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Questions and Answers
What is the key difference between donor's tax and estate tax?
What is the key difference between donor's tax and estate tax?
Which of the following is a type of transfer that would be subject to estate tax?
Which of the following is a type of transfer that would be subject to estate tax?
What is the key requirement for a transfer to be considered 'gratuitous' and subject to transfer taxes?
What is the key requirement for a transfer to be considered 'gratuitous' and subject to transfer taxes?
What is the deadline for filing and paying the donor's tax?
What is the deadline for filing and paying the donor's tax?
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Which of the following transfers would be subject to estate tax?
Which of the following transfers would be subject to estate tax?
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What is the tax base for the donor's tax?
What is the tax base for the donor's tax?
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What type of tax is levied on the net properties left by a decedent?
What type of tax is levied on the net properties left by a decedent?
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When is the estate tax due?
When is the estate tax due?
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What is a transfer in contemplation of death?
What is a transfer in contemplation of death?
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Which of the following transfers would be subject to estate tax?
Which of the following transfers would be subject to estate tax?
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What is a complex transfer?
What is a complex transfer?
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If a donor donates property to their spouse while battling a terminal illness, would this transfer be subject to estate tax?
If a donor donates property to their spouse while battling a terminal illness, would this transfer be subject to estate tax?
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When does a donation become subject to donor's tax?
When does a donation become subject to donor's tax?
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What type of tax is imposed on a donation that occurs after the donor's death, before the fulfillment of a condition?
What type of tax is imposed on a donation that occurs after the donor's death, before the fulfillment of a condition?
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Which theory suggests that the government should tax wealth transfers to redistribute wealth?
Which theory suggests that the government should tax wealth transfers to redistribute wealth?
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According to the state-partnership theory, why should the government impose transfer taxes?
According to the state-partnership theory, why should the government impose transfer taxes?
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Which characteristic of transfer taxes is highlighted in the given information?
Which characteristic of transfer taxes is highlighted in the given information?
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According to the ability to pay theory, why should wealth transfers be taxed?
According to the ability to pay theory, why should wealth transfers be taxed?
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Study Notes
Transfer Taxation
- Transfer taxation is the taxation of transfers, but strictly speaking, it only applies to gratuitous transfers.
- Gratuitous transfers are unilateral transactions that do not require an equivalent undertaking from the counterparty.
Concept Structure of Transfers
- Consideration is the key to distinguishing between gratuitous and onerous transactions.
- Gratuitous transactions are characterized by the generosity of one party, with no expectation to receive something in return.
- Examples of gratuitous transactions include succession and donation.
- Onerous transactions involve the undertaking of the counterparty, with the expectation of receiving something in return.
- Examples of onerous transactions include sales, barter, and other onerous dispositions.
Types of Transfer Taxes
- Donor's Tax: a tax on inter-vivos transfers, where a living donor transfers property to a living donee.
- The tax is imposed on the donor, with a net gift threshold of ₱250,000.
- The deadline for filing and payment is 30 days from the date of donation.
- Estate Tax: a tax on mortis-causa transfers, where property is transferred upon death.
- The tax is imposed on the estate, with a net estate threshold of ₱5,000,000.
- The deadline for filing and payment is 1 year from the date of death.
Special Scenarios in Transfer Taxation
- Transfer in contemplation of death: a donation motivated by the thought of death is considered 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, subject to estate tax.
- 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.
Why Impose Transfer Taxes?
- State-Partnership Theory: the government is an indirect partner in 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 a tool 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.
- Transfer taxes are not imposed to tax properties, but to tax the exercise of a person's right to transfer.
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Description
Test your knowledge on estate tax, net estate, heirs, beneficiaries, and special scenarios in transfer taxation like transfers in contemplation of death. Explore concepts related to one-time tax payment from the decedent's properties and the time limit for settling the net estate.
