Have your say: Parliament passes law ridding New Zealand of gift duty from October 1 this year

Have your say: Parliament passes law ridding New Zealand of gift duty from October 1 this year

Gift duty in New Zealand will be no more from October 1 this year.

Parliament last night passed the Taxation (Tax Administration and Remedial Matters) Bill into law under urgency as the November 26 election looms.

In its report on the Bill in June, Parliament's Finance and Expenditure Committee gave a majority view that the law be passed.

Labour and the Greens held a minority view opposing the abolition of gift duty, saying there was not enough evidence to show the move would not increase the use of trusts.

But the majority view of the select committee was a Law Commission review into trust law would handle the issue of trust use, and that gift duty was not the appropriate way to handle inadequacies in trust law.

"This bill proposes to abolish gift duty from 1 October 2011. Gift duty raises the Government about NZ$1 million a year, but costs NZ$430,000 in administration, and costs the private sector an estimated NZ$70 million in compliance each year," the FEC said in its report.

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For our family, far from increasing the use of trusts, it will make trusts less attractive. We must be simple folk.

For those that have used trusts to protect assets from events beyond their control, and to look after the assets of those that cannot look after themselves, it won't matter.

I know lots of the comments here will be on trusts, but does anyone have comments on other implications of this? 

For example, if an elderly person gets ill, could they immediately gift all their assets to their kids and avoid having their assets stripped for their health care costs?

Basically, I am interested in insights into what effects the removal of gift duty might cause (and perhaps some will be positive?)

Presumably if it saves $70m in compliance costs accountants and lawyers etc will be down that much on income??

@AndyC

The law change is only about removing Gifting Duty it is not going to give you the ability to avoid gifted assets being clawed back for health care costs within legally I believe a 10 year period (but I believe they look back only 5).

nope can't do that Andy...the Min of health via MSD who implement have add back provisions when there is excessive gifting (such as one off gifts).  The changes make no difference at all to Residential Care funding issues.

No you can't do that as others have pointed out, but we expect to give away a substantial portion of our assets at 65 for precisely that reason, crossing fingers tightly that we stay healthy into our 70s.

A oneoff at 65 may be caught by WINZ - if it is over $27,000. Until this is clarified it is safer to document any gifting - and forgive it at $27,000 per year. The only thing that has changed at present is that you don't have to tell the IRD. WINZ will go back 5 years, so keep healthy.

John Key is talking up the chances of economic growth for a "considerable period of time" in the United States

good to do what they do

policies that work for the US will work for NZ

Superb effort by Peter Dunn taking out a unneccessary waste of capital in our economy. Money that can be better spent elsewhere away from the traditional legal and accounting professions that do little to add anything to our forward momentumn.

We have been gifting for years by drip-feed $54,000 pa, and lawyer charges $350 each time.

Will be able to do everything in nonetransaction after 1 October, overcomes a long drawn out process 

well silly old you! 

 Why didnt you just photocopy last years, change the date, download a gifting form off the IRD website and do it yoursel???   

Received from lawyers last week.

1) The abolition of gift duty is an IRD issue and has no bearing on the laws and policies of the MSD and WINZ

2) For asset testing for MSD and WINZ the Status quo will remain

Plus various examples which i wont type here.

Keep gifting at $27k per year or they can claw things back

 

Good trick. Save money and it will hurt lawyers and accounatnts.