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Transfer Taxes

This document discusses two types of transfer taxes: estate tax and donor tax. Estate tax is imposed on property transferred at death and is assessed based on the fair market value of the deceased's estate. Donor tax is imposed on inter vivos gifts made while living. Both taxes require the donor/decedent, donee/heir, intent to donate, and acceptance for a valid taxable transfer. The document outlines exemptions, tax rates, payment procedures, valuation methods, and legal requirements for each transfer tax.

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Ivan Slovskie
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60 views3 pages

Transfer Taxes

This document discusses two types of transfer taxes: estate tax and donor tax. Estate tax is imposed on property transferred at death and is assessed based on the fair market value of the deceased's estate. Donor tax is imposed on inter vivos gifts made while living. Both taxes require the donor/decedent, donee/heir, intent to donate, and acceptance for a valid taxable transfer. The document outlines exemptions, tax rates, payment procedures, valuation methods, and legal requirements for each transfer tax.

Uploaded by

Ivan Slovskie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Transfer Taxes

1. Estate Tax- at the death of the property owner.


An EXCISE TAX on the rights of transmitting property at the time of death and on the privilege that
a person
is given in controlling to a certain extent the disposition of his property to take effect upon death
A tax imposed upon the privilege to transmit property at the time of death; the tax should not be
construed
as a direct tax on the property of the decedent although the tax is based thereon

a. Cannot take place in juridical persons only natural persons.


Exemption:
a. P200,000.00 value of the net estate
b. 2) Merger of usufruct in the owner of the naked
Procedure:
i. Filing of Notice of death
ii. Filing of Estate Tax Returns
Extension of payment:
2.
3.
4.
5.

Undue hardship
Anxiety
Judicial settled (5 yrs to pay)
Extra judicial settlement (2 yrs to pay)
Exemption: if the heirs are guilty of negligence there is no extension given.

Characteristics of estate tax:


1.
2.
3.
4.
5.
6.

Excise tax- shifting of economics benefits


Ad Valorem Tax by the value
In direct tax- tax shifted to the transferee.
National tax- it is being imposed by the national government.
General tax- the main purpose of estate tax is to use for genral purpose.
Progressive tax- the rate of the tax increases as the tax base increases.

Determinant of fair market value


1. Commissioner of BIR
2. Provincial and city assessors.
Requisites for the imposition of estate tax.
1. Death of decedent
2. The successor must be alive at the time of the decedent death.
3. The successor should not be disqualified to inherent.

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Payment of Tax: Time of Payment


(a) General Rule: at the time the return is filed by the executor, administrator or the heirs but before
delivery of the distributive share in the inheritance to any heir or beneficiary.
(b) Exception: when the Commissioner finds that payment on due date would impose undue hardship
upon the estate or any of the heirs, he may extend the time for payment of such tax:
1. not to exceed 5 years, in case the estate is settled through the courts; or
2. 2 years in case the estate is settled extrajudicially In which case it shall be paid on or before expiration
of the extension and running of the Statute of Limitations for assessment shall be suspended for the period
of any
such extension. The Commissioner may require a bond not exceeding double the amount of the tax and
with such sureties as the Commissioner deems necessary when an extension for payment is granted.

(c) Restrictions as to Extension of Time to Pay:


no extension shall be allowed when taxes are assessed by reason of :
1) negligence,
2) intentional disregard of rules and regulations,
3) fraud on the part of the taxpayer

Donor tax- life time of the owner of the property


a. Natural and juridical persons can take property.
b. No requirement as to notice to the donee that there is a donation.
A tax on the privilege of transmitting ones property or property rights to another or others without
adequate and full valuable consideration.
THERE ARE TWO (2) KINDS OF DONATIONS:
1. Donation inter vivos: a donation made between living persons; perfection is at the moment when the
donor knows of the acceptance of the donee (exception: donations of immovable1 properties); subject to
donors tax
2. Donation mortis causa: a donation which takes effect upon the death of the donor; subject to estate tax
The subject of donors tax is the gift or donation. Article 725 of the Civil Code defines a gift or donation
as an act of
liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it.
Thus, the following are the

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REQUISITES OF VALID GIFT OR DONATION SUBJECT TO DONORS TAX:


1. Capacity of the donor
a. Legal age (18 year old above)
b. Sound mind
2. Intent to donate
3. Delivery of the subject gift, whether actual or constructive
4. Acceptance by the donee

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