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March 2005

Gift Duty

“Death Duties” were abolished in respect of deaths occurring after 17th December 1992. However, pursuant to the Estate and Gift Duties Act 1968, Inland Revenue still assess for Gift Duty.

A “gift” is defined as a “disposition of property without fully adequate consideration in money or moneys worth”. In other words, a gift is where A receives something of value from B and is not expected to pay for it.

A Gift Statement must be filed with Inland Revenue if gifts of one person within a 12 month period exceed $12,000. Gift Duty is calculated on the following scale:

The Value   The Duty
Up to $27000
$27001 - $36000 
$36001 - $54000 
$54001 - $72000 
Exceeding $72001
5% on excess over $27000 
$450 plus 10% of excess over $36000
2250 plus 20% of excess over $54000
$5850 plus 25% of excess over $72000

As an example, a gift of $100,000 would incur duty of $12,850.
Penalties accrue for late filing of gift statements and/or late payment of duty. As will be noted, even where the gift will incur no duty a gift statement must be filed if the gift/s exceeds $12,000.

There are some limited exemptions, the most significant being gifts not exceeding $2,000 in any calendar year from A to B where it “is made in good faith as part of the normal expenditure of” A.

If in doubt about your circumstances, consult us before making a “gift” to avoid paying unnecessary duty.