On 1 November the Government announced that it will abolish gift duty with effect from 1 October next year. This decision seems quite a sensible one. Gift duty raises a paltry $2.2M each year for Government, when in fact it collectively costs trusts around $70M per annum to file gift duty statements, most of which result in no gift duty needing to be paid. At last, some simplification!
It’s natural to be concerned that the removal of gift duty creates an ‘open slather’ environment, encouraging people to hide assets in trusts to avoid creditors. Not so, says the Government, who suggest that there is plenty of protection in the Insolvency Act to safeguard creditors. The abolition of gift duty will be included in legislation to be introduced in November 2010 and will be effective from 1 October 2011.