PLANS AND PRICING
Essentials
Annual accounts, tax, gst, plus all your other compliance needs.
Track Your Business
For the business owner that wants a closer relationship with their financial adviser.
Growth & Strategy
For the business owner that wants to set up a strong management and planning function.
129 Kolmar Road,
Manukau, Auckland
P: 279 3787
F: 279 3789
info@quinnbiz.co.nz
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Update on new Gifting rules
Further to our article in September's e-Business Forward, we are able to pass on some additional information relating to the new rules surrounding gifting.
A Deed of Forgiveness of Debt will still need to be completed for any monies given to or paid on behalf of your Trust during the financial year. This Deed can be considered at the time of producing the Financial Statements for your Trust.
Financial arrangement rules potentially still apply unless the debt forgiven is in consideration of natural love and affection.
Anti tax avoidance rules potentially still apply. If a spouse was to gift $200,000 to his/her partner to get a better tax deal, the arrangement could be upset. Use a matrimonial settlement to be safe.
A quick transfer of assets to a family trust, when a business is getting into difficulties, is likely to be upset by a liquidator. If you want to make a substantial gift to a family trust, your accountant could prepare a solvency certificate similar to that used when a company dividend is declared. It could show you were solvent after the gift was made.
Beware of Regulation 9B of the Social Security Regulations 2005 and S147A of the Social Security Act 1964. The gifting rules for benefits and for the Residential Care Subsidy did not change on 1 October 2011. The Act does not allow any amount of gifting when applying for general benefits and other extra help. When it comes to the Residential Care Subsidy, the Act does allow a certain amount of gifting.
If people give away or reduce their income, or any assets that could earn them an income, that is deprivation. If someone applies for a long term care subsidy and they have deprived themselves of assets, any income that would otherwise have been able to be earned on that asset can be included in their income assessment. This applies regardless of when the deprivation occurred. Under this Act, the maximum they were entitled to gift was $27,000 between them. WINZ can claw back the excess over $27,000. This right of claw back is discretionary. It is not automatic.
However, if either partner dies, and the other partner later needs to go into care, there is an advantage in having slowly gifted rather than having gifted in a lump sun. That's because WINZ only counts the excess gifting of the surviving partner. The deceased partner's gifting is no longer included.
A single person can gift $27,000 each year without penalty. So if there are no gifts over $27,000 in past years, the client is more likely to be eligible for subsidy.
Under the same Act, loans made by the spouse of a person being means tested, with interest being payable if demanded, can be deprivation of income, if the interest was not demanded.
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