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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: Tax
Satisfied Customers: 22315
Experience:  37 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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My daughter and I own equal shares of a LTC with one

Customer Question

My daughter and I own equal shares of a LTC with one investment property bought about 8 years ago. It made losses until year before, now making profits. I want to gift my shares to my daughter so she will be the sole owner of LTC. What are the tax implications of this gift to me and and my daughter? Are there other more tax effective options? Regards, Ariya
JA: The accountant will know how to help. Is there anything else important you think the accountant should know?
Customer: I am retired and my main income is superannuation and investments. My daughter is self employed and has no other investment properties.
Submitted: 23 days ago.
Category: Tax
Expert:  Barbara replied 23 days ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Changes have been made to sections 2(2) and 61 of the Estate and Gift Duties Act so that gifts made on or after 1 October 2011 are no longer liable for gift duty, and you no longer need to file any documents with IRD. However, it is still necessary to properly record and document any gift that is made for your own records.

http://www.ird.govt.nz/duties-levies/gift-duty/giftduty-index.html

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Expert:  Barbara replied 22 days ago.

Just following up with you to see if you have any other questions. If so, please let me know so I can further assist you.

Best regards,

Barb

Customer: replied 21 days ago.
Hi Barbara, Thank you for your prompt advice. Unfortunately, your advice is, not complete. I know that there is no gift duty, but are there other potential tax issues that we need to examine: (a) whether or not the transfer of shares as a gift treated as disposal of shares under IRD rules; (b) whether or not shares received as a gift treated as income of my daughter, and how they are valued for transfer (I am not sure whether valuation is a tax issue); (c) how the tax benefits we received on account of depreciation of depreciable assets are treated by IRD in this event. I don't want to spend anymore to seek advice on these issues, but I thought I should draw your attention to them. Regards, Ariya
Expert:  Barbara replied 21 days ago.

Hi, Ariya.

Based on the information you provided in your initial question, I would have no way of knowing what you do or do not know. I will opt out so another expert can assist you.

Best regards,

Barb

Expert:  Chris The Lawyer replied 21 days ago.

Hi, Chris the lawyer here

A gift is not treated as income, and valuation is therefore not important. The tax benefits would cease in your hands as at the date of the transfer. So you look forward rather than backwards.

However there is another issue which may be relevant. If you are likely to need residental care in a rest home in the next 5 years, then disposing of an asset may mean you cannot obtain rest home subsidies. This is a WINZ and Health Ministry requirement, and I can explain further if you need the information