Recent comments by the Inland Revenue Department will have far-reaching and significant implications in the area of gifting, particularly to family trusts, Guardian Trust business development manager Mark Cassidy says.
Under trust law $27,000 a year can be gifted to a trust each year and be free from gift duty. This has been an effective way for people to transfer assets to a trust, however it takes time which can be a problem if the value of the assets is high, or the people transferring assets are near the end of their lives.
The Inland Revenue Department says that a considerable number of gifting documents had been backdated, "either to correct a planned gifting programme omission, or accelerate an existing or new gifting programme".
It says this is not an acceptable and it has promised to crack down on the practice.
"Inland Revenue investigators recently began investigating gifting transactions. As a result a number of cases have been forwarded to the Police," the department says.
From the September 1 it widened its investigation programme to include full investigations of gifting transactions and that it views the practise as an offence under the Tax Administration Act.
IRD has indicated that this is such a serious matter that full investigation will, in appropriate cases, involve forensic examination of the documents.
Cassidy explains this and other major developments and what they mean in the features section of Good Returns.
Recent comments by the Inland Revenue Department will have far-reaching and significant implications in the area of gifting, particularly to family trusts, Guardian Trust business development manager Mark Cassidy says.