Chapter 6: Donor's Tax Flashcards
(27 cards)
Donation, defined
act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it
The law considers donation as a _________ rather than an act as it requires _________.
contract; acceptance
Donor’s tax is a
direct or indirect tax?
direct tax
Donor’s tax is a
property tax or excise tax?
excise tax
Donor’s tax is tax imposed on _________
on the exercise of the donor’s right during lifetime to transfer property to others in the form of gift
Donor’s tax applies to
natural or juridical persons?
Both
When does transfer become complete and taxable?
when the owner has divested himself of all beneficiary interest in the property transferred and has no power to revest any such interest in himself or his estate
What is the purpose of donor’s tax?
- To prevent avoidance of estate tax
- To prevent or compensate for loss of the progressive rates of income tax
What are the elements of donation?
- Capacity of donor to make donation (capacity to contract and to dispose)
- Donative Intent
- Delivery of donated property or the instrument to the donee
- Acceptance of the donor
When is donative intent necessary as an element of donation?
in direct gifts or indirect gifts?
Direct gifts
When is a gift completed?
By the delivery, either actual or constructively, of the donated property or the instrument to the donee
For incomplete gifts, when does it become complete?
When donor renounces power OR the donor’s right to exercise the power ceases because of the happening of some event or contingency or the fulfillment of some condition, other than the death of the donor
When is donation perfected?
from the time of knowledge of the donor that the donee has accepted the same
To consummate donation, what is required?
delivery and acceptance of gift
When must acceptance happen in relation to the donor and donee?
During the lifetime of the donor AND the donee
When shall donor’s tax apply?
When there is a completed gift (completed gift and perfected donation)
What law shall govern the imposition of donor’s tax?
Law in force at time of the perfection/completion of the donation
Should donation of movable property be in certain form
(oral, in writing, in public instrument)?
If value of PERSONAL PROPERTY donated exceeds P5,000, it shall be in writing
Is donation of movable personal property, exceeding P5,000 that is not in writing, void?
Yes
Should donation of immovable property be in a certain form (oral, in writing, in public instrument)?
It must be in a public document to be valid
What are the characteristics of Donor’s Tax?
- It is an excise tax.
- It is a contract.
- The transfer is perfected from the moment the donor knows of the acceptance of the donee.
- It is a direct tax.
What is simple donation?
Donation wherein cause is pure liberality
What is renumeratory donation?
Donations made due to past services rendered or future services or charges and burdens
Is renumeratory donation subject to donor’s tax?
No, because it is not donations in substance
