Tax facts – Gift Duty

Be in the know with gift duty. Firstly it’s important to understand what is considered a gift. Think of it in the following terms:

 

  • 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.

 

These items can all be gifts:

  • Transfers of any items (for example, company shares or land)
  • Any form of payment
  • Creation of a trust
  • A forgiveness or reduction of debt
  • Allowing a debt to remain outstanding so that it can’t be collected by normal legal action.

It is important to note that 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.

For more information on gifting or gift duty please give us a call.

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