16 Questions
According to the 'state-partnership theory', why should the government impose transfer taxes?
The government is an indirect partner behind all forms of wealth accumulation.
What is the key difference between transfer taxes and taxes on properties?
Transfer taxes are imposed on the exercise of the privilege to transfer properties, not on the properties themselves.
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.
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.
What type of transactions are subject to transfer taxes strictly?
Gratuitous transfers
In a unilateral transaction, what is the nature of consideration?
Merely the generosity of one party
What is an example of an onerous/bilateral transaction subject to income tax?
Sales
In a donation scenario, who is responsible for paying donor's tax?
Donor
When is estate tax imposed in a mortis-causa transfer?
Upon death of the decedent
What is the deadline for filing and payment in donor's tax cases?
30 days from donation
What type of donation is considered a donation mortis-causa and subject to estate tax?
Donation made in contemplation of death by the decedent
When does net estate become subject to estate tax?
Above P5,000,000 pesos
A complex transfer involves what kind of transactions?
A transfer involving two transactions - a donation and a sale
What type of donation is not subject to estate tax?
Donation made as part of estate planning
What is the purpose of estate tax?
To tax net properties left by the decedent for the heirs or beneficiaries
What is a transfer to take effect upon death considered as?
A donation mortis-causa subject to estate tax
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.
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.
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