A gift is something given when:
- Nothing is received in return; or
- Something is received in return, but its value is less than the value of the property given.
If something of lesser value is given in return for a gift, the value of the gift is the difference between the two values.
In the context of trusts, these items can all be gifts:
- Transfers of any items (for example, company shares or land).
- Any form of payment.
- A forgiveness or reduction of debt.
If you propose to make a gift to a trust, please contact us to discuss the implications. It is important to take into consideration what the trust, and the gifts to the trust are designed to achieve as part of a long-term strategy.
The government abolished gift duty for dispositions of property made on or after 1 October 2011. This means that:
- Gift duty will not be payable for dispositions of property made on or after 1 October 2011
- Gift statements will not need to be filed for dispositions of property made on or after 1 October 2011
- However, gift duty and gift statements will remain due for dispositions of property made prior to 1 October 2011
For gift duty on any gifts made before 1 October 2011, the IRD’s guide on the IRD website is helpful.
Note that gifts are still included for assessment for a Residential Care Subsidy, therefore even though gifting duty has been abolished, there are still things to consider before gifting one lump sum amount.
For more information on gifting please give us a call.