TRANSFER & BUSINESS TAXATION

Net Gift and Donor’s Tax

First donation for a calendar year:

Gross Gift xxx

Less: Exemption xxx
Net Gift xxx
Donor’s Tax xxx
On subsequent donation within the same
calendar yaer:
Gross Gift, This Date xxx
Less: Exemption xxx
Net Gift, This Date xxx
Add: All Prior Net Gift xxx
Aggregate Net Gift xxx

Donor’s Tax on Aggregate Net Gift xxx

Less: Donor’s tax on All Prior Net Gift xxx
Donor’s Tax on the Net Gift, This Date xxx
Rates of Donor’s Tax
1. When the donee is not a stranger, the computation of
donor’s tax shall be in accordance with the following
table:
If net gift is Of the
But not over Tax shall be Plus
over excess over
P 100,000 Exempt
P 100,000 200,000 P 0 2% P 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 and over 1,404,000 15% 10,000,000
Illustration 1:
• The net taxable gift is P100,000. The gift shall not
be subject to donor’s tax. Net gift up to the extent
of P100,000 is exempt.
Illustration 2:
• The net taxable gift is P 850,000. The donor’s tax
is P35,000.

Donor’s Tax Due:

On P 500,000 P 14,000
350,000 × 6% 21,000
P 850,000 P 35,000
Rates of Donor’s Tax
2. But when the donee is a stranger, the tax payable by
the donor shall be 30% of the net gift. For the purpose
of this tax, 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.
Illustration 3:
• Rodela gifted Haidee, her sister-in-law, a gold bracelet
on her birthday. The fair market value of the bracelet is
P30,000.

Donor’s Tax Due:

Gross Gift P 30,000

Less: Exemption -
Net Gift P 30,000
Multiply by: 30%
Donor’s Tax P 9,000
Rates of Donor’s Tax

3. Any contribution in cash or in kind to any candidate,

political party or coalition of parties for campaign
purposes, shall be governed by the election Code, as
amended.
Illustration 4:
• Mr. and Mrs. Polo made donations of their conjugal property to
the following:
Date of Fair market
Donee Property Donated
donation value
To Berna,daughter and Mario,
Feb. 14 her groom on their marriage Resthouse in Zambales P 800,000
last Jan. 25
To Phil. National Red Cross
April 8 Cash 400,000
(PNRC)
April 13 To the province of Bulacan. Lot for public playground 2,000,000
To Dina, Mrs. Polo’s sister as
May 13 Apartment one unit 700,000
gift for Dina’s Birthday
To Mayor Reynes who is
June 13 Cash 300,000
running for reelection.
To Lito, Mr. Polo’s Brother for
Sept. 20 topping the medical board Cash 430,000
exam.
• On the one-unit apartment donated by Mrs. Polo to her
sister, Dina has unpaid mortage of P300,000.

• Of the P430,000 cash given to Mr. Polo’s brother, Lito Mr.

Polo pointed out that P30,000 must be donated to St.
Paul, The Apostle Parish.
Problems
1. Don Fernando gave his favorite grandson, Froilan, a
farm in Ilocos Norte. The property is subject to mortgage
of P500,000. Of this amount there remains an unpaid
mortgage of P150,000. The farm was acquired in 2010
for 350,000. at the time of donation, it has a fair market
value of P750,000. Froilan assumed the mortage. The
donor’s tax on Don Froilan’s net gift is?
Problems
2. Juan gave Maria, his first cousin P180,000 for Maria’s
Boracay trip. Of this amount, Juan wants 30,000 to buy
souvenirs in Boracay to which Maria agreed. The
donor’s tax on Juan’s net gift is?
Problems
3. Maria gifted Mary, her sister-in-law, a silver necklace on
her birthday the fair market value of the necklace is
P50,000. Maria’s donor’s tax on the net gift is?
Problems
4. Bryan gave Angelo, his second cousin P350,000 for
Angelo’s Hong Kong trip. Of this amount, Bryan wants
P50,000 to go to Immaculate Conception Parish Church
to which Angelo agreed. Bryan’s donor’s tax on the net
gift is?
Problems
5. Justine donated cash to his son on account of marriage
on October 2014 as follows:
January 15, 2015 P25,000
March 10,2015 20,000
July 15, 2015 50,000
September 10, 2015 100,000
The donor’s tax due on September 10, 2015 is?