PART IV.

Death Duties.

27. —In this Part of this Act—

the word “disposition” includes any trust, covenant, agreement, or arrangement, whether made by a single operation or by associated operations;

the word “annuity” includes any series of payments, whether inter-connected or not so connected and whether of the same or of varying amounts and whether payable at regular intervals or not so payable;

references to an annuity or other interest limited to cease on a death shall be construed as also referring to an annuity or other interest subject to a limitation (in whatsoever form) having the effect of providing in the alternative for the cesser of such annuity or interest on a death or on the occurence of some event or expiration of some period before such death;

the expression “associated operations” means operations (whether effected by the same person or by different persons and whether connected otherwise than as hereinafter mentioned or not so connected and whether contemporaneous or not contemporaneous) which are—

(a) operations affecting the same property, or

(b) operations one of which affects some property and the other or others of which affect property representing (directly or indirectly) that property or income arising from that property or accumulations of such income, or

(c) two operations of which one is effected with reference to the other or with a view to enabling such other to be effected or to facilitating the effecting of such other and any third operation having a like relation to either of the said two operations, and any fourth operation having a like relation to any of those three operations, and so on;

the word “payment” includes a transfer of property and also a set-off or release of an obligation;

references to the amount of a payment shall be construed as including references to the value of property transferred and to the value of an obligation set-off or released.

28. —In the case of persons dying after the 7th day of May, 1941, the scale set out in the Third Schedule to this Act shall be, and shall have effect as, the scale of rates of estate duty in lieu of the scale set out in the Second Schedule to the Finance Act, 1931 (No. 31 of 1931), as modified by section 8 of the Finance (No. 2) Act, 1939 (No. 33 of 1939).

29. —(1) Where an interest in expectancy within the meaning of Part I of the Finance Act, 1894, in any property (other than property deemed, by virtue of section 26 of the Finance Act, 1931 (No. 31 of 1931), as amended by sections 29 and 30 of the Finance Act, 1934 (No. 31 of 1934), to pass on a death occurring before the 8th day of May, 1941) has, whether before or after the passing of this Act, been bona fide sold or mortgaged for full consideration in money or money's worth and the rates of estate duty having effect in the case of a person dying when the said interest falls into possession are higher than the rates of estate duty having effect in the case of a person dying on the date of the said sale or mortgage, the following provisions shall have effect, that is to say:—

(a) no other estate duty shall be payable on the said property by the purchaser or mortgagee when the said interest falls into possession than would have been payable by him if the rates of estate duty having effect in the case of a person dying on the date of the said sale or mortgage were the rates of estate duty having effect in the case of a person dying when the said interest falls into possession;

(b) in the case of any such mortgage as aforesaid, any higher estate duty payable by the mortgagor shall rank as a charge subsequent to the said mortgage.

(2) This section shall have effect only in respect of interests in expectancy which fell or shall fall into possession after the 7th day of May, 1941.

30. —(1) Subject to the subsequent provisions of this section, where an interest in property limited to cease on a death has, after it has become an interest in possession, been disposed of or has determined (whether by surrender, assurance, divesting, forfeiture or any other means except the expiration of a fixed period at the expiration whereof such interest was limited to cease) either wholly or partly and either for valuable consideration or otherwise, whichever of the following provisions is applicable shall apply and have effect, that is to say:—

(a) if in the absence of such disposition or determination the whole of the said property would, by virtue of section 1 of the Finance Act, 1894, have passed on the said death on which it was limited to cease, then and in such case the whole of the said property shall be deemed by virtue of this section to be included in the property passing on the said death, or

(b) if in the absence of such disposition or determination the said property would, by virtue of paragraph (b) of sub-section (1) of section 2 of the Finance Act, 1894, have passed to a particular or limited extent on the said death on which it was limited to cease, then and in such case the said property shall be deemed by virtue of this section to be included to that particular or limited extent in the property passing on the said death.

(2) The foregoing sub-section of this section shall not apply or have effect if the disposition or determination mentioned in that sub-section was bona fide effected or suffered for public or charitable purposes one year or more before the death or was bona fide effected or suffered for any other purpose three years or more before the death and either—

(a) bona fide possession and enjoyment of the property in which the interest the subject of such disposition or determination subsisted was, immediately after such disposition or determination, assumed by the person who became entitled thereto by virtue of or upon such disposition or determination and was thenceforward retained by that person to the entire exclusion of the person previously entitled to the said interest and the exclusion of any benefit to him by contract or otherwise, or

(b) the said disposition or determination was only partial and the provisions of the next preceding paragraph of this sub-section are not fully complied with by reason only of the retention by the said person previously entitled to the said interest of some part of the property or some benefit by virtue of the instrument creating or conferring on him the said interest.

(3) Nothing contained in the next preceding sub-section of this section shall prejudice or affect any charge of estate duty arising otherwise than by virtue of sub-section (1) of this section.

(4) In the application of sub-section (1) of this section to a case in which an incumbrance on the property in which the interest mentioned in that sub-section subsisted has been created by associated operations which included a disposition of the said interest, the following provisions shall have effect, that is to say:—

(a) where such incumbrance was created for consideration in money or money's worth which was applied wholly or partly for purposes calculated to maintain or increase the value of the said property, references in the said sub-section (1) to the said property shall be construed as referring to that property with and subject to the said incumbrance to the extent to which the consideration therefor was so applied;

(b) save as provided by the foregoing paragraph, references in the said sub-section (1) to the said property shall be construed as referring to that property free from the said incumbrance.

(5) In sub-section (3) of section 59 of the Finance (1909-10) Act, 1910, the words “property taken under such a disposition or affected by such a surrender, assurance, divesting, or disposition as aforesaid” shall be construed as including property affected by any such disposition or determination as is mentioned in sub-section (1) of this section, and the said words shall have effect accordingly and the subsequent words “disposition, surrender, assurance, or divesting” in the said sub-section shall be construed as including any such disposition or determination as is mentioned in the said sub-section (1), and the words “this section” shall be construed as including this present, section.

(6) This section shall not operate in respect of any such surrender, assurance, divesting, or disposition as is mentioned in paragraph (c) of the proviso to section 14 of the Finance Act, 1914, so as to make any estate duty payable which would not have been payable but for that section.

(7) This section shall have effect only in relation to persons dying after the 7th day of May, 1941.

31. —(1) Where a person (in this sub-section referred to as the deceased) who dies after the 7th day of May, 1941, has made (whether before or after the passing of this Act) a disposition of property in favour of a relative, the creation or disposition in favour of the deceased of an annuity or other interest limited to cease on the death of the deceased or of any other person shall not be treated for the purposes of either section 3 of the Finance Act, 1894, or of sub-section (1) of section 7 of that Act as consideration for the said disposition so made by the deceased.

(2) Where a person (in this sub-section referred to as the deceased) who dies after the 7th day of May, 1941, has made (whether before or after the passing of this Act) a disposition of property in favour of a company to which this section applies, the creation or disposition in favour of the deceased of an annuity or other interest limited to cease on the death of the deceased or of any other person shall not be treated for the purposes of either section 3 of the Finance Act, 1894, or of sub-section (1) of section 7 of that Act as consideration for the said disposition so made by the deceased, unless it is shown to the satisfaction of the Revenue Commissioners that no relative of the deceased was, when the said disposition was so made or at any subsequent time during the life of the deceased, a member of either the said company or another company to which this section applies which is itself a member of the said company.

(3) Where, in a case to which one of the foregoing sub-sections of this section applies, there have been associated operations effected either with reference to the receiving by the person referred to in that sub-section as the deceased of any payment in respect of such annuity or other interest as is mentioned in the said sub-section or effected with a view to enabling the said person to receive or to facilitating the receipt by him of any such payment, the said sub-section shall have the same effect in relation to each of those associated operations as it is expressed to have in relation to the creation or disposition in favour of the said person of the said annuity or other interest.

(4) For the purposes of this section the following persons and no other person shall be relatives of another person, that is to say:—

(a) the wife or husband of that other person, and

(b) the father, mother, children (whether legitimate or illegitimate), uncles, and aunts of the said other person, and

(c) the issue (including illegitimate children) of any person who is, by virtue of either of the foregoing paragraphs of this sub-section, a relative of the said other person, and

(d) the wife or husband of a person who is, by virtue of either the foregoing paragraph (b) or the foregoing paragraph (c), a relative of the said other person.

(5) In this section the expression “company to which this section applies” means a body corporate (wherever incorporated) which, by its articles or otherwise, restricts the right to transfer its stock or shares, and limits the number of its members (exclusive of persons in its employment) to fifty, and prohibits any invitation to the public to subscribe for any of its stocks, shares, debentures, or debenture stock

(6) Where two or more persons hold stock or shares in a company jointly, they shall, for the purposes of the definition contained in the next preceding sub-section of this section, be deemed to be a single member of such company.

32. —(1) The creation (whether before or after the passing of this Act) by a person or with his consent of a debt or other right enforceable against him personally or against property which he is or may become competent to dispose of, charge, or burden for his own benefit shall be deemed for the purposes of the enactments relating to estate duty (including this Part of this Act) to be a disposition made by that person, and in every such enactment the word “property” shall, in relation to any such disposition, be construed as including the debt or right so created.

(2) The extinguishment (whether before or after the passing of this Act) at the expense of a person of a debt or other right shall be deemed for the purposes of the enactments relating to estate duty (including this Part of this Act) to be a disposition made by that person in favour of the person for whose benefit the said debt or right is so extinguished, and in every such enactment the word “property” shall be construed as including the benefit conferred by the extinguishment of the said debt or right.

(3) The proviso to section 4 of the Finance Act, 1894 (which excepts from aggregation property in which the deceased never had an interest) shall not have effect in relation to property passing on the death of the deceased which consists of a debt, right, or benefit which is, by virtue of this section, to be included in the connotation of the word “property” in the enactments (including as hereinbefore mentioned) relating to estate duty.

(4) This section shall have effect only in relation to persons dying after the 7th day of May, 1941.

33. —References in the enactments relating to estate duty to an interest limited to cease on a death shall be construed as also referring to an interest subject to a limitation (in whatsoever form) having the effect of providing in the alternative for the cesser of such interest on a death or on the occurrence of some event or expiration of some period before such death.