DEATH DUTIES ACT.

Dominion, Volume 3, Issue 883, 1 August 1910, Page 5

DEATH DUTIES ACT.

POSITION OF LEGATEES. AUCKLAND LAWYER INTERVIEWED. (By Telegraph-Special Correspondent.) Auckland, July 30. A good deal of controversy has arisen over the Death Duties Act, and its provisions are generally not, understood. Mr. T. Cotter, the well-known- legal authority, :has given the "Herald," in an interview, some interesting sidelights/ . • "In my opinion," said Mr. Cotter, "the Death Duties Act of 1909, which was passed on December 24 and came into operation seven days later, very materially increases the duties payable, on the. death of any person'in such a way as to bear 'harshly or unjustly on those possessed of wealth. In-the Consolidated Act.of' 1908 there was no duty of any kind payable, on'estates under £100, nor on the first £100 of any estate under £1000, and above those amounts the duty ranged from 2J per cent, to 10 per cent., which- latter amount was the highest duty payable, except in the case of strangers in blood who paid 3 per cent, extra. Under the Act there was only one duty payable, and no duty whatever was payable upon any property given to tho wife or husband of the deceased, and only halt of the ordinary duty was payable upon property given to the children or grandchildren of tho deceased. Under tho present Act, however, all that lias been altered, and tho duly most materially increased.. . _'..('■

Position of Widows. ■ "Tliere are now two duties -liiviab'O, one called an 'estate'- duty, and the other called ; a 'succession' duty, and while estates' under £500 in value, are relieved. from estate, duty only,. successions under .£20,000,. if. coming to the wife .or any .child, grandchild, or. other descendant of the deceased, or charitable trusts, aro made exempt from.succession duty. The 'estate' duty ranges from .1 per cent, to 15 por cent., and; in the case of strangers in blood, or relatives beyond the fourth degree of consanguinity, estate and succession duty together may amount to 25 per cent, on amounts coming to the legatee over. £20,000, artd-even as high as 35 per. cent., whore the estate amounts to, over £150,000. Under the old Act, as it has been stated, tho widow paid no duty on that part of hor husband's estate coming to her.- Now, however, she has to pay estate duty up -to-15 per cent.,-unless the value of ner hunband's estate does not exceed £10,000, and her share of it does exceed .£6OOO, and sbo has.also to pay an. additional succession duty of 2 per cent, if the value .of her succession exceeds £20,000." .

Widowers •Penallsoo. And what is the. position of the husband or widower? ' "Much worse than before. It is he who, under the present- Act, is most highly penalised. Under the old Act ho paid no duty upon that.part,of ins wife's estate, coming to him. Under tho present Act; however, ho has to pay the lull estate duty up to 16 pel cent.,- and has- also to pay an additional duty of 2 per cent, without an allowance of, any kind whatever; so that,' supposing a husband wishes to provide for his wife, conveys property to her, and she. dies before him; leaving -such property to him,, luvwill, under ■ the present Act, have to pay tho above two rates of duty' on her death, and ho may also; havo paid tho gift duty of 5 per cent: 1 as' well when he convoyed the property to her. Again, on his-dcath, assuming lie leaves the property to'-their children', tho full estate duty,will again b'eeomo payable.; arid' succession duty may also reo.uir6 to be, again paid." And_ as to children? ■ ,':■'• "Children and grandchildren under tho old Act paid only half the normal duty, the same not being in any uasf' more than 5 per cent. ■ Now, however, they havo.to pay the full estate duty up to 15 per cent, and 2.per cent..duty on the valuo of their succession, if such value is over £20,000. ' ;: - ; '•■ •' '■,'■''' '- ' Thirty Psr Cont. swallowed. ' - ' "Relatives ■ beyond tho fourth degree and strangers in blood are, however, the most severely dealt with under tho 1 present alteration in the law. Thirteen per cent, was the highest duty previously payable, and thon only by strangers, in blood. Now, however, such, relatives ,and strangers in blood have to pay up to 25 per cent., which is really. 33 1-3 per cent, on tho amount actually received by tho legatee, and if tho. amount received , is over £20,000, then the both duties on.' the . excess amount to 35 per cent. .Thus'if. in an estate of £150,000 or over a legacy of, say, £30,000 were given to a relative more remote than the fourth degree, or to a stranger in blood, tho legatee would get £15,000 only out of the first £20,000, aud out of the next £10,000 ho would only got £6500, the duty being £3500." , . ■-..-,-

Is the Act calculated to discourage tho industrial expansion of New Zealand,' or- to drive capital out. of ' the country? ' "Yes, to drive wealthy people put of the country." Is it within your knowledge that it has already had a disturbing effect on wealthy people? "Yes.- In my opinion the Act ponalises wealth."

Dr. Findlay's statements. Is tho Attorney-General, in his reply, to Mr. Bcauchanip, right in making tho following' statements: -. "The point suggested by him when referring to sons'' helping to contribute to the wealth of parents was fully considered when tho Bill was drawn up, and, as an evidence of tho fact,; Section 16 provides for tho exemption of succession duty oil . a soli's inheritance up to £20,000, and on any sum ovur that amount the duty, is'only 2 per cent. If tho estate men-, tioned by Mr. Beauchamp went to other. relatives than dependents, such as a wife or children, the succession duty would be only 5 per cent., making 'in all 13 per cent. In the most extreme case, that is, of an estate going to strangers in blood, the whole duty payable to tho Crown would be 18 per .cent, at the highest." • "No. It is slightly misleading. _ It is quite true that Section 16 provides for the exemption froin: succession duty on a soli's inheritance up, to-£20,000, and on any sum over that amount tho duty is. only 2 per cent. Tho lastmentioned word duty only refers to tho previous words succession duty, as in each of the cases before-mentioned, where the not value of the estate is over £500, the sons would have to pay estate duty of from 1 to 15 per cont, according to the value of the. estate. The next sentence but one, where the Attorney-General states_ as follows :— 'That is, of, an estate going to strangers in blood, tho whole duty payable'to tho Crown would lie 18 nor cent, at the highest,' is also incorrect. Such wholo duty might be 15 per cent.'estate duty, and from 10 per cent, to 20 per cent, succession duty, boing therefore a full duty of, from '25 to 30 per cent." '