Train Law Comparison_Estate and Donors Tax.pptx

Train Law Comparison_Estate and Donors Tax.pptx

1. E S T A T E A N D D O NO R ’ S T AX

2. T O K N O W A ND U ND E R S TA N D T H E T RA IN L A W , I T S EF F E CT S A ND A PPL I C A T I O N I N C L U DING T H E M O ST R E C E N T B I R I SS U A N C E S A ND U P D A T E S R E G AR D I N G I TS I M L E M E N T A T I O N

3. C o m p a r i so n o f Est at e T ax R at e – O L D vs . N E W D ed uc t io n A l l o w e d t o t h e E stat e of a C it i z e n o r a R e s id e n t D ed uc t io n A l l o w e d t o N on r e s i d e n t Est a t e s S h a r e i n Con j u g a l Pr o p e rt y T a x C r e d i t for Est at e T a x e s P ai d t o a F or e i g n C o u n t r y Est at e T a x Retu r n s

4. O v e r B ut N ot O v e r The T a x Sh a l l B e P lus O v e r O f t h e E x c e s s ₱ -0 - ₱ 200,0 00 E xe m p t -0 - -0 - ₱ 200 , 00 ₱ 500 , 00 ₱ -0 - 5 % ₱ 200 , 00 ₱ 500 , 00 ₱ 2,0 0,0 00 ₱ 15,00 8 % ₱ 500 , 00 ₱ 2,0 0,0 00 ₱ 5,000 , 00 ₱ 135,0 00 1 1 % ₱ 2,000 , 00 ₱ 5,0 0,0 00 ₱ 10, 00, ₱ 465,0 00 1 5 % ₱ 5,000 , 00 ₱ 10,00 ,0 00 An d O ve r ₱ 1,215 , 00 2 % ₱ 10,00 ,0 00

5. Impositio n o n th e va l u e o f suc h ne t estat e a n : E S T A T E T A X R A TE 6%

6. Se ct i o n 8 6 (A) NIR C o f 1 9 9 7 , a s a m e n d ed TRAIN F un er a l E xpen s e s A c tu a l f uner a l expen s e or 5 % of th e g r o ss e s tate , w h i c h eve r i s l o we r . Rep e a le d J ud i c i a l E xp e n s e s Deduc t ibl e i f a ri s e s f r o m te s t a ment a r y or inte r s t a t e p r o ceedin g s Rep e a le d P r o p e rt y P r e vi o u s l y T a xe d S u ch dedu c ti o n al l o w ab l e s h a l l be r e d uce d b y a n a m o un t w h i ch be a r s th e s a me r at i o t o t h e a m o u n t s a l lo we d a s d e d u ct i o n u nde r p a r a gr a ph s : ( 1) E xp e n s e s , L o s s e s, In d e b t e d ne s s, a n d T a xe s ( 3) T r a n sf e r s for P u bli c U s e S uc h dedu c ti o n a l l o w a b l e s h a l l be r ed u ce d b y a n a m o un t wh i c h b e a r s th e s a m e r a ti o t o th e a m o unt s a l l o w e d a s dedu c ti o n unde r p a r a g r a p h s: C l a i m s a g a i n s t E s ta t e C l a i m s of t h e d e c e a s e d a g a i n s t i n s o l ven t p e r so n U n p a i d M o r tg a g e s (6 ) T r a n sf e r s f or P u b l i c U s e

7. Sect ion 8 6 (A) NIR C of 1 99 7, a s a m e nd e d TRAIN T h e F a m i l y H o me I f t h e F M V exc e ede d P h p 1 , 00 , , th e exce ss s h a l l b e s ubjec t t o e st a t e t a x . I f th e F MV exceede d P h p 10 , , 00 , th e exce ss s h a l l b e s ubjec t t o e s t a t e t a x. S t a n d a rd D e d u c t i o n P h p 1 , , P h p 5 , , M ed i c a l E xp e n s e s I f in c u r red wi t h i n 1 ye ar p r i o r t o h i s d e a t h w h ic h sh a l l b e d u ly s ub s ta nti a te d wi th r e c e i p t s ; P r ovide d , T h at i n n o c a se s h a l l t he de d uc ti ble m ed ic a l e x p en s e s e x c e ed Five Hundred Thousand Pesos (P500,000). R epe a l e d

8. C it i z e n or Sect ion 8 6 (B ) NIR C o f 19 97 , a s a m e nd ed TRAIN E x p e n s e s , L o ss e s, Indeb t edne ss a n d T a x e s S ub s e c t i o n (A)( 1 ) F uner a l E x pen se J udi c i a l Exp e n se C l a im s a g a in s t e s t a t e C l a i ms o f th e de c e a s e d a g a i n st in s o l v e n t pe r s o n U np a i d m o rt g a g e s T h a t p o rti on o f t h e dedu c t i o n s s pe c ifie d i n p a r a g r a p h (1 ) of S ub s e c t i o n (A ) o f thi s S ecti on whic h th e v a lu e of s uc h p a r t be a r s t o th e v a lu e of hi s entir e gr oss e s t a t e whereve r s itu a ted ; R e pe a le d S t a n d a r d D edu c t i o n N o n e Php5 , 00 P r o pe r ty P r e vi ou s l y T a x e d S a me w i th C it i z e n or Re s ident S a me w i th C it i z e n or Re s ident

9. NIR C of 19 9 7 , a s a m e n d ed TRAIN S e c t i o n 90 ( A ) R e q u i r e me n t s xx x …, o r wh e r e , th o ug h e x e m p t f r o m t a x , th e gr o s s v a lu e of th e e s t a t e exceed s P200,0 00 ,… x xx Phr a se w a s re m o v ed . S e c t i o n 90 (A ) ( 3) P a r t of in fo rm a ti on a s m a y a t th e t i m e b e a s cert a i n a b l e & s u c h s up p le m en t a l d a t a a s ma y b e nec e ss a r y t o e st a b l i sh t h e c o r re c t ta x e s xxx Pr o vided , h o wever , T h at e s t a t e t ax return s s h o win g a gr o ss valu e excee di n g P 2 , 000 , 00 s h a l l b e s upp o rte d wit h a s t a temen t dul y certi f ie d t o b y a C erti f ie d Publi c Acc o unt a n t c o nt a inin g th e f o ll o wing : xxx xxx Pr o vided , h o wever , T h at e s t a t e t ax return s s h o win g a gr oss valu e excee di n g P 5 , , s h a l l b e s upp o rte d wit h a s t a temen t dul y certi f ie d t o b y a C erti f ie d Publi c Acc o unt a n t c o nt a in i n g th e f o ll o wing : xxx

10. T i min g f or F il i n g S h a l l be f il e d w i t h i n 6 m o n t hs S h a l l be f i l ed w i t h in 1 y e a r f r o m th e decedent ’ s de a th . fr o m th e decedent ’ s de a th .

11. NIR C of 1 99 7, a s a m e n d e d TRAIN S e cti o n 9 1 ( C) P a y m e nt b y I n s t a ll m e n t N o n e I n c ase th e a v a il a bl e c ash o f th e e s t a t e i s in s u ff icien t t o p a y th e t o t al e s t a t e t ax d u e , p a ymen t b y in s t a llmen t s h a l l b e a ll ow e d withi n 2 y e ar s f ro m th e s t a tut o ry d a t e f o r it s p a ymen t with o u t civi l pen a lt y a n d i n t e r e s t . S e ct i on 9 7 P a y m e n t o f T ax A n te c e d e nt t o T ra n s f e r o f S h ar es, B o n d s o r R i gh t s Adm i ni st r a t or o r o n e o f t h e he i r s c a n w i thdr a w an a m o un t n o t e x c eedi n g P20, up on a uth o riz a ti on o f t h e C o m m i ss i o ne r . A n y w i thdr a w al s h a l l b e a l l o w e d s ub j e c t t o 6 % f i n a l w i t hh o l din g t a x.

12. NIR C of 1 9 9 7 , a s a m e n d e d TRAIN S ecti on 9 7 P a y m e nt o f T a x A n te c e d e n t t o T ra n sfe r o f S ha r es, Bo n d s o r R i g h t s xxx…i t s h a l l n ot a l l ow a n y withdr a w al f r om th e sa i d dep os i t a cc o unt , unle ss th e C o mmi ss i o ne r h as certi f ie d th at th e t a xe s imp os e d there on b y thi s T itl e h a ve bee n p a id ; …xxx H e i r s c a n a l so w i t h d r a w a n a m o un t n o t e x c eedi n g P2 , xxx…i t s h a l l a ll o w a n y withdr a w al f ro m th e s a i d dep os i t a c c o unt , s ubjec t t o a f in al withh o ldi ng t ax o f 6% . F o r thi s purp os e , a l l w i t h d r a w a l s lip s s h a l l c o nt a i n a s t a temen t t o th e ef f ec t th at a l l o f th e j o in t dep os it o r s a r e s til l livin g a t th e tim e of withdr a w al b y a n y o n e o f th e j o in t dep os it o r s a n d s uc h s t a temen t s h a l l b e unde r o a t h b y th e s a i d d e p o s i t o r .

13. C o m p a r i so n o f D o n o r ’ s T ax Rat e – O L D v s . N E W O t he r don o r ’ s ta x p r o v i s i o n s c h a n g ed

14. O v e r B ut N ot O v e r T h e T a x Sh al l B e P l us O v e r O f t h e E x c e s s ₱ -0 - ₱ 100,0 00 E xe m p t -0 - -0 - ₱ 100 , 00 ₱ 200,0 00 ₱ -0 - 2 % ₱ 100,0 00 ₱ 200 , 00 ₱ 500,0 00 ₱ 2,00 4 % ₱ 200 , 00 ₱ 5,0 0,0 00 ₱ 1,000 , 00 ₱ 14,00 6 % ₱ 5,0 0,0 00 ₱ 1,0 0,0 00 ₱ 3,000 , 00 ₱ 44,00 8 % ₱ 1,0 0,0 00 ₱ 3,0 0,0 00 ₱ 5,0 0,0 00 ₱ 204 , 00 1 % ₱ 3,000 , 00 ₱ 5,0 0,0 00 ₱ 10, 00, ₱ 404 , 00 1 2 % ₱ 5,0 0,0 00 ₱ 10,00 ,0 00 An d O ve r ₱ 1,004 , 00 1 5 % ₱ 10, 00,

15. Impositio n o n th e va l u e o f tota l gif t s in exces s o f Php2 5 0,00 e x e m p t g if ts , in cl uding t o a s tra n g e r , a: D O NOR’ S TA X RA T E 6%

16. NIR C o f 19 97, as a m e n d ed TR A IN T r a n s f e r for Le s s tha n A dequ a t e a n d F u ll C o n s i derat i o n * Ex c e p t R e al P r o pe rt y T h e e x c e s s be t wee n t h e F MV of th e p r o p e rt y a n d c o n s i de r a ti o n r ecei v e d s h a l l be deeme d a g i f t s ubjec t t o D o n o r ’ s T a x x xx … Pr o VI DE d , ho w e V E R , T h a t a sa l e , exch an g e , o r o t h e r tr a n s f e r of p r o pe r t y m a d e i n t h e o rd i n a r y c o u r s e o f b u s i ne s s (a t r a n s a cti o n w h i c h i s a b o na f i d e , a t arm ’ s l en gth , a n d fr ee f r om a n y d o na t iv e i n t e nt ) , w i l l be c o n si d e r ed as m ad e for a n ad e q ua t e an d fu l l c o n s i de ra ti o n i n m on e y or m o n e y ’ s w o r t h . D o w r ie s or G i f t s m a de o n a cc o u n t of m a r r i a g e 1 s t P 10,0 00 g i f t s b y th e p a ren t i s exemp t f r o m d o n o r ’ s t a x R epe a le d

17. “ Wh e n i t i s o b v i ous t h at t h e g o a l s c a nn o t b e r eac h e d, don ' t a d j u s t th e g oals , ad ju s t t h e a cti o n s t e p s . ” - Con f u c i us