- 7 Feb - PAYE, Terminal Tax, FBT (5th on weekend)
- 20 Feb - PAYE, RWT, N-RWT
- 28 Feb - GST, Prov Tax
The Abolition of Gift Duty - Tread with Caution
From 1 October 2011 a gift that is made to a trust will no longer be subject to a gift duty tax. This will mean that an acknowledged debt owed to an individual by a trust could now be gifted in full without having a tax imposed on the transaction.
However, before a decision is made to fully divest this asset, you need to consider the reasons and consequences for doing so. Some of these reasons may include:
1. Asset Protection
Once the assets are divested away from individuals they are (generally) protected from being subject to a creditors claim in a situation of business failure. If asset protection is the only, or predominant, reason for transferring assets then a large one-off gift may be the correct option.
2. Succession Planning
Assets divested in to a Trust will not form part of a persons Estate on their death. With this in mind, fully divesting yourself of your assets to a Trust may be advantageous as the assets held in the Trust will not be subject to a claim against your Will.
3. Relationship Property (Matrimonial Property)
Gifting an asset to a Trust will not necessarily protect that asset from being considered matrimonial property if a marriage dissolves. We suggest that you consult with a lawyer if you have assets which you want to protect as ‘separate property’.
4. Government Assistance
There have always been strict rules around divesting yourself of assets to qualify for government assistance. In many situations the gift will be “clawed back” in terms of determining eligibility for government assistance, particularly around Rest Home subsidies, Legal Aid and certain Benefits.
In considering the reasons for divesting your assets to a Trust, you must also consider any reasons for maintaining an acknowledged debt with your Trust. Maintaining this debt will enable you to retain some control over your divested asset and may enable you to access interest income if it is required in the future.
We suggest that you weigh up the advantages and disadvantages of fully divesting yourself of your wealth to the trust and consult your advisor and solicitors to work through the consequences of this decision.