Gift duty to go?

Federated Farmers has been campaigning against gift duty for years and is welcoming the news that  it may go.

“Federated Farmers is extremely happy as we’ve lobbied successive Governments to end this arcane but avoidable tax, for those who have the means and time to restructure their affairs,” says Philip York, Federated Farmers economics and commerce spokesperson.

“The current gift duty threshold of $27,000 per annum means it can take decades to gift a farm from parents to their children. Succession is a major issue in farming today so the end of gift duty is a major step forward for Federated Farmers priority of farming for generations.

“In tragic circumstances gift duty greatly amplifies any sense of loss if affairs are not in order.  Unless gifted, for every $1 million up to $250,000 is payable to Inland Revenue.   

“Yet gift duty is easily avoided over time thanks to accountants and lawyers, so that makes gift duty not only inefficient, but punitive and pointless as well. . . “

The ODT reports that the amount collected doesn’t  justify the effort anyway:

The scheme cost $435,000 to administer each year, but generated just $1.5 million in duties.

A lot of people were escaping the tax by selling their assets at market value in exchange for a debt which they progressively wrote off without requiring repayment.

Feds describes gift duty as an “envy tax”. Getting rid of it will mean there’s no need for avoidance and make succession planning a bit easier for farming families.

Twenty seven thousand dollars may be a lot to someone who doesn’t have much but it’s less than the average wage. It would take decades to give away the value of even a small farm at no more than that amount each year.

Gift duty doesn’t  just apply to farmers or other business people, though. It applies to anyone, including Lotto winners who have to pay the tax if they want to share any more of their winnings than $27,000 annually.

The state shouldn’t be standing with its hand out between people who want to give away what they’ve earned or won and the recipients.

2 Responses to Gift duty to go?

  1. Gravedodger says:

    My understanding is that death duty is still a part of tax law only it is zero rated and knowing that Politicians very rarely remove a source of largess, the best we could hope for would be they would zero rate gift duty.I find it a little surreal that I can deny the state a share of my money by shuffling off but if I wish to transfer my very limited wealth while I am compos mentis and enjoy the experience,I must share it with a government who constantly exhibit a total incompetence in redistributing any stolen money from the citizenry in a way that gives me anything other than the aggravation.
    I accept that a major perceived downside is the opportunity for a family to retain residual estate monies if a relative goes into care but it seems a capricious act, to me, to penalize the ignorant or the down right unlucky when the aware will have set up the estate to achieve retention of the money. Another unintended consequence of the welfare state.
    I agree the removal of gift duty would be a major step in support of farm and business generational transfer which I see as mainly a good thing for the nation and its continuing prosperity, only I see the great unwashed enjoying a feeding frenzy largely based on envy. at the suggestion that the “rich pricks win again”.

    Like

  2. Rob Hosking says:

    GRAVE D: Death duty was zero rated from (I think) 1992 or 1993, but then it was abolished in Bill Birch’s last Budget in 1999.

    As for the rest of your points, couldn’t agree more!

    Like

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