Gift Duty to be abolished from 1st October allowing anyone to freely gift any amount to another person, charity or trust.
Previously amounts gifted over $27,000 per annum per person were liable for tax.
Careful Consideration before Gifting
Gifting to a Trust - the money is no longer yours
The money is no longer yours, and if you wanted to access it at a later date you will need to obtain approval fro the trustees and a Capital distribution for the Trust would be required
Asset Protection from Creditors
To protect your assets from creditors you may gift your assets to a trust. But if you do end up in financial difficulty, you need to prove that you were solvent at the time of gifting. Best practice would be to obtain a solvency statement from your accountant at the time of gifting which would require a valuation of your assets. If this is not done any gift made within 2 years may be cancelled.
Asset Protection from Relationships
Gifting may not be the best way to protect assets during a relationship. Often couples enter a Section 21 Agreement to classify certain items as 'separate property' that would normally be defined as 'relationship property' and potentially subject to equal sharing.
Asset Testing for Rest Home Subsidies
Gifting rules under the social security Act do not follow the gifting for the Inland Revenue department
- Gifting of $6,000 per annum, per couple is acceptable, for 5 years prior to application for rest home subsidy
- Gifting of $27,000 pa prior to that is acceptable.
- All other gifting is regarded as an asset.
For example, if a gift of $100,000 was made 10 years ago and no gifting since.
The amount will not be apportioned over the 10 years, but the excess over $27,000 will all be counted as an asset for subsidy calculations.
If you have any concerns about asset testing, we advise to continue to gift at $27,000 per annum.
For more information - Ministry of Health
Return to Tax Changes