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FINALS 4.04: DONOR'S TAX - Coggle Diagram

- - - - IF E-E -> PRESUMED COMP. INC
        ○ Remember, we learned that any amount given to an employee, whether it is from a detached or disinterested generosity, will presumably be considered as compensation income rather than as a gift because of the employer-employee relationship
    - - CONDITION -> REDUCE
        Where a donation imposes some condition or burden, like an assumption by the donee of a mortgage on the donated property, the value of the gift shall be reduced by the amount of the obligation or mortgage assumed by the donee. Sec. 11, Rev. Regs. No. 2-2003, Dec. 16, 2002
  - - - Provided it is a non-stock entity, paying no dividends, governed by trustees who receive no compensation, and devotes all its income, whether students’ fees or gifts, donation, subsidies or other forms of philanthropy, to the accomplishment of the purposes for which it is organized.
    - - 6% DONOR'S TAX RATE
        Donor’s Tax Rate and Foreign Tax Credit ● Donor’s tax rate is 6% of the value of total gifts made during the calendar year in excess of P250,000. ●
        
        DONOR'S TAX TO FOREIGN = CREDIT
        To the extent that donor’s tax is paid to a foreign country (because the donor had properties situated therein), such donor’s tax paid to a foreign country is available as a credit against the Philippine donor’s tax due, subject to the per country and global limitations as in income tax.
        
        RATIO - PH: OUTSIDE
        INCOME, ESTATE, & DONATION
        ● Again, just like in income and estate tax, the per country and global limitations shall also apply to the foreign tax credit in respect of estate taxes paid to another foreign country.
      - FILING OF DONOR'S TAX RETURN
        
        WHEN:
        30D-GIFT
        Filing of Donor’s Tax Return
        ● Must be filed within 30 days from the date the gift is made.
        
        WHERE:
        
        RDO-DOMICILE AT GIFT
        ● Venue: AAB within the jurisdiction of the RDO where the donor was domiciled at the time of the gift.
        
        WHAT TO STATE:
        
        GIFTS & PRIOR GIFTS IN YEAR
        
        DONEE'S NAME
        ● The return shall set forth each gift made during the calendar year, any previous net gifts made during the year, name of the donee, and such other information required by applicable regulations, such as zonal value in the case of real property, or book value in the case of shares of stock.
        
        NRAs:
        
        RDO-SOUTH QC
        
        PHIL EMBA/CONS
        a. DOMICILE AT GIFT
        For NRAs, return may be filed with the CIR through the RDO South QC, or with the Philippine Embassy or Consulate in the country where the donor is domiciled at the time of the gift.
        
        PAYMENT OF DONOR'S TAX
        
        30D-GIFT
        PAY AS YOU FILE
        ● The donor’s tax must be paid at the time the donor’s tax return is filed (“pay-as-you-file”), i.e., 30 days from the date when the gift is made.
        
        CAR -> REGISTER
        ● Certificate Authorizing Registration (“CAR”) must be obtained from the BIR before any property (e.g., real property and shares of stock) may be registered in the name of the donee.
        
        SPECIAL RULES FOR NRA DONORS
        
        NRA'S DONATION
        ONLY IN PH
        Special Rules for Non-Resident Alien (NRA) Donors ● Only real or personal properties, whether tangible or intangible, donated by a NRA donor and which are located in the Philippines are subject to donor’s tax.
        
        ESTATE & DONATIONS TAX:
        SHARE:
        SITUS IN PH IF
        
        DOMESTIC CORP/BUSINESS
        
        FOREIGN CORP:
        a. 85%-PH-BUSINESS
        
        FRANCHISE
        a. EXERCISED IN PH
        ● However,
        (a) shares of stock, bonds, or certificates of indebtedness issued by a domestic (i.e., ● Philippine) corporation,
        (b) shares or rights (e.g. units of participation) in any partnership, business or industry established in the Philippines,
        (c) franchises exercised in the Philippines,
        (d) shares of stock, bonds, or certificates of indebtedness issued by a foreign corporation 85% of the business of which is located in the Philippines or where such shares of stock, bonds or certificates of indebtedness have acquired a business situs in the Philippines, shall be considered as situated in the Philippines. ○ The same exception as in estate tax applies, see next bullet.
        
        RECIPROCITY:
        DONOR'S ESTATE TAX
        ● Notwithstanding the foregoing, Section 104 of the NIRC states that intangible personal properties (such as shares of stock, bonds, certificates of indebtedness) considered as situated in the Philippines by reason of the rule mentioned above and that are donated by a donor who is a NRA shall not be subject to donor’s tax if
        (a) the donor at the time of the gift was a citizen or resident of a foreign country which did not impose a transfer tax of any character on intangible personal properties donated by Filipino citizens who do not reside in that foreign country, or (b) the laws of the foreign country of which the donor is a citizen or resident at the time of the gift allow Filipino citizens not residing in that foreign country a similar exemption from donor’s tax or transfer tax in respect of such intangible personal properties, or otherwise known as the “principle of reciprocity”.
        
        TREATMENT OF RENUNCIATION BY HEIRS
        
        RENUNCIATION
        
        CONJUGAL SHARE
        
        INHERITANCE
        Treatment of Renunciation by Heirs
        ● This issue is a favorite in the bar exam. It arises when somebody dies, and the surviving spouse or any of the heirs waives his or her share in the conjugal property or in the estate. Be very, very specific here.
        
        RENOUNCE:
        CONJUGAL SHARE:
        ● Renunciation by the surviving spouse of his or her share in the conjugal partnership or absolute community property in favor of the other heirs (say the other heirs) of the decedent or any other person/s is tantamount to a donation subject to donor’s tax.
        
        RENOUNCE:
        INHERITANCE
        
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