Finance Minister Peter Dunne has announced the government may repeal gift duty if several concerns can be addressed.
Dunne said was the gift duty was introduced in 1992 to stop people circumventing estate duty rules, but people were using gifting programmes to get around the gift duty.
Your view? We welcome your insights and thoughts below on the gift and estate duty situation.
Here is the full statement below from Dunne:
The Government intends to repeal gift duty if concerns around creditor protection and social assistance targeting can be addressed, Revenue Minister Peter Dunne announced today.
“Officials have been reviewing the gift duty rules for several months, and a strong case has emerged for repealing the rules altogether,” Mr Dunne said.
Gift duty was originally introduced to prevent people from circumventing the estate duty rules. When estate duty was abolished, with effect from 1992, gift duty was retained to prevent people from gifting away large assets, where doing so may undermine the interests of creditors, minimise income tax liability or enable access to social assistance.
“The use of gifting programmes ensures that gift duty is not paid in most situations,” Mr Dunne said.
“For example, assets are sold at market value, usually to a trust, in exchange for a debt which is progressively forgiven. This means that the vast majority of gift duty statements that Inland Revenue receives are not liable for duty. “The result is that very little revenue is being collected, but at a significant cost to Inland Revenue and to the private sector in compliance costs,” he said.
“The alignment of the top personal tax rate with the trustee tax rate announced in Budget 2010 will significantly reduce the motivation to minimise tax obligations through gifting to trusts. “However, there are still some valid concerns around preventing gifting which may undermine the interests of creditors or which enables access to social assistance.
“Officials have been talking to relevant government departments about these issues and possible new protection measures. “There will be further consultations over the next few months, and if gift duty is to be repealed, I intend to include it in a tax bill to be introduced in November this year.” Mr Dunne said.
Mr Dunne said that as leader of UnitedFuture he was especially pleased that gift duty looks likely to be abolished. “Removing gift duty has long been UnitedFuture policy,” he said.