Chuck gift duty, MPs told

Tuesday, 9 March 2010 1 Comment

The government should get rid of gift duty or at the very least review the threshold says the New Zealand Institute of Chartered Accountants (NZICA).

 It believes exemption levels in the Estate and Gift Duties Act 1968 are "well out of date".

The NZICA told MPs on Parliament's finance and expenditure select committee the gift duty threshold of $27,000 - implemented in April 1984 - would be worth $77,220 in today's money.

"The gift duty threshold is now interfering with normal family arrangements and forcing people to find other ways around the rules," the NZICA said in a submission on the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver and Remedial Matters) Bill.

The bill only considers a few remedial issues around the existing gift duty, because, as it stands, the duty could apply to businesses which make transactions for lower than market value.

But the NZICA has gone further and advised that at the very least, the threshold should be reviewed - and that the government should in fact consider getting rid of the duty altogether.

"Gift duty was never intended to be a taxing regime per se, but rather a set of rules to overcome arrangements designed to avoid estate duty."

"If the threshold is kept deliberately low for other policy reasons then it is incumbent on government to clearly set those out."

Estate duties were removed in 1999.

Both the NZICA and the Corporate Taxpayers Group told MPs there are market value rules in the Income Tax Act which safeguard against gifting as a way of avoiding tax.

The government is reviewing gift duty later this year.

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