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Tax Facts – Gifting

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.
  • 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.

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.  

Please be aware that there is a $6,500 annual gifting limit for a gifting period of 5 years before going into care for rest home subsidy purposes.

For more information on gifting please give us a call or refer to the Inland Revenue guide on Trusts and estates income tax rules (IR288)

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