AGS Donation 2019 PDF

2
Donation
Atty. Gerry Sebastian, CPA

AGS Donor’s Taxes
National Internal Revenue Code,
as amended by Republic Act No. 10963
PRESENTATION
AGS Atty. Gerry Sebastian, CPA

© 2016 Motagua PowerPoint Multipurpose Theme. All Rights Reserved.
1 2
Donation 3
Donation 4
NIRC, as amended by Republic Act No. 10963 NIRC, as amended by Republic Act No. 10963
Concept Concept
• In estate tax law, successional rights will result • But with donation, it is different. We have an
upon the death of the decedent. At a minimum, the imposition of the donor’s tax everytime a gift is
Transfer accountant will just have to know that the death of a Transfer given. And the Tax Code did not helped either
Taxes person results in the imposition of estate taxes. Taxes because it did not define what is a donation, for
This is a one-time expense for the estate to bear for donor’s tax purposes. So it is incumbent upon you to
the successional rights to transfer to the heirs of the know what constitute donation because it is only
decedent. when donation occurs will donor’s taxes apply.

AGS
© 2016 Motagua PowerPoint Multipurpose Theme. All Rights Reserved. © 2016 Motagua PowerPoint Multipurpose Theme. All Rights Reserved.
3 4
(07) AGS Donation 2019 - 17 February 2018
Donation 5
Donation 6
Elements Additional Elements

• The essential elements of donations: • In donation of an immovable property, the donation
Transfer • The reduction of the patrimony of the donor. Transfer must be made in a public document.
Taxes • The increase in the patrimony of the donee. Taxes • In donation of movable property, it can be effect thru
• The intent to do an act of liberality (animus oral donation with simultaneous delivery except
donandi). where the property is valued more than P5,000 where
the law requires the same to be in writing.

AGS
5 6
Donation 7
Donation 8
Kinds of Donation
• Simple donation. Those which are not subject to any
Significance of Acceptance condition.
• Remuneratory donation. Those that remunerate past
Transfer • There is no donation if there is no acceptance. No Transfer services of the donee which do not constitute
Taxes one is compelled to accept the liberality of the donor. Taxes demandable debts against the donor. Example. A
corporation’s donation to the children of the deceased
president of the corporation for the services rendered
by the latter which made the corporation successful
was considered remunerative.

AGS
7 8
Donation 9
Donation 10
Kinds of Donation
• Conditional donation. Those which are subject to
condition before the donation will take effect.
Illegal Donation
• Modal donation. Those subject to burdens or
• Illegal or impossible conditions in simple and
Transfer charges. Transfer remuneratory donations shall be considered not
Taxes • Onerous donation. Those made for valuable Taxes imposed. The donation remains valid without the
consideration which is considered equivalent of
condition.
donation. Example. A donation given in compensation
for a recoverable debt which is demandable against
the donor. This is not considered a donation per se
but an obligation.

AGS
9 10
Donation 11
Donation 12
Illegal Donation
• Rule: As a general rule, the impossible condition as
well as the obligation to which it is appended
Persons who may give donation
thereto, are considered null and void, except: • All persons who may contract and dispose of their
Transfer • When the impossible condition is imposed Transfer property may make a donation.
Taxes negatively, the obligation is still valid. Taxes • Guardians and trustees cannot donate the property
• When an impossible condition is attached to a entrusted to them.
donation or imposed in a will, the same is
considered as not imposed because the principal
consideration is the gratuitous transfer made by the
donor or testator.
AGS
11 12
Donation 13
Donation 14
Persons who may receive donation Void Donations

• All those who are not specially disqualified by law • The following donations shall be void from the
therefor may accept donations. beginning:
• Minors and others who cannot enter into a contract • Those made between persons found guilty of
Transfer may become donees but acceptance shall be done Transfer adultery or concubinage at the time of the
Taxes through their parents or legal representatives. Taxes donation.
• Donations made to conceived and unborn children • Those made between persons guilty of the same
may be accepted by those persons who would criminal offense, in consideration thereof.
legally represent them if they were already born. • Those made to a public officer or his wife,
descendants and ascendants, by reason of his
office.
AGS
13 14
Donation 15
Donation 16
Incapable of Succeeding Incapable of Succeeding

• The following are incapable of succeeding (in this • The following are incapable of succeeding (in this
case become donees): case become donees):
• Priest who heard the confession of testator on his • Guardian with respect to testamentary dispositions
Transfer last illness, or the minister of the gospel who Transfer given by a ward in his favor before final accounts of
Taxes extended spiritual aid. Taxes guardianship have been approved, even if the
• Relatives of No. 1 within 4th degree, his church, testator should die after the approval thereof (any
order, chapter, community, organization, or provision made by the ward in favor of guardian
institution. who is his ascendant, descendant, brother, sister,
or spouse is valid).

AGS
15 16
Donation 17
Donation 18
Incapable of Succeeding Incapable of Succeeding

• The following are incapable of succeeding (in this • The following are incapable of succeeding (in this
case become donees): case become donees):
• Any attesting witness to the execution of a will, the • Any physician, surgeon, nurse, health officer or
Transfer spouse, parents, or children, or any one claiming Transfer druggist who took care of the testator during his
Taxes under such witness, spouse, parents, or children Taxes last illness.
(not applicable to donation because this pertain to • Individuals, associations and corporations not
a will). permitted by law to inherit.

AGS
17 18
Donation 19
Donation 20
NIRC, as amended by Republic Act No. 10963 What is Donation?
Perfection of Donation
• Donation is perfected when the donor knows of the Q Can a person donate all of his properties?
acceptance by the donee. Thus, acceptance must
Transfer
Taxes
be made during the lifetime of the donor and of the
donee. 1 • No. He has to provide or set aside something for those who
• The donee must accept the donation personally, or
through an authorized person with a special power are entitled to his support. Otherwise, the donation shall be
for the purpose, or with a general and sufficient power.
Otherwise, the donation shall be void.
A reduced equal to the amount of support needed.

AGS AGS Presentation
19 20
Donation
What is Donation?
21
Donation
What is Donation?
22
Q What kind of tax is a donor’s tax? Q When is donation perfected?
2 • The donor’s tax is not a property tax, but is a tax imposed on

3 • The transfer of property by gift is perfected from the moment the
the transfer of property by way of gift inter vivos. donor knows of the acceptance by the donee. It is completed
A A by the delivery, either actually or constructively, of the donated
property to the donee.
AGS Presentation AGS Presentation

21 22
Donation
What is Donation?
23
Donation
What is Donation?
24
Q In the imposition of donor’s taxes, what law will apply? Q When is a donation considered incomplete?
4 • The law in force at the time of the perfection/completion of the

5 • It is considered incomplete when the donor deprives the donee
donation shall govern the imposition of the donor’s tax. of certain powers over the property like possession and
A A enjoyment or the right of designation.

23 24
Donation
What is Donation?
25
Donation
What is Donation?
26
• No. Donor’s taxes cannot be imposed on gifts subject of

reserved powers because they are considered incomplete
Can donor’s taxes be imposed on gifts subject of reserved
Q powers? A gifts. However, a gift that is incomplete because of reserved
powers, becomes complete when either: (1) the donor
renounces the power; or (2) his right to exercise the reserved
6 6 power ceases because of the happening of some event or
contingency or the fulfilment of some condition, other than
because of the donor’s death.

25 26
Donation
What is Donation?
27
Donation
What is Donation?
28
Is renunciation by the surviving spouse of his/her share in

the property regime after the dissolution of the marriage in Is the renunciation of inheritance by an heir considered a
Q favor of the heirs of the deceased spouse or any other Q donation, for donor’s tax purposes?
person/s subject to donor’s taxes?
7 • Yes. It is subject to donor’s taxes. The pool of common property is
8 • No. Repudiation of an inheritance retroacts to the date of
considered co-owned by both spouses. When it is liquidated, it just death of the Decedent. Thus, it is as if the person never became
A means that the undivided share of each spouse is now
determined. After it is determined, the renunciation by a spouse in
A an heir. However, if the renunciation was specifically done in
favor of identified heir/s to the exclusion of the other co-heirs in
favor of the other heirs is considered a gratuitous transfer in their the hereditary estate, it is subject to Donor’s Tax.
favor as the spouse is the owner of such share.

27 28
Donation
What is Donation?
29
Donation
What is Donation?
30
Q What is the difference between Questions No. 7 & 8? Q Is donation a transfer in contemplation of death?
9 • The difference is the legal consequence of each action. In the

10 • As a general rule, no. However, if the transfer was motivated
renunciation of spouse in favor of his heirs, the person by the thought of death, then the answer is yes. Consequently,
A renouncing the property is the owner of the share. In the
repudiation of inheritance, the person repudiating the property was
A aside from the fact that donor’s taxes were already imposed, it will
be included in the gross estate and imposed estate taxes.
never the owner of the property and his repudiation retroacted to
the date of the death of the decedent who owns the property.

29 30
Donation
What is Donation?
31
Donation
What is Donation?
32
Is a transfer of a property gratuitously to a trustee for a

Q Can donor’s taxes be imposed on a contract of sale? Q benefit of one or more beneficiary considered a donation?
11 • As a general rule, no. However, if it is proven that the contract

12 • Yes. However, the donation is considered on the part of the
is more of a donation, donor’s taxes will be imposed. Under beneficiaries and not the trustee. Thus, donor’s taxes will be
A the Tax Code, even transfers for insufficient consideration is be
subject to donor’s taxes to the extent that it is gratuitous.
A imposed on the beneficiaries.

31 32
Donation
What is Donation?
33
Donation
What is Donation?
34
Is a transfer of property gratuitously from one trust to

Q another considered a gift for donor’s tax purposes? Q Is a trust considered a gift for donor’s tax purposes?
13 • If all the elements of donation are present, the answer is yes.

14 • No. The nature of the trust permits otherwise because control
If the beneficiaries of the trusts are one and the same, it is not over the property still rest on the trustor. However, if the
A considered a gift. A trustor relinquishes all economic rights over the property to
the beneficiary, a donation is present.

33 34
Donation
What is Donation?
35
Donation
What is Donation?
36
Is a compromise or settlement of an estate contest and Are transfers in contemplation of death considered as
Q other dispute over inheritance considered a gift? Q donation?
15 • No. There is no donative intent that exists. However, if the

16
estate considered and paid a person who had no legally
A enforceable rights as an heir, donation is present.

35 36
Donation
What is Donation?
37
Donation
What is Donation?
38
• Not in all cases. Transfers in contemplation of death involves

transfers during the lifetime of the decedent. If the same does
A not involve any consideration, then it is considered a
donation as long as all of the elements of donation are present.
Q Are revocable transfers a gift for donor’s tax purposes?
If the transfer involved reservation or withholding of certain rights

16 17
•
until death, there is no donation to speak of because control over
the property still rest with the transferor. However, if the transfer • No. Since power and control over the property still rest with
took effect during the lifetime of the transferor without any the transferor, no donation exists.
reservation, then donation is present. In this case, both transfer A
taxes will be imposed, one at the time of transfer and the other at
the time of death.

37 38
Donation
What is Donation?
39
Are properties passing under a general power of

Q appointment a gift for donor’s tax purposes?
18 • No. Since power and control over the property still rest with
the transferor, no donation exists.
A
AGS Presentation
© 2016 Motagua PowerPoint Multipurpose Theme. All Rights Reserved.
39

AGS Donation 2019 PDF

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

AGS Donation 2019 PDF

Încărcat de

Drepturi de autor:

Formate disponibile

2

Atty. Gerry Sebastian, CPA

AGS Atty. Gerry Sebastian, CPA

Atty. Gerry Sebastian, CPA

Elements Additional Elements

Atty. Gerry Sebastian, CPA

Atty. Gerry Sebastian, CPA

Atty. Gerry Sebastian, CPA

Persons who may receive donation Void Donations

Incapable of Succeeding Incapable of Succeeding

Atty. Gerry Sebastian, CPA

Incapable of Succeeding Incapable of Succeeding

Atty. Gerry Sebastian, CPA

NIRC, as amended by Republic Act No. 10963 What is Donation?

Atty. Gerry Sebastian, CPA

Q What kind of tax is a donor’s tax? Q When is donation perfected?

2 • The donor’s tax is not a property tax, but is a tax imposed on

AGS Presentation AGS Presentation

4 • The law in force at the time of the perfection/completion of the

AGS Presentation AGS Presentation

• No. Donor’s taxes cannot be imposed on gifts subject of

AGS Presentation AGS Presentation

Is renunciation by the surviving spouse of his/her share in

AGS Presentation AGS Presentation

9 • The difference is the legal consequence of each action. In the

AGS Presentation AGS Presentation

Is a transfer of a property gratuitously to a trustee for a

11 • As a general rule, no. However, if it is proven that the contract

AGS Presentation AGS Presentation

Is a transfer of property gratuitously from one trust to

13 • If all the elements of donation are present, the answer is yes.

AGS Presentation AGS Presentation

15 • No. There is no donative intent that exists. However, if the

AGS Presentation AGS Presentation

• Not in all cases. Transfers in contemplation of death involves

If the transfer involved reservation or withholding of certain rights

AGS Presentation AGS Presentation

Are properties passing under a general power of

S-ar putea să vă placă și