AN OLD MAN'S ESTATE.

Dominion, Volume 3, Issue 785, 7 April 1910, Page 3

AN OLD MAN'S ESTATE.

LEGATEES HAVE TO GO SHORT. HOW NEW DEATH DUTIES WORK. DR. FINDLAY DEPENDS TEE ACT. Considerable interest lias been occasioned in connection with the new Death Duties Act as a result of the comments by Mr. A. R. Barclay, ©x-JI.P.. in. regard to its operations with reference to the estate of an old man, who died at Dunedin recently. In the course of his letter on the subject in yesterday's issue, Mr. .Barclay, it. will bo remembered, stated that the deceased's estate realised «£7S Us. 6d. after, payment of medical and funeral expenses. Under directions in his will tho grave was enclosed and a stone erected) afc a cost of ,£lO, diminishing tho total value of the estate to <£68 14s. 6d. No duty would have been payable on the estate previously, but the Department insisted upon the payment of £t 17s. sd. under the new Act. As the costs and expenses of administration totalled about <£11, it was found, after payof the duty, that there was not sufficient money left in tho estat© to pay in full the legatees, four friends, who -had ministered to' his wants and to whom, .in his gratitude, t'he deceased had willed in a11'455.

Interviewed in regard to the matter by a Dominion reporter yesterday, the Hon. "a "^ n<^a y (Minister for Justice) said:— One of the main purposes the Government sought to achieve in framing the new Death Duties Act was how to substantially relieve - all, estates, under, say, 41000, which had to go to support tho deceased's dependents. The vast majority of all estates that pay duty are under 41000, . and the relief' of these estates determined on by the Government involved a very grea't' prospective loss of revenue. How was this doss 'to be made up? It had to be made, up from two sources. First, by a'substantial increase of duty upon the larger estates, Itad, secondly, by an increase upon estates or the parts of estates passing to strangers. Any comparison of the existing Act with the old Act will show how substantial is the relief given to estates under .£IOOO going to families. Under the old Act, the exemption was. only, 4100, now' it is 4500, and the old rate of duty on estates over 4500 and under 41000 has also been reduced. This purpose of Telief has also been given effect to in diminishing degree in the smaller estates over 41000 not going to strangers. , "Very substantial increases were made in the scale of duty dn the larger estates. As regards strangers in blood, the Prime, Minister pointed out in the House that sinco the purpose was largely to relieve estates going to support dependents,' strangers in blood must pay an increased rate. He pointed' out that on any fair principle ;'a stranger who has no claim upon tho deceased, and yet who get a gift of money under a will, could' not well grumble if he had to pay some of it to the State by wayi, of-duty. A tax on windfalls is not usually resented. ' It may be said that these legatees had been kind to the deceased, but obviously no distinction can be made' by law in these cases between absolute strangers who may have done absolutely nothing for the deceased,; and stranger's who may have performed 1 some services of friendship. A moment's reflection will show • that if the Commissioner had to allow deductions in cases where thero was no legal claim whatever, but only some considerations' of gratitude, ho would be faced by an impossible task. In i every advanced country, this . distinction is observed, and strangers in bloodtaking a. legacy ljave to pay • a much-in-creased rate. In England, if the net residue of this estate was, say, 4101, and had gone to strangers, over .£lO would he taken by the State in death duty. In New Zealand.the 41 makes no difference, aiid strangers are allowed no exemption. "In the case referred to by Mr. Barclay; the whole of the bequests are to strangers, and that—and that alone—i§ why any duty is payable. If the estate "had'been over five"times" as large, and had gone to the deceased's family, no duty would have been paid'. Mr. Barclay entirely misconceives the real incidence of the tax.' He says that the Government professed 'that the Bill would make it easier ' for tho small man and harder for the big ones? What does ho mean by this? The duty is not paid by the small man (tlie deceased at all) but by certain strangers who had no claim upon him for the money they get. Even in this case of an estato of 492, had-not the law costs and expenses of administration amounted to so much as 411, the share of these three strangers would have had to suffer no abatement, and as it is, the abatement amounts only to a few shillings each ■ legatee. No one can adequately understand the difficulty of equitably readjusting a death duty scale unless ho has tried it. It is a task of the greatest perplexity: Every wide general rule in connection with such a scale based on a sound principle may give rise to isolated cases of apparent hardship, but looked at .impartially this surely is not oho of these cases? Most of us would gladly pay 2s. in. tho 4 on the amount of a bequest' to which we had no claim either of indebtedness or relationship. The other fees to which Mr. Barclay refers have been collected in New Zealand for over a quarter of a century. They are not death duty in any sense and mainly, arise in this case because land was involved and the executor's title to it had to bo established.

In conclusion Dr. ' Findlay said: "I see that it is reported in your columns that the deceasea was an old age pensioner. In these days when the State pays a liberal old age pension' of .£26 per annum to those qualified for it, even if. they have small estates, the people's right to take a portion of such estates in the' shape of death duty from strangers to whom the estates may. be left by will, does not seem unreasonable or unjust. This, however, is in no way essential to the principle of tho existing. Act, which is simply this, that' a stranger who gets money under a Will may reasonably be asked to pay a duty ,on it to the State where it does not exceed .£100."