CAPITAL GAINS TAX PAYMENT

Here's an interesting problem: When is the deadline for Capital Gains Tax if...

If the Deed of Absolute Sale was notarized on October 1, 2024, but the acknowledgment receipt for full payment is September 15, 2024, when is the deadline for Capital Gains Tax?

Option 1: October 15, 2024

Option 2: November 1, 2024

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Only one person got the answer correct.

Let's revisit the problem:

If the Deed of Absolute Sale was notarized on October 1, 2024, but the acknowledgment receipt for full payment is dated September 15, 2024, when is the deadline for the Capital Gains Tax?

Only one person mentioned leaving the acknowledgment receipt blank, highlighting that the BIR can choose the earlier date (September 15) as the start of the deadline for CGT.

Everyone else said the deadline is November 1, 2024.

Section 44(c)(2)(ii) of the Tax Code states, "the capital gains tax return shall be filed within thirty (30) days following each sale or disposition."

The law doesn't explicitly say that the deadline is based on the notarization date.

In fact, in Court of Tax Appeals (CTA) Case No. 6299, a similar issue was addressed. The judge ruled that:

"The time of execution is not extended to the time of the notarization of the Deed of Sale as this subsequent act of the Notary Public merely attests to the authenticity of the signatures of the parties to a Deed of Sale but does not confer validity or completion to the contract."

In our problem, the acknowledgment receipt for full payment will be seen as the consummation of the sale. Therefore, the BIR can dictate that the date (September 15) should be used to compute the deadlines.

Take-away:

As broker Timo Roxas-Chua suggests: always leave all dates on closing documents blank. One simple oversight can cost you hundreds of thousands in penalties.