should take its fair share by taxing the transfer of wealth.
Ability to Pay Theory: Transferring properties is a manifestation of a person's capability to pay tax.
Wealth Redistribution Theory: Taxation is used to redistribute wealth from the rich to the poor.

Nature and Characteristics of Transfer Taxes

Privilege/Excise Tax: Imposed on the exercise of the privilege to transfer properties through succession or donation.

Special Scenarios in Transfer Taxation

Transfer in contemplation of death: A donation motivated by the thought of death is considered as a donation mortis-causa (subject to estate tax).
Transfer to take effect upon death: A donation made on the decedent's last will and testament is a donation mortis-causa.
Complex transfer: A transfer that is less than full and adequate consideration where the sales price is sufficiently lower than the fair value of the property.

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Description

Test your knowledge on estate tax, transfer taxation, net estate calculation, and special scenarios such as transfers in contemplation of death. Learn about the one-time tax paid from the net properties left by the decedent, the heirs or beneficiaries, and the time period for estate tax payment.