SUMMARY
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Is giving cash is subject to donor’s tax? What is the threshold amount?
Yes. Donor’s tax shall apply whether the donation is real or personal property, including cash. There is no threshold or limit to your generosity. There’s threshold, however, if the donation is made directly to beneficiary or a non-government organization (NGO) that’s not accredited by the Bureau of Internal Revenue (BIR). To claim it as deductible tax expense, an individual can donate up to only 10% of his/her operating income before donation, and corporations, up to 5%.
What’s the benefit of donating it through NGOs?
Any amount or value of properties donated through BIR-accredited NGOs is exempted from donor’s tax and is deductible in full from taxable income.
I understand that donor’s tax is paid by the donor. At what rate? If the donor fails to pay the donor’s tax, is the donee liable to pay? Will the donee be charged with tax evasion?
Yes. Donor’s tax is payable by donor based on the net amount of gift made in accordance with the following schedule:
| Net Gift Over | But not Over | The Tax Shall be | Plus | Of the Excess Over |
|---|---|---|---|---|
| 100,000.00 | exempt | |||
| 100,000.00 | 200,000.00 | 0 | 2% | 100,000.00 |
| 200,000.00 | 500,000.00 | 2,000.00 | 4% | 200,000.00 |
| 500,000.00 | 1,000,000.00 | 14,000.00 | 6% | 500,000.00 |
| 1,000,000.00 | 3,000,000.00 | 44,000.00 | 8% | 1,000,000.00 |
| 3,000,000.00 | 5,000,000.00 | 204,0000.00 | 10% | 3,000,000.00 |
| 5,000,000.00 | 10,000,000.00 | 404,000.00 | 12% | 5,000,000.00 |
| 10,000,000.00 | and over | 1,004,000.00 | 15% | 10,000,000.00 |
However, the schedule or graduated donor’s tax table is only applicable if donation is made to relatives up to fourth degree. Otherwise, donors shall be liable to pay 30% donor’s tax. Further, liability is not transferrable to donees or beneficiaries of donation.
Got a question about taxes? #AskTheTaxWhiz! Tweet @rapplerdotcom or email us at business@rappler.com. – Rappler.com
Mon Abrea is a former BIR examiner and an advocate of genuine tax reform. He serves as chief strategy officer of the country’s first social enterprise, the Abrea Consulting Group, which offers strategic finance and tax advisory services to businesses and professionals. Mon’s tax handbook, “Got a Question About Taxes? Ask the Tax Whiz!” is now available in all bookstores nationwide. Follow Mon on Twitter: @askthetaxwhiz or visit his group’s Facebook page. You may also email him at consult@acg.ph.
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