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28 Feb 2008
Appeal Status
Not appealed

A deed of gift of money and declaration of trust

2008 case note - Deed for a future gift of money with a declaration of trust for a home to secure payment is not a gift – disposition of property, creation of trust.

Begg and Jacksons v The Commissioner of Inland Revenue


A deed for a gift of money to be paid in future coupled with a declaration of trust for a home to secure that payment is not a gift.


The taxpayers executed a deed and a declaration of trust of their home for the purported purpose of making a gift of a sum of money to family members. While the intention of the deed was to make the gift of a sum of money, payment of it was deferred to the future upon sale of the home of the taxpayers. A trust was declared on the home to secure payment of the money.


The key to the Court's decision lay in its interpretation of "the creation of the trust"as a gift in the Act. The Court, taking a narrow interpretation, held that "the creation of the trust" was a subset to the general definition of "disposition of property" which speaks of "settlement ... of property ... in equity". That meant the gift was for a property in existence at the time of settlement. In other words, the subject of the gift had to be the sum of money. As the home was clearly not the subject of the gift, although the trust was valid, there was no disposition of property for the purpose of the Act.

Taking this approach, it did not appear necessary for the Court to discuss whether the beneficiaries' rights to the proceeds from the sale of the home in the trust could constitute a disposition of property.

Estate and Gift Duties Act 1968