DEATH DUTIES

Hokitika Guardian, 14 September 1932, Page 6

DEATH DUTIES

INTEREST REDUCTION EXPLAINED. HEAV'Y LEVIES AGAINST ESTATES. The reduction of - intex-est on unpaid death duties, which was authorised by an Order-ih’-Council issued) last week, does not apply to the penalty du'ty of five' per cent., which i-s levied in addition to the estate and succession duties where these are! not paid in full within three months after the receipt of a notice of assessment. Undbr' the terms of the Death Duties;f|Aet, 1921, death 'duti&s aw mad© payable on assessment, or if‘ there iisyino assessment within six months from tlie date of death, then Lit the expiration of six months. If' the full amount of the duty is' not j paid three months after the notice of ; assessment, a further five per cent. : duty is added, and is deemed" part ot the estate and succession duties. iThe rate w-as originally 10 per cent, j Under the 1921 Act, interest is pay!able also on all death duties’ not paid within three months ’ after death. Tfitis' the interest- runs from toe fourth month after death and is collectable in the! same way as if it was additional duty. Interest' is also payable on the penalty duty described above as from the date on which this' duty is levied. . The rate of interest on death duties" not paid with in thro© months after death was fixed at six per cent, by the 1921 Act. Under Section 61 of the Finance Act, 1932, the Government took power' to fix a lower rate of this interest' aK such a lower rate as the Governor-General by Order-in-Council might determine! The Gazette notice of September Bth has reduced the rate to five per cent, from the fourth month after death and five and a half per cent, from t,he thirteenth month. The penalty duty of five per cent, still stands and! is an addition to this interest charge.' TYPES OF DEATH DUTIES. Death duties in New Zealand are particularly severe. Th.ey coinprisC' (1) estate duty, and (2) succession or legacy duty. The first is l ' assessed on tlie value of the ©'state and the other is r determined ’by the blood-relation-ship of the testator. If a testator leaves’ £2OOO to his wife, this being the whole estate, there is no duty payable. Tlie wife, who is a sole beneficiary, is allowed a total exemption up to £SOOO. If, however, the wife received' £15,000, the duty would' he seven per' cent, estate duty and two per cent, succession- duty—a total levy of £13"0. If she wee the sole beneficiary in an .estate of £40,COO, the levy would be £6400 (12 per cent, estate duty and four' per cent, succession duty). If she received the whole of an " estate of £IOO,OOO, the levy would be" £24,000 (20 "per cent, estate duty and four per cent, succession duty). '• The rate of succession duty for a husband-beneficiary begins at one per cent, when he receives over £SOO, readies three per cent, at £3OOO, and continues at that rate whatever the size of his benefit. In the case of children, if a child receives £lo,ooo, being the whole estate, the duty would he six per cent, estate and two per cent succession, or £BOO. The rate of children rises to four per cent, at £20,000. OTHER RELATIONSHIPS.

Where a father,, mother, brother, or sister benefits / his or her- legacy or share of the estate, has to bear the scale rate of estate duty and succession duty at the rate of five per cent (if it exceeds £500), hut if- the benefit exceeds £20,000 the successin duty is 10 per c-ent. Thus on one of them received a whole estate worth £20,000, the duty would be eight per cent estate and five per -cent- succession! a total of £2600. If the benefit was £40,000, the rate is, 12 per cent estate and 10 per cent succession, or £B,BOO.

Where the relatives are within the fourth degree of blood relationship—uncles, aunts, cousins, and nephews*— the succession rate is a little different from that affecting father, mother brother, or sister, but if the v uncle cousin), or nephew lives outside New Zealand and is not witliiri the third degree of bleed relationship and receives over £IOOO, :< third duty is levied which might be called a penalty on overseas beneficiaries, whether charities or private persons. The rate of this duty is 10 per cent.

Strangers who are beneficiaries have to pay heavily at the scale rate of estate duty and 10 per cent, succession duty up to £20,000 or 2D per cent succession duty over £20,000, plus a third duty of 10 per cent, if they live beyond New Zealand and receive over £IOOO. For instance, if a charity in London received a whole estate worth £IOO,OOO, the duty levied comprises 20 per cent, estate, 20 per cent, succession, and 10 per cent, overseas, a total of 50 per cent. In this case, half of the estate is forfeited to the Government. Where the estate exceeds £30,000 the estate duty has recently been increased so that the rate is 30 per cent, on the excess over £IOO,000 pins the succession duty on the usual scale. DISSIPATION OF CAPITAL.

The exceptional severity of death duties in New Zealand was remarkedby an authority on the subect wlio prepared these figures. He condemned the policy under which these duties, a levy on capital, were regarded by the Government as revenue and the capital savings of 60, 70, or 80 ~oars—the real capital of tlie Doiriih|an — thus dissipated. £nt some