In this short video Kris Morrison considers the impact of the repeal of Gift Duty on those with gifting plans in place. The transcript of the video follows:
The Minister of Revenue recently announced the Government’s intention to abolish Gift Duty with effect from 1 October 2011. From our perspective we think this is a good decision.
Gift Duty was originally introduced to close a loophole in relation to Estate Duty, and with Estate Duty having been abolished some years ago the primary reason for Gift Duty’s existence ceased to exsist. Adding to that it was estimated that Gift Duty cost the Government perhaps $400,000.00 a year to recover and the amount recovered was only in the order of $1.5 million. The estimated cost to the private sector to complying with Gift Duty requirements was in the order of $70 million, so the numbers just didn’t add up.
One question that many people who have family trusts have asked with the announcement is whether they should continue with their gifting programmes in the meantime given they will probably be able to gift the whole of whatever debt the trust owes in October next year.
If you have a gifting programme in place it is likely you will be contacted by your lawyers when the next gifting date rolls around anyway, and it may be that at that time you should raise this question with your lawyer and just ask, “does it make sense for me to keep gifting now or should I wait till October 2011?”
In some cases it will be a good idea to just wait until October next year, but in other cases there may be reasons in your particular circumstances that you should gift now to reduce exposure of assets even though you have the ability to complete your gifting in October next year.
