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8 1976

CAPITAL ACQUISITIONS TAX ACT, 1976

PART V

Provisions relating to Gifts and Inheritances

Discretionary trusts.

22. —Where a person becomes beneficially entitled in possession to any benefit—

(a) under a discretionary trust, other than a discretionary trust referred to in paragraph (b), otherwise than for full consideration in money or money's worth paid by him, he shall be deemed to have taken a gift;

(b) under a discretionary trust created—

(i) by will at any time;

(ii) by a disposition, where the date of the disposition is on or after the 1st day of April, 1975, and within two years prior to the death of the disponer; or

(iii) by a disposition inter vivos and limited to come into operation on a death occurring before or after the passing of this Act,

otherwise than for full consideration in money or money's worth paid by him, he shall be deemed to have taken an inheritance.

Dealings with future interests.

23. —(1) Where a benefit, to which a person (in this section referred to as the remainderman) is entitled under a disposition, devolves, or is disposed of, either in whole or in part, before it has become an interest in possession so that, at the time when the benefit comes into possession, it is taken, either in whole or in part, by a person (in this section referred to as the transferee) other than the remainderman to whom it was limited by the disposition, then tax shall be payable, in respect of a gift or inheritance, as the case may be, of the remainderman in all respects as if, at that time, the remainderman had become beneficially entitled in possession to the full extent of the benefit limited to him under the disposition, and the transferee shall be the person primarily accountable for the payment of tax to the extent that the benefit is taken by him.

(2) The provisions of subsection (1) shall not prejudice any charge for tax in respect of any gift or inheritance affecting the same property or any part of it under any other disposition.

(3) In subsection (1), “benefit” includes the benefit of the cesser of a liability referred to in section 28.

Release of limited interests, etc.

24. —(1) Where an interest in property, which is limited by the disposition creating it to cease on an event, has come to an end (whether by another disposition, the taking of successive interests into one ownership, or by any means whatever other than the happening of another event on which the interest was limited by the first-mentioned disposition to cease) before the happening of such event, tax shall be payable under the first-mentioned disposition in all respects as if the event on which the interest was limited to cease under that disposition had happened immediately before the coming to an end of the interest.

(2) The provisions of subsection (1) shall not prejudice any charge for tax in respect of any gift or inheritance affecting the same property or any part of it under any disposition other than that first mentioned in subsection (1).

(3) Notwithstanding anything contained in subsection (2), if—

(a) an interest in property which was limited to cease on an event was limited to the disponer by the disposition creating that interest; and

(b) on the coming to an end of that interest, the provisions of subsection (1) have effect in relation to a gift or inheritance which was taken by a donee or successor under that disposition and which consists of the property in which that interest subsisted, then—

a further gift or inheritance taken by the same donee or successor under another disposition made by the same disponer (being the disposition by which that interest has come to an end) shall not be a taxable gift or a taxable inheritance in so far as it consists of the whole or any part of the same property.

(4) In this section, “event” includes—

(a) a death; and

(b) the expiration of a specified period.

Settlement of an interest not in possession.

25. —(1) Where any donee or successor takes a gift or an inheritance under a disposition made by himself then, if at the date of such disposition he was entitled to the property comprised in the disposition, either expectantly on the happening of an event, or subject to a liability within the meaning of section 18 (9), and such event happens or such liability ceases during the continuance of the disposition, tax shall be charged on the taxable value of the taxable gift or taxable inheritance which he would have taken on the happening of such event, or on the cesser of such liability, if no such disposition had been made.

(2) The provisions of subsection (1) shall not prejudice any charge for tax in respect of any gift or inheritance affecting the same property or any part of it under the said disposition.

(3) In this section, “event” has the same meaning as it has in section 24.

Enlargement of interests.

26. —(1) Where a person, having a limited interest in possession in property (in this section referred to as the first-mentioned interest), takes a further interest (in this section referred to as the second-mentioned interest) in the same property, as a taxable gift or a taxable inheritance, in consequence of which he becomes the absolute owner of the property, the taxable value of the taxable gift or taxable inheritance of the second-mentioned interest at the valuation date shall be reduced by the value at that date of the first-mentioned interest, taking such value to be the value, ascertained in accordance with the Rules contained in the First Schedule, of a limited interest which—

(a) is a limited interest in a capital sum equal to the value of the property;

(b) commences on that date; and

(c) is to continue for the unexpired balance of the term of the first-mentioned interest.

(2) For the purposes of subsection (1) (a), “value” means such amount as would be the incumbrance-free value, within the meaning of section 18 (1), if the limited interest were taken, at the date referred to in subsection (1), as a taxable gift or taxable inheritance.

(3) The provisions of this section shall not have effect where the second-mentioned interest is taken under the disposition under which the first-mentioned interest was created.

Dispositions involving powers of appointment.

27. —(1) Where, by virtue of or in consequence of the exercise of, or the failure to exercise, or the release of, a general power of appointment by any person having such a power, a person becomes beneficially entitled in possession to any benefit, then, for the purposes of this Act, the disposition shall be the exercise of, or the failure to exercise, or the release of, the power and not the disposition under which the power was created, and the person exercising, or failing to exercise, or releasing, the power shall be the disponer.

(2) Where, by virtue of or in consequence of the exercise of, or the failure to exercise, or the release of, a special power of appointment by any person having such a power, a person becomes beneficially entitled in possession to any benefit, then, for the purposes of this Act, the disposition shall be the disposition under which the power was created and the person who created the power shall be the disponer.

Cesser of liabilities.

28. —(1) The benefit of the cesser of—

(a) a liability within the meaning of section 18 (9); or

(b) any liability similar to that referred to in paragraph (a) to which the taking of a benefit which was a gift or inheritance was subject,

shall be deemed to be a gift or an inheritance, as the case may be, which shall be deemed—

(i) to the extent that the liability is charged on or secured by any property at the time of its cesser, to consist of the whole or the appropriate part, as the case may be, of that property; and

(ii) to the extent that the liability is not charged on or secured by any property at the time of its cesser, to consist of such sum as would, under the provisions of section 5 (2) (b), be the sum the annual income of which would be equal to the annual value of the liability.

(2) In this section, “appropriate part” has the meaning assigned to it by section 5 (5).

(3) For the purposes of sections 6 (1) (c) and 12 (1) (b), the sum referred to in subparagraph (ii) of subsection (1) shall be deemed not to be situate in the State at the date of the gift or at the date of the inheritance.

Disposition enlarging value of property.

29. —(1) In this section, “property” does not include any property to which a donee or successor became beneficially entitled in possession prior to the 28th day of February, 1969.

(2) Where the taking by any person of a beneficial interest in any property (hereinafter in this section referred to as additional property) under any disposition made by a disponer has the effect of increasing the value of any other property (hereinafter in this section referred to as original property) to which that person is beneficially entitled in possession, and which had been derived from the same disponer, the following provisions shall have effect—

(a) the increase in value so effected shall be deemed to be a gift or an inheritance, as the case may be, arising under that disposition and taken by that person, as donee or successor, from that disponer, at the time he took the beneficial interest in the additional property;

(b) the original property shall be treated as having been increased in value if the market value of that property at the time referred to in paragraph (a) would be greater if it was sold as part of an aggregate of the original property and the additional property rather than as a single item of property, and the increase in value for the purposes of this section shall be the amount by which the market value of the original property if sold at that time as part of such aggregate would be greater than the amount of the market value of that property if sold at that time as a single item of property;

(c) the additional property shall, for the purpose of determining its market value, be deemed to be part of an aggregate of the original property and the additional property; and

(d) the market value of any property which is to be valued as part of an aggregate of property shall be ascertained as being so much of the market value of such aggregate as may reasonably be ascribed to that part.

(3) For the purpose of this section, the donee or successor shall be deemed to be beneficially entitled in possession to any property notwithstanding that within five years prior to such a disposition as is referred to in subsection (2) he has divested himself of such property, or any part thereof, otherwise than for full consideration in money or money's worth or has disposed of it to a company of which he is, at any time within that period of five years, deemed to have control within the meaning of section 16 (4) (b).

(4) In subsection (3), “company” means a private company within the meaning of section 16 (2).

Gift subject to power of revocation.

30. —Where, under any disposition, a person becomes beneficially entitled in possession to any benefit and, under the terms of the disposition, the disponer has reserved to himself the power to revoke the benefit, such person shall, for the purposes of this Act, be deemed not to be beneficially entitled in possession to the benefit unless and until the power of revocation is released by the disponer, or otherwise ceases to be exercisable.

Free use of property, free loans, etc.

31. —(1) A person shall be deemed to take a gift in each relevant period during the whole or part of which he is allowed to have the use, occupation or enjoyment of any property (to which property he is not beneficially entitled in possession) otherwise than for full consideration in money or money's worth.

(2) In subsections (1) and (4), “relevant period”, in relation to any use, occupation or enjoyment of property, means the period from the 28th day of February, 1974, to the 31st day of December, 1974, and thereafter the period of twelve months ending on the 31st day of December in each year.

(3) A gift referred to in subsection (1) shall be deemed to consist of a sum equal to the difference between the amount of any consideration in money or money's worth, given by the person referred to in subsection (1) for such use, occupation or enjoyment, and the best price obtainable in the open market for such use, occupation or enjoyment.

(4) A gift referred to in subsection (1) shall be treated as being taken at the end of the relevant period or, if earlier, immediately prior to the time when the use, occupation or enjoyment referred to in subsection (1) comes to an end.

(5) In any case where the use, occupation or enjoyment of property is allowed to a person, not being beneficially entitled in possession to that property, under a disposition—

(a) made by will;

(b) where the date of the disposition is on or after the 1st day of April, 1975, and within two years prior to the death of the disponer; or

(c) which is a disposition inter vivos and the use, occupation or enjoyment is had by that person after the cesser of another person's life interest,

subsections (1), (3) and (4) shall have effect in relation to that property as if a reference to an inheritance were substituted for the reference to a gift wherever it occurs in those subsections, and for the purpose of this subsection “relevant period” in subsections (1) and (4), in relation to the use, occupation or enjoyment of property, means the period of nine months ending on the 31st day of December, 1975, and thereafter the period of twelve months ending on the 31st day of December in any year.

(6) For the purposes of sections 6 (1) (c) and 12 (1) (b), the sum referred to in subsection (3) shall be deemed not to be situate in the State at the date of the gift or at the date of the inheritance.

When interest in assurance policy becomes interest in possession.

32. —(1) For the purposes of this Act, an interest in a policy of assurance upon human life shall be deemed to become an interest in possession when and only when, either—

(a) the policy matures; or

(b) prior to the maturing of the policy, the policy is surrendered to the insurer for a consideration in money or money's worth:

Provided that if, during the currency of the policy, the insurer makes a payment of money or money's worth, in full or partial discharge of the policy, the interest shall be deemed to have come into possession to the extent of such payment.

(2) This section shall have effect in relation to a contract for a deferred annuity, and for the purposes of this section such a contract shall be deemed to mature on the date when the first instalment of the annuity falls due.

Provisions to apply where section 98 of Succession Act, 1965, has effect.

33. —(1) If, on the death of a testator and by virtue of the provisions of section 98 of the Succession Act, 1965 , or otherwise, a disposition takes effect as if a person, who had predeceased the testator, had survived the testator, the benefit taken by the estate of that person shall not be deemed to be an inheritance.

(2) Where a person survives a testator, and—

(a) such person becomes beneficially entitled, under a disposition made by a person who predeceased the testator, to any benefit in relation to any property devised or bequeathed by the testator; and

(b) section 33 of the Wills Act, 1837, or section 98 of the Succession Act, 1965 , or any analogous provision of the law of another territory has effect in relation to the devise or bequest.

such person shall be deemed for the purposes of inheritance tax to derive the benefit from the testator, as disponer.

Disposition by or to a company.

34. —(1) For the purposes of this Act—

(a) consideration paid by, or a disposition made by, a company shall be deemed to be consideration, or a disposition, as the case may be, paid or made; and

(b) consideration, or a gift, or an inheritance taken by a company shall be deemed to be consideration, or a gift or an inheritance, as the case may be, taken,

by the beneficial owners of the shares in the company and the beneficial owners of the entitlements under any liability incurred by the company (otherwise than for the purposes of the business of the company, wholly and exclusively) in the same proportions as the amounts which would be payable to them if the company were wound up voluntarily and its assets were realised on the date of the payment, disposition, gift or inheritance, as the case may be, would bear to each other (the amount of any realisation being ascertained for this purpose in accordance with section 17 as if the date of the payment, disposition, gift or inheritance were the date of such realisation).

(2) In this section, “company” means a private company within the meaning of section 16 (2).

(3) For the purposes of subsection (1) all acts, omissions and receipts of the company shall be deemed to be those of the beneficial owners of the shares and entitlements, referred to in subsection (1), in the company, in the proportions mentioned in that subsection.

(4) Where the beneficial owner of any shares in a company or of any entitlement of the kind referred to in subsection (1), is itself a company, the beneficial owners of the shares and entitlements, referred to in subsection (1), in the latter company, shall be deemed to be the beneficial owners of the latter company's shares and entitlements in the former company, in the proportions in which they are the beneficial owners of the shares and entitlements in the latter company.

(5) So far as the shares and entitlements referred to in subsection (1) are held in trust and have no ascertainable beneficial owners, consideration paid, or a disposition made, by the company shall be deemed to be paid or made by the disponer who made the disposition under which the shares and entitlements are so held in trust.