Estate and Gift Duties Amendment Act 1963

This commentary item was published in Public Information Bulletin Volume 5, December 1964.

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Estate duty

Outline of amendment

The 1963 Act amends the Estate and Gift Duties Act 1955 by increasing the value limit of the estate duty exemption for the widow's succession from £10,000 to £12,000.

Previous exemption

Previously section 17(1) of the principal Act provided for a deduction from the estate duty of so much of the duty as was attributable to the value of the widow's succession up to a maximum extent of £10,000.

New exemption

The Amendment Act increases the value limit of the widow's succession up to £12,000 and provides that it is to take effect in the estates of persons dying on or after 11 July 1963; the date of the Budget Statement.

Effect of new exemption

Estate under £12,000: Left wholly to widow

No estate duty is payable where an estate not exceeding £12,000 in value is left wholly to widow.

Estate over £12,000: Widow successor

Where the widow is a successor in an estate over £12,000 in value duty at the scale rates is reduced by the duty attributable to her succession or the amount of £12,000, whichever is the lesser.

Illustrative table

The effect of the new exemption is illustrated by the following table comparing the duty at scale rates with the duty payable where the widow is the sole successor:

Gift duty

Outline of amendment

The Estate and Gift Duties Amendment Act 1963 further amends the principal Act by reframing the gift duty exemptions provided in section 47 for various payments made by employers to employees or the widows of deceased employees. The amendments will apply to gifts made on or after the 22 October 1963.

Exemption for payments by employers to employees

Previous exemption

Section 47(c) of the principal Act provided a gift duty exemption for payments made by an employer to an employee on his retirement or by way of a gratuity or bonus during the course of the employment.

Some payments excluded

This exemption did not apply in cases where -

(a) the payment was made by a firm or individual to an employee who was connected by ties of blood or marriage with the employer or any of the employers; and

(b) the payment was made by a private company to an employee who was a director of the company or connected by ties of blood or marriage with a director.

New exemption

The salient features of the amendment which inserts a new paragraph (c) into section 47 of the principle Act are -

FIRSTLY, references to the phrase "connected by ties of blood or marriage" have been omitted. Relationship qualifications are now restricted to the spouse and to blood relatives of the first and second degree; that is, to parents, grandparents, children, grandchildren and brothers and sisters.

SECONDLY, reference to a director of a private company is also omitted and is replaced by a restriction that excludes from exemption payments made by a public or private company to an employee where a half interest or more in the company is held for the benefit of one or more of the employee, his spouse, and blood relatives of the first and second degree.

FINALLY, the new paragraph (c) uses the expression "payments ... made in consequence of the retirement" instead of the formerly used expression "payments ... made on retirement". This alteration makes it clear that a series of payments or a pension is covered.

Exemption for payments by employer to widows of deceased employees

Paragraph (d) of section 47 of the principal Act provides an exemption for payments made to a widow by her deceased husband's employer. The amendment reframes this paragraph to keep it in line with the amended paragraph (c).