It is not widely appreciated that since 1 July 2008, the exemption from gift duty for donations to charities only applies to donations that are made to registered charities (tax charities).
However, as registration is voluntary a charity can be a donee organisation, but not a registered charity. As a consequence, a donor may be entitled to a tax benefit for a gift to donee organisation but can also incur a gift duty liability.
An amendment proposed in the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill will, if passed, address this perceived inconsistency by amending the Estate and Gift Duties Act 1968 so that gifts to donee organisations named in Schedule 32 of the Income Tax Act 2007 or listed on the IRD website will be exempt from gift duty. Further specific exemptions from gift duty are also provided for by the Bill.
That said, a review of gift duty, focusing on options for targeting the application of gift duty in a generic rather than case by case basis, has also been signalled for the coming year.
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