Valuation of particular gifts

Valuation of particular gifts

1. Personal property- the fair market value thereof at the time of the gift is considered the amount of the gift.
2. Real property- the current fair market value of as shown in the schedule of values fixed by the assessor’s office, or the fair market value as determined by the Commissioner of the Internal Revenue, whichever is higher.
3. Cash- if the gift is in money, then the amount thereof is the valuation


Donor’s Tax imposed on net gifts

The donor’s tax is computed on the basis of the total net gifts made during the calendar year, meaning the total amount of gifts after deducting the exemptions and allowable deductions.



Under Section 99 of the tax code, the donor’s tax for each calendar year shall be computed on the basis of the total net gifts during the calendar year.

Computation of Donor’s Tax

1. First donation in a year

Gross Gift made……………………………… P xxx

Less Deductions……………………………... xxx

NET GIFT………………. P xxx

Multiply by tax rate ………………………. X %

DONOR’S TAX ON NET GIFT………….. P XXX

2. Next donation of a subsequent date during the same year

Gross gift made on this date ………….. P xxx

Less: Deductions …………………. xxx

NET GIFT……………….. P xxx

Add all prior net gifts within the year.. xxx

AGGREGATE NET GIFTS ……. P xxx

Donor’s Tax on aggregate net gifts… P xxx

Less Donor’s Tax on all prior net

Gifts within the year…………… xxx

Donor’s Tax on the net gifts on this date P XXX

ADMINISTRATIVE PROVISIONS

The donor’s tax return must be filed under oath and in duplicate by any individual which makes any transfer of property or rights by way of gift, donation or contribution, and should contain the following information:

1. Each gift made during the year

2. Deductions claimed and allowable

3. Any previous net gift made during the same year

4. Name of the donee;

5. Other pertinent information

The Return shall be filed within 30 days from the date of the donation, in the BIR. In meritorious cases, the Commissioner of Internal Revenue may grant a reasonable extension not exceeding 30 days within which to file the return.

The donor’s tax shall be paid at the time the return is filed. However the Commissioner may extend the time for payment not exceeding 6 months provided the donor furnish a bond in amount of the tax and such other sureties as the Commissioner may require.

TAX CREDIT FOR GIFT TAXES PAID TO FOREIGN COUNTRIES

Tax credit- is a right of a taxpayer to deduct from the donor’s tax payable the foreign donor’s tax he has paid to his foreign country subject to limitation.

The donor’s tax imposed by the Tax Code upon a donor who was a citizen or a resident at the time of donation shall be credited with the amount of any donor’s taxes of any character and description imposed by the authority of a foreign country.

Limitations on credit

(a) For donor’s tax paid to one foreign country- the amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax against which such credit is taken which the net gifts situated within such country taxable under the tax code bears to his entire gift.

In computing the allowable tax credit, the formula is

Net gifts situated in a foreign country X Philippines Donor’s Tax = Tax Credit Limit

Entire Net Gifts

(b) For Donor’s Taxes paid to two or more foreign countries- the total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken which the donor’s net gifts situated outside the Philippines taxable under Tax Code bears to his gift.

In computing the allowable tax credit, the formula is:

Net gifts situated in a outside the Philippines X Philippines Donor’s Tax = Tax Credit Limit

Entire Net Gifts