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Gifts get generous 18 Oct 2011

Susan Edmunds reports on nzherald.co.nz how “two weeks after gift duty was axed, accountants and lawyers are overwhelmed with calls from clients wanting to give assets and cash to relatives or family trusts.”

Daniel Hunt, a tax lecturer who runs a training and consulting practice, said that millions of dollars in assets and cash had already changed hands.

The law was changed on October 1. Before that, any taxpayer who gave away more than $27,000 had been liable for gift duty ranging from 5 per cent to 25 per cent.

But few people actually paid the tax as schemes were set up to avoid it, such as arrangements under which people would gift $27,000 a year until the whole asset was transferred.

Hunt said the number of people avoiding gift duty was evident in the fact that the Government received a return of only $1 million a year from the scheme, which cost $500,000 to administer.

Revenue Minister Peter Dunne said the changes were common sense. The ending of gift duty cut compliance costs and was the removal of a tax “well past its use-by date”. “Gift duty has continued to impose $70 million of compliance costs on New Zealanders each year, while no longer serving its intended purpose.”

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