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.