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III. Charities in Relation to Gift and Estate Duties

25.17. Section 14 (d) of the Gift Duty Assessment Act states that duty shall not be payable in respect of

‘any gift to, or wholly for the benefit of, an institution, organisation or body of persons, whether corporate or unincorporate not formed or carried on for the profit of any individuals.’

This sub-section in general covers religious, scientific, charitable or public educational institutions which are specifically mentioned in section 23 (e) of the Income Tax Assessment Act. In addition, gifts to those institutions commonly known as ‘nonprofit organisations’ are exempt from duty.

25.18. Under section 8 (5) of the Estate Duty Assessment Act duty is not payable on so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for various purposes or for the benefit of one or more of the institutions listed in


  ― 492 ―
Appendix B to this chapter. While the Act does not use the word ‘charity’, it more than covers the four divisions of charity noted in paragraph 25.1, but stops short of including all those non-profit organisations exempt from gift duty. Thus the test for exemption from estate duty is not simply that an organisation is non-profit-making, but that it falls into one of the listed categories.

25.19. In New Zealand gifts during life or on death to institutions of a charitable kind do not respectively attract gift or estate duty. Until the late 1960s, lifetime gifts were exempt from duty while charitable bequests formed part of the dutiable estate, one of the grounds for the different treatment being that during lifetime a donor loses possession of the property, whereas a gift made by will involves the donor retaining the property in his possession until he dies. In the United States, a deduction is allowed to the donor for the value of the property transferred to a charity, subject to certain qualifications. These qualifications are aimed at denying the exemption if the organisation contravenes certain regulations, including participating in a political campaign. The United Kingdom proposes to introduce a capital transfer tax. It is expected that bequests to charities, which are now exempt from estate duty up to a limit of $50,000, will not be treated any less favourably than at present.

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