Gift duty going
Revenue Minister Peter Dunne today confirmed the government’s intention to abolish gift duty, saying the decision would be welcomed by taxpayers generally as the rules were resulting in a high level of compliance costs and were no longer raising significant revenue.
Thursday, November 4th 2010, 8:18AM
Dunne said considerable work had taken place since plans to scrap the duty were first flagged earlier this year.
"This work has revealed that the protection that gift duty offers in the areas of income tax, creditors and social assistance has only ever been incidental and very limited," he said.
"The limited protection that gift duty offers does not outweigh the significant compliance costs, estimated at $70 million per year that gift duty imposes on the private sector."
A number of arguments weighed in favour of scrapping gift duty, including the fact it slows down the transfer of assets to children and family trusts and the ease with which it could be avoided through gifting programmes.
Government figures show the wide use of gifting programmes to transfer large assets meant just 0.4% of gift statements received by Inland Revenue result in liability for payment of gift duty, and last year gift duty raised just $1.6 million.
Grant Thornton tax partner Geordie Hooft said "Very few people actually pay gift tax."
He said that out of the 225,000 gift duty statements received by the Inland Revenue each year, those liable for duty are "often simply as a result of a timing mistake."
Dunne said government agencies would monitor the impact of the changes and a post-implementation review would take place to ensure there were no unintended affects.
The abolition of gift duty will be included in legislation to be introduced in November 2010 and will be effective from October 1, 2011.
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