On 17 August 2011, Parliament passed legislation that abolishes Gift Duty on GIFTS made after 1 October 2011. This is a major change to the Trust landscape in New Zealand, in that it now provides people with the opportunity to make lump sum gifts or disposals to their Trusts without the need to stay within certain thresholds and without being exposed to liability for Gift Duty.
However, while this may seem like an exceptionally beneficial position for people with Trusts and gifting programmes that would normally have a number of years to run, it is optional as to whether people take up the opportunity to make lump sum gifts, and some people may choose not to do so.
We have provided here a LUMP SUM GIFT ASSESSMENT TABLE to allow people to assess the pro’s and cons of whether they should consider making large lump sum gifts to their Trusts.
If, following your review of this table you are still uncertain as to what position you should take please CONTACT US to obtain specific advice on the issue. Alternatively, if you are in a position where you do wish to take advantage of making a Lump Sum Gift, please CONTACT US to find out the best process for taking advantage of the post – 1 October 2011 rules.
Please note carefully that while FAMILY TRUSTS and Gifting are important ways for people to obtain Asset Protection for their assets, a FAMILY TRUST will not necessarily provide such protection:
- When it has been set up at a time where a creditor claim was imminent;
- Where the transfer of assets to the trust have been carried out with the intent to prejudice creditors;
- If you are adjudged bankrupt within five years of making such GIFTS;
- Where transfers have been made during a relationship and the transfers have been made up of assets which were relationship property at the time of transfer.
- Where the person has transferred assets for less than market value.
- Where the extent of the transfer of the assets to the Trust breach the Government’s specific guidelines relating to means testing and subsidy criteria.