No gift duty is payable on gifts to charities

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Generally if you give someone a substantial gift you will have to pay gift duty.  However, if you make a gift to a charity you do not have to pay gift duty.

For example, a society (XYZ Society Incorporated) can transfer land to a charity (XYZ Trust) for free without paying gift duty. The society could then lease the land back from the charity.  Doing this adds an extra barrier of protection for the assets.  Call me on 09 470 2445 to find out more.

The relevant law is the Estate and Gift Duties Act 1968.

Gift duty is only imposed on “dutiable gifts” (s 61). The Act specifically excludes gifts to “tax charities” as dutiable gifts (s 73). A “tax charity” is a charity registered as a charitable entity under the Charities Act 2005 (s CW 41(5) Income Tax Act 2007).

In any event, all gift duty may be abolished soon as discussed in my previous blog Gift duty to be repealed – making gifting to your trust free!

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