Gifting – your frequently asked questions

Clients regularly ask questions about gifting – everything from Christmas gifts for staff through to financial help for family. To help you navigate this popular subject our Business Services Senior Manager, Nicola Pollard and Simpson Western North’s Partner, Sarah Martin teamed up to answer some frequently asked questions.

Is there tax or duty on gifts in New Zealand?

No. But there are other factors to take into consideration before you make any gifts. For example, if you may need to claim residential care subsidies in future, some gifts can be clawed back and added to your total assets. These rules are complicated so ensure you get some advice in this area. You will need legal documents to be drawn up, including a certificate of solvency to certify that the gift does not leave you financially insolvent.

Are gifts tax deductible?

No, but some donations to approved organisations may qualify for refundable donation tax credits when paid by an individual.

Can I give some cash to my child(ren) to help them buy a house?

Yes, but consider carefully whether it should be a gift or a loan. There can be unintended consequences if you get it wrong. The required legal documentation should be prepared and legal advice sought beforehand. Carefully consider whether you are leaving yourself enough money for the rest of your life. Be wary of unequal treatment between children to avoid disputes.

Watch relationship property issues with children’s partners. There is protection for inherited funds in some circumstances, but not for gifted funds, and if your child puts the gifted funds into the family home, the gifted funds will likely become relationship property unless you or your child takes steps to protect them. Ensure you get robust legal advice.

Can I gift my house to my children?

Yes, you can gift any property but carefully consider why. Sometimes the motive behind the gift may not achieve what you want it to. A lawyer is required to arrange transfer of title and prepare the required documentation. Refer to our comments above re. residential care subsidies and relationship property.

What about gifts to other family members?

You can gift to anyone. If you step outside that category, while you can still make a gift, there could be consequences for either you or the person you gift to. Make sure you get some advice around this.

Can I gift anything to a trust?

Yes you can. However, be careful of breaching tax rules (for example the bright-line test in respect to residential property) or ‘re-setting clocks’ in respect to other property. Something to be wary of is that sometimes gifts can be clawed back – especially if the gift was done to defeat the rights of creditors. Likewise, gifts that defeat relationship property rights can be overturned, or remedies can be granted to an aggrieved party. Legal documents need to be prepared.

Gifts to staff – are they tax deductible? What do we need to watch out for?

• Food & drink – the entertainment rules apply. It is likely the cost is 50% deductible to the business.
• Cash – subject to the PAYE rules.
• Other gifts – subject to the FBT rules unless the amount is below the de minimis threshold.

Gifts to clients – are they tax deductible? What do we need to watch out for?

• Food & drink – the entertainment rules apply. It is likely the cost is 50% deductible to the business.
• Other gifts – 100% deductible.

Talk to our experts

If you would like to discuss any of the issues outlined above, please get in touch with your Nexia New Zealand or Simpson Western North advisor.

If you are not already a Nexia client, please reach out to our Auckland, Hawke’s Bay or Christchurch office. Connect with a Nexia Advisor to discuss how we can help.

Thanks to Sarah Martin from Simpson Western North for sharing her expertise.