Press Release – Age Concern
Following the abolition of Gift Duty, Age Concern New Zealand reminds older people to think carefully before disposing of their assets.Is Gifting Really Free?
Following the abolition of Gift Duty, Age Concern New Zealand reminds older people to think carefully before disposing of their assets.
Age Concern’s honorary solicitor Jock Nicolson is concerned older people may be encouraged to give away too many assets prematurely.
One reason for this could be so that if they go into care their assets will fall below the threshold level of personal assets to ensure they are eligible for state funding of their care.
However, a gifting limit of $6000 per year applies for each of the five years before applying for a residential care subsidy. Gifts in excess of $6000 in each of the five years preceding entry into care are brought back into account in assessing eligibility.
Prior to October 1 an individual could only gift $27,000 each year without incurring gift duty.
Mr Nicolson says he is concerned older people may be influenced, by family members or others, into giving away more than they are comfortable with, or is sensible for them.
“Giving away assets prematurely or excessively could lead to an older person losing their independence, which is essential for their well-being.”
He fears older people would be reluctant to ask for money back, should they live longer than they had expected or incur unexpected expenses.
“The last thing older people want to do is to go along cap in hand and say to the family ‘I need some financial help’.”
His advice is clear – “If you’re going to gift property, think carefully about your own needs and seek proper professional advice before doing so.”
Gift duty was introduced in 1885 to raise revenue and discourage people from giving away their assets before they died. It ran in tandem with death duty which has since been abolished.
Government cited high administration costs as a key reason for changing the legislation.