• Home
  • Family
    • Pregnancy
    • Breastfeeding
    • Baby
    • Toddler
    • Preschooler
    • Big Kid
    • Teen World
    • Pets
    • Education & Learning
      • Toys
  • Finance
    • Success & Fulfillment
    • Money Mondays
    • Law and Taxation
    • Doing Business in the Philippines
  • Health
    • Beauty & Style
    • Healthy Food
    • Fabulous Fridays
  • Life
    • Love & Relationships
    • Mind & Spirit
    • Beautiful Home
    • My Hometown-Baguio City
    • Travels
  • Privacy Policy
    • Privacy Policy
    • Contact Me!
    • About Me
    • Advertise
    • Facebook
    • Google+
    • Instagram
    • Pinterest
    • Twitter

Mommy Unwired

FREE!HAPPY KIDS FOR LIFE eBOOK!

Give your child confidence & a strong sense of self-esteem!Here is your Special HAPPY KIDS FOR LIFE eBook!

Home » Law and Taxation » How Much Will Kris Aquino Pay for Giving Boy Abunda A Hummer: (Philippine Donor’s Tax 101)

How Much Will Kris Aquino Pay for Giving Boy Abunda A Hummer: (Philippine Donor’s Tax 101)

in Law and Taxation, Love and Relationships, Uncategorized on 10/05/14

Click To Download This Post As PDF
Share
Tweet
Pin

I just want to let you know that all opinions are my own and I may earn from qualifying purchases. Regardless, I only recommend products or services I use personally and believe will be good for my readers. Enjoy and feel free to share with your friends!

*This post was in my Windows Live Writer draft folder for a couple of weeks now!  The news may be #boompanes, but I am  hoping that this quick lesson on Philippine Transfer Taxes, specifically Donor’s/Gift Tax will be a great help for you guys. 

By this time, this Instagram photo must be very familiar to you.

kris&boy

*grabbed from –_krisaquino’s instagram

Two weeks ago, Kris Aquino gave co-host, Boy Abunda, a Hummer.

“Dahil mahal na mahal ko sya.”  _krisaquino

(Wish lang nating she is our friend din, ano? In love)

Around August, Boy Abunda was visibly absent from talk shows he host because he had to undergo surgery because of a liver abscess.  He claimed that his stay in the hospital humbled him.
Days after he was released from the hospital, Kris gave Boy a Hummer.  A photo (shown above) and a video with the following caption documented the gift-giving:
“Because he is my best friend, because I’m so grateful he’s alive & because I want to make him happy. I gave Boy the Hummer tonight after A&A. Uulitin ko, kulang pa this gift because sobra sobra ang pagmamahal, pagtiwala at pag-aasikasong naibigay at patuloy na binibigay niya sa kin. Together w/ my brother & my 2 sons, it’s with Boy that I continue to experience the gift of true & unconditional love. #throughtheyears #iloveboyabunda”

A couple of days later, I heard Kris blurting on A&A (their nightly talk show) about Boy having to pay the transfer tax because she doesn’t want to get in trouble with the Bureau of Internal Revenue.

What Transfer Tax is Kris talking about?

She must be talking about Donor’s Tax. It is a tax on the voluntary transfer of property without consideration, between two or more persons who are living at the time of the transfer, which property was delivered, and accepted by the donee.

On to the boring (but informative) deets (by the way, if you want to know how much the donor’s tax should be, scroll down the post)…


Meaning of Consideration:

  • The word “consideration” means that, when the transferor gives something away and does not at the same time replace it with money of equal value or some goods or services capable of being valuated in money, he is deemed to have made a gift within the taxing law (Commissioner v. Bristol 121 F(2d)129)
  • Consideration must be measurable in money or money’s worth.  Mere legal consideration is not sufficient.

When does a Gift occur?

A gift occurs when the donor surrenders CONTROL over the property.  In this case, Kris is surrendering her control over the Hummer.  If the donor retains an unlimited power to revoke a gift, no gift has occurred.

If the donor does not relinquish control over the property during his lifetime, meaning you can only get the property after the donor dies, the donation is a donation mortis causa subject to the estate tax.

Composition of the Gross Gift:

  • Only properties upon which the donor divests himself of CONTROL during his lifetime
  • Residents and Citizens – All properties wherever situated can be donated
  • Non-resident Aliens – Only properties situated in the Philippines can be donated, provided that, with respect to intangible personal properties, we follow the rule of reciprocity

Rules on Valuing the Gift:

  • Fair Market Value of property donated
  • Real property – higher value between the FMV determined by the CIR and the FMV as shown in the schedule of values fixed by the Provincial and Coty Assessors
  • Personal property recently acquired by the donor – purchase price may indicate FMV
  • In case of shares of stocks, the FMV will depend on whether or not the shares are traded in the Stock Exchange.  For traded shares – arithmetic mean between highest and lowest quotation.  For unlisted shares – common shares-book value, preferred shares-par value

So Boy needs to pay transfer tax pala for the Hummer he received?

According to the Tax Code, the one who gave the gift should be the one paying the donor’s tax.  In this case, Kris, as the donor, should be the one paying the donor’s tax.

How much will the Donor’s Tax on the “Hummer gift” be?

Assuming that the value of the Hummer is P7,000,000.00, the Donor’s Tax Due will be P2,100,000.00.

Seriously??? That’s like 30% of the value!!! (Ang mahal din pala ng pagmamahal!)

Yep, folks, the Donor’s Tax Due is 30% of the Fair Market Value of the gift.

Bakit ang laki?


The Donor’s Tax Rate is this high because the Donee (Boy) is a STRANGER.


But Kris said that “Together w/ my brother & my 2 sons, it’s with Boy that I continue to experience the gift of true & unconditional love.”, right?  Boy surely is not a stranger!

According to the 1997 Tax Code, as amended, a stranger is a person who is not a:

  • Brother, sister (whether by whole or half blood), spouse, ancestor and lineal descendant; or
  • Relative by consanguinity in the collateral line within the fourth degree of relationship. 
A child of the first cousin of a donor is at the fifth degree of relationship and is considered a stranger.

What about a legally adopted child? A legally adopted child is entitled to all the rights and obligations provided by law to legitimate children, and therefore, donation to him shall not be considered as donation made to a stranger.

Donation made between business organizations and those made between an individual and a business organization shall be considered as donation made to a stranger.

Relatives by affinity are also considered strangers (e.g., father-in-law, sister-in-law).  If your father decides to donate a property to your husband, your husband will be considered a stranger because your father and your husband are not relatives by consanguinity.  Your father will be paying 30% of the value of the gift as Donor’s Tax.

What if your father decides to donate a property to you?

Since you are NOT a stranger, your father will be subject to the graduated donor’s tax rates of 2% to 15%.  The first P100,000.00 of net gift is exempt.

Over
But Not Over
The Tax shall be
Plus
Of Excess Over
100,000
Exempt
100,000
200,000
2%
100,000
200,000
500,000
2,000
4%
200,000
500,000
1,000,000
14,000
6%
500,000
1,000,000
3,000,000
44,000
8%
1,000,000
3,000,000
5,000,000
204,000
10%
3,000,000
5,000,000
10,000,000
404,000
12%
5,000,000
10,000,000
1,004,000
15%
10,000,000

Let’s go back to the Kris Aquino-Boy Abunda – Hummer Gift saga.  What if Kris decides to give the Hummer to Bimby instead? Since Kris and Bimby are relatives within the fourth civil degree of consanguinity, donor’s tax due will be based on the graduated donor’s tax rates table.  Like the income tax table, the tax rate gets higher as the net gift gets higher.

The Donor’s Tax Due on this donation will be P644,000.00.
Computation:  Value of Gift – P7,000,000.00
Donor’s Tax Due:   Tax on P5,000,000.00                 P404,000.00
                             Tax on Excess of P2,000,000.00*  240,000.00
Donor’s Tax Due                                                        P644,000.00
(mas mura if blood relatives, right?)

Filing of the Donor’s Tax Return:

Ang taas pala ng Donor’s Tax sa Hummer!  If Kris or Boy failed to pay the Donor’s Tax, what will be the effect? The effect will be that the Hummer cannot be transferred to Tito Boy.

So how should the Donor’s Tax Return Be Filed, what form shall be used, when and where will the filing be made?

The donor will file the return using BIR Form 1800 (Donor’s Tax Return) within 30 days from the Date of Donation at an/the:

  1. Authorized Agent Bank or
  2. Revenue District Office, Revenue Collection Officer or duly authorized Treasurer of the city or municipality where the donor was domiciled at the time of the transfer
The computation of the donor’s tax is on a cumulative basis over a period of one calendar year.  In other words, if the donor makes several gifts during the  calendar year, the gifts shall be added on a cumulative basis.

Kris got a lot of  “vitriol” (a word Boy loves to use in their A&A show), with bashers saying she should have just donated to the poor.  She did claim she donates / gives to charity a lot.  If she gives/donates more than once in a year, here is how her donor’s tax should be computed (pro-forma procedure):
FIRST GIFT
Gross Gift
xxx
Less: Exemption
/deductions*
xxx
Net Gift
xxx
Donor’s Tax Due
-1st Gift
xxx
Second Gift
Gross Gift
xxx
Less:Exemptions
/Deductions
xxx
Net Gift
xxx
Add: Prior Net Gift
(1st gift)
xxx
Total Net Gifts
xxx
Donor’s Tax on Total Net Gifts
xxx
Less:Tax Credit
         Donor’s tax
paid on prior net gift
xxx
Donor’s tax due on 2nd gift
xxx
*By the way, if you happen to have inherited properties that are still named after your deceased parents/grandparents/ancestors, please take note that these properties can only be named after you, the legal heir, after settlement of the estate, including the payment of transfer taxes.  Do comment here if you want a post on estate tax/extra-judicial settlement. 

Red heartMarie

Related

Click To Download This Post As PDF
« Ditch The Powder Box And Still Look Beautiful!
Getting Ideas for a Children’s Birthday Party »

Comments

  1. maria wenttotown says

    October 6, 2014 at 2:25 am

    whew…that's a lot of tax. Buti di pa ako nareregaluhan or napapamanahan ng malaki.

  2. Cheryl says

    October 6, 2014 at 8:42 am

    This is so timely! Just yesterday, I was in a car with some relatives and they were discussing about donor's tax, which I know very little about. At least now, I know a bit more! 🙂

  3. Celerhina Aubrey says

    October 6, 2014 at 2:04 pm

    grabe naman! nagregalo ka na lang, makukubrahan ka pa ng gobyerno. hahaha! oo isa akong middle class na bitter sa tax. hihihi…

  4. May Palacpac says

    October 6, 2014 at 2:13 pm

    Thanks for the information. Now I fully understand why my parents are not so big on working for anything to pass on to us except our education, haha. Kasi ang edukasyon, walang donor's tax!

  5. Marie Angeli Laxa says

    October 6, 2014 at 2:38 pm

    This was actually discussed in the real estate Accreditation seminar I attended several weeks ago. It must be a small amount for Boy but it surely is an unnecessary expense, thanks to Kris!

  6. Of Coffee and Crackers says

    October 6, 2014 at 2:43 pm

    Taxation is such a pain in the A&*^ subject when I was in college.. I can never comprehend this.. hahaha although thank you for sharing this post..

  7. Audric's Mom says

    October 6, 2014 at 4:07 pm

    Seriously? Ang mahal ng tax! Tapos napupunta lang sa mga maling kamay. OMG.

  8. MrsMartinez | xoxoMrsMartinez.com says

    October 7, 2014 at 11:27 am

    Super mahal ng tax! Pero ang tanong saan napupunta ang mga binabayaran natin? Nakaksama ng loob, no? Government officials, not all but mostly, are so corrupt that's why there are so many Filipinos who are still poor and cannot even send their children to school… so sad ; (

    xoxo
    MrsMartinez

  9. zaineandi says

    October 7, 2014 at 6:01 pm

    we are paying too much tax na nde natin nakikita kung san napupunta and here we see people (mostly politicians or relatives of one) spending way too much and sometimes more than they can truly afford… there goes our taxes, i guess…

  10. Que Sullano - Gavan says

    October 8, 2014 at 8:05 am

    Mahal ng taxes! If only we can really see where our taxes go.

  11. Peachy @ The Peach Kitchen says

    October 8, 2014 at 11:55 am

    Grabe! May donor at gift tax pa pala??? AT ang laki.

  12. Kim Reyes says

    October 8, 2014 at 12:18 pm

    Taxes in the Philippines are CRAZY!

  13. Paulline @ milastolemyheart says

    October 8, 2014 at 11:51 pm

    GRABE!!!! Nakakalula ang Tax! For the rich who can afford, it does not matter. But for the middle and low income families, it is way too much. Now I know why some would prefer to "sell" their properties to their kids instead of giving it as inheritance.

  14. Louisa says

    October 9, 2014 at 2:44 am

    Wow… they really do come up with everything. S even if Kris were to give Bimby the hummer she still has to pay tax but at a lesser amount?! Thanks for the education on this though, 🙂

  15. Mommy Jen says

    October 13, 2014 at 5:14 am

    Ang mahal pala mag regalo!! hehehe. pati ba naman yan may tax na?! Hayy naku, pagkain sa jollibee may tax din, sweldo may tax din. Jusko po! hehehe

  16. Mommy Levy says

    October 21, 2014 at 11:28 am

    Grabe, nagregalo ka na nga lang may Tax pa din. Sana lang may napupuntahan ang tax natin. Sad 🙁

Recent Posts

  • TALES OF ARCADIA: 3BELOW PREMIERES ON DREAMWORKS ON MARCH 1
  • Guidelines in the Filing and Payment of Philippine Income Tax Returns and Other Taxes in 2021
  • Cancers You Should Know About and How to Protect Yourself
  • Voluntary Assessment and Payment Program (VAPP) of the BIR
  • NOVUHAIR Celebrates 10.10

Popular Posts

  • FAQ:Senior Citizen's Discount in Restaurants In The Philippines and Other Issues
  • Salient Features: Tax Reform For Acceleration and Inclusion (TRAIN) - Republic Act No. 10963
  • Guidelines in the Filing and Payment of Philippine Income Tax Returns and Other Taxes in 2021
  • TALES OF ARCADIA: 3BELOW PREMIERES ON DREAMWORKS ON MARCH 1
  • How to Apply For T.I.N. : Local Employees

© 2021 MOMMYUNWIRED.COM

This Site is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon. Certain content that appears on this site comes from Amazon Service LLC. This content is provided 'as is' and is subject to change or removal at any time.