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39 1997

TAXES CONSOLIDATION ACT, 1997

PART 32

Estates of Deceased Persons in Course of Administration and Surcharge on Certain Income of Trustees

CHAPTER 1

Estates of deceased persons in course of administration

Interpretation ( Chapter 1 ).

[ITA67 s450; CTA76 s140 and Sch2 PtI par23; FA97 s146(1) and Sch9 PtI par1(30)]

799. —(1) (a) In this Chapter—

administration period” has the meaning assigned to it by section 800(1);

charges on residue”, in relation to the estate of a deceased person, means the following liabilities properly payable out of the estate and interest payable in respect of those liabilities—

(i) funeral, testamentary, and administration expenses and debts,

(ii) general legacies, demonstrative legacies and annuities, and

(iii) any other liabilities of the deceased person's personal representatives as such,

but, in the case of any such liabilities which, as between persons interested under a specific disposition or in a legacy referred to in paragraph (ii) or in an annuity and persons interested in the residue of the estate, fall exclusively or primarily on the property that is the subject of the specific disposition or on the legacy or annuity, includes only such part (if any) of those liabilities as fall ultimately on the residue;

foreign estate”, as regards any year of assessment, means an estate other than an Irish estate;

Irish estate”, as regards any year of assessment, means an estate the income of which comprises only income which either has borne Irish income tax by deduction or in respect of which the personal representatives are directly assessable to Irish income tax, other than an estate any part of the income of which is income in respect of which the personal representatives are entitled to claim exemption from Irish income tax by reference to the fact that they are not resident or not ordinarily resident in the State;

personal representative”, in relation to the estate of a deceased person, means his or her personal representative within the meaning of section 3 (1) of the Succession Act, 1965 , and includes any person who takes possession of or intermeddles with the property of the deceased and also includes any person having, in relation to the deceased, under the law of another country any functions corresponding to the functions for administration purposes under the law of the State of a personal representative within the meaning of that section, and references to personal representatives as such shall be construed as references to personal representatives in their capacity as having such functions;

specific disposition” means a specific devise or bequest made by a testator, and includes any disposition having, whether by virtue of any enactment or otherwise, under the law of the State or of another country an effect similar to that of a specific devise or bequest under the law of the State.

(b) For the purposes of this Chapter—

(i) references to the aggregate income of the estate of a deceased person for any year of assessment shall be construed, subject to section 439 (2), as references to the aggregate income from all sources for that year of the personal representatives of the deceased as such, treated as consisting of—

(I) any such income chargeable to Irish income tax by deduction or otherwise, such income being computed at the amount on which that tax falls to be borne for that year, and

(II) any such income which would have been so chargeable if it had arisen in the State to a person resident and ordinarily resident in the State, such income being computed at the full amount of that income actually arising during that year, less such deductions as would have been allowable if it had been charged to Irish income tax, but excluding any income from property devolving on the personal representatives otherwise than as assets for payment of the debts of the deceased;

(ii) references to sums paid include references to assets transferred or appropriated by a personal representative to himself or herself and to debts set off or released;

(iii) references to sums payable include references to assets as to which an obligation to transfer or a right of a personal representative to appropriate to himself or herself is subsisting on the completion of the administration and to debts as to which an obligation to release is set off, or a right of a personal representative so to do in his or her own favour, is then subsisting;

(iv) references to amount in relation to assets referred to in subparagraphs (ii) and (iii) shall be construed as references to the value of those assets at the date on which they were transferred or appropriated, or at the completion of the administration, as the case may require, and, in relation to such debts, as references to the amount of such debts.

(2) For the purposes of this Chapter—

(a) a person shall be deemed to have an absolute interest in the residue of the estate of a deceased person, or in a part of the residue of that estate, if and so long as the capital of the residue or of that part of the residue, as the case may be, would if the residue had been ascertained be properly payable to the person or to another in the person's right for the person's benefit, or is properly so payable, whether directly by the personal representatives, or indirectly through a trustee or other person;

(b) a person shall be deemed to have a limited interest in the residue of the estate of a deceased person, or in a part of the residue of that estate, during any period (other than a period during which the person has an absolute interest in the residue or in that part of the residue, as the case may be) where the income of the residue or of that part of the residue, as the case may be, for that period would, if the residue had been ascertained at the commencement of that period, be properly payable to the person, or to another person in the person's right, for the person's benefit, whether directly by the personal representatives, or indirectly through a trustee or other person;

(c) real estate included (either by a specific or a general description) in a residuary gift made by the will of a testator shall be deemed to be a part of the residue of the testator's estate and not to be the subject of a specific disposition.

(3) Where different parts of the estate of a deceased person are the subjects respectively of different residuary dispositions, this Chapter shall apply in relation to each such part with the substitution—

(a) for references to the estate of references to that part of the estate, and

(b) for references to the personal representatives of the deceased as such of references to those personal representatives in their capacity as having the functions referred to in the definition of “personal representative” in relation to that part of the estate.

Limited interest in residue.

[ITA67 s451; F(MP)A68 s3(5) and Sch Pt IV; FA74 s11 and Sch1 PtII]

800. —(1) This section shall apply in relation to a person who, during the period commencing on the death of a deceased person and ending on the completion of the administration of the estate of the deceased person (in this Chapter referred to as “the administration period”) or during a part of that period, has a limited interest in the residue of that estate or in a part of the residue of that estate.

(2) When any sum has been paid during the administration period in respect of that limited interest, the amount of that sum shall, subject to subsection (3), be deemed for the purposes of the Income Tax Acts to have been paid to that person as income for the year of assessment in which that sum was paid or, in the case of a sum paid in respect of an interest that has ceased, for the last year of assessment in which that interest was subsisting.

(3) On the completion of the administration of the estate—

(a) the aggregate amount of all sums paid before or payable on the completion of the administration in respect of that limited interest shall be deemed to have accrued due to that person from day to day during the administration period or the part of that period during which that person had that interest, as the case may be, and to have been paid to that person as it accrued due,

(b) the amount deemed to have been paid to that person by virtue of paragraph (a) in any year of assessment shall be deemed for the purposes of the Income Tax Acts to have been paid to that person as income for that year, and

(c) where the amount deemed to have been paid to that person as income for any year by virtue of this subsection is less or greater than the amount deemed to have been paid to that person as income for that year by virtue of subsection (2), such adjustments shall be made as are provided in section 804 .

(4) Any amount deemed to have been paid to that person as income for any year by virtue of this section shall—

(a) in the case of an Irish estate, be deemed to be income of such an amount as would after deduction of income tax at the standard rate of tax for that year be equal to the amount deemed to have been so paid and to be income that has borne income tax at that standard rate of tax;

(b) in the case of a foreign estate, be deemed to be income of the amount deemed to have been so paid, and shall be chargeable to income tax under Case III of Schedule D as if it were income arising from securities in a place outside the State.

(5) Where—

(a) a person has been charged to income tax for any year by virtue of this section in respect of an amount deemed to have been paid to that person as income in respect of an interest in a foreign estate, and

(b) any part of the aggregate income of that estate for that year has borne Irish income tax by deduction or otherwise,

the income in respect of which that person has been so charged to tax shall on proof of the facts be reduced by an amount bearing the same proportion thereto as the part of that aggregate income which has borne Irish income tax bears to the whole of that aggregate income.

(6) Where relief has been given in accordance with subsection (5), such part of the amount in respect of which the person has been charged to income tax as corresponds to the proportion referred to in that subsection shall for the purpose of computing the person's total income be deemed to represent income of such an amount as would after deduction of income tax at the standard rate of tax be equal to that part of the amount charged.

Absolute interest in residue.

[ITA67 s452; CTA76 s140(1) and Sch2 PtI par24]

801. —(1) This section shall apply in relation to a person who during the administration period or a part of that period has an absolute interest in the residue of the estate of a deceased person or in a part of the residue of that estate.

(2) There shall be ascertained in accordance with section 802 the amount of the residuary income of the estate for each whole year of assessment, and for each part of a year of assessment, during which—

(a) the administration period was current, and

(b) that person had that interest,

and the amount so ascertained in respect of any year or part of a year, or, in the case of a person having an absolute interest in a part of a residue, a proportionate part of that amount, is in this Chapter referred to as the “residuary income” of that person for that year of assessment.

(3) When any sum has or any sums have been paid during the administration period in respect of that absolute interest, the amount of that sum or the aggregate amount of those sums shall, subject to subsection (4), be deemed for the purposes of the Income Tax Acts to have been paid to that person as income to the extent to which, and for the year or years of assessment for which, that person would have been treated for those purposes as having received income if—

(a) that person had had a right to receive in each year of assessment—

(i) in the case of an Irish estate, that person's residuary income for that year less income tax for that year at the standard rate of tax, or

(ii) in the case of a foreign estate, that person's residuary income for that year,

and

(b) that sum or the aggregate of those sums had been available for application primarily in or towards satisfaction of those rights as they accrued and had been so applied.

(4) In the case of an Irish estate, any amount deemed to have been paid to that person as income for any year by virtue of subsection (3) shall be deemed to be income of such an amount as would after deduction of income tax at the standard rate of tax for that year be equal to the amount deemed to have been so paid, and to be income which has borne income tax at the standard rate of tax.

(5) On the completion of the administration of the estate—

(a) the amount of the residuary income of that person for any year of assessment shall be deemed for the purposes of the Income Tax Acts to have been paid to that person as income for that year and, in the case of an Irish estate, shall be deemed to have borne tax by reference to the standard rate of tax, and

(b) where the amount deemed to have been paid to that person as income for any year by virtue of this subsection is less or greater than the amount deemed to have been paid to that person as income for that year by virtue of subsection (3) or (4), such adjustments shall be made as are provided in section 804 .

(6) In the case of a foreign estate, any amount deemed to have been paid to that person as income for any year by virtue of this section shall be deemed to be income of that amount, and shall be chargeable to income tax under Case III of Schedule D as if it were income arising from securities in a place outside the State.

(7) Where—

(a) a person has been charged to income tax for any year by virtue of this section in respect of an amount deemed to have been paid to that person as income in respect of an interest in a foreign estate, and

(b) any part of the aggregate income of that estate for that year has borne Irish income tax by deduction or otherwise,

the income in respect of which that person has been so charged to tax shall on proof of the facts be reduced by an amount bearing the same proportion thereto as the part of that aggregate income which has borne Irish income tax bears to the whole of that aggregate income.

(8) Where relief has been given in accordance with subsection (7), such part of the amount in respect of which the person has been charged to income tax as corresponds to the proportion referred to in that subsection shall for the purpose of computing the person's total income be deemed to represent income of such an amount as would after deduction of income tax at the standard rate of tax be equal to that part of the amount charged.

(9) For the purposes of any charge to corporation tax to which this section is applied, the residuary income of a company shall be computed in the first instance by reference to years of assessment, and the residuary income for any such year shall be apportioned between the accounting periods (if more than one) comprising that year.

Supplementary provisions as to absolute interest in residue.

[ITA67 s453]

802. —(1) The amount of the residuary income of an estate for any year of assessment shall be ascertained by deducting from the aggregate income of the estate for that year—

(a) the amount of any annual interest, annuity or other annual payment for that year which is a charge on residue and the amount of any payment made in that year in respect of any such expenses incurred by the personal representatives as such in the management of the assets of the estate as, in the absence of any express provision in a will, would be properly chargeable to income, but excluding any such interest, annuity or payment allowed or allowable in computing the aggregate income of the estate, and

(b) the amount of any of the aggregate income of the estate for that year to which a person has on or after assent become entitled by virtue of a specific disposition either for a vested interest during the administration period or for a vested or contingent interest on the completion of the administration.

(2) (a) In this subsection, “benefits received”, in relation to an absolute interest, means the following amounts in respect of all sums paid before, or payable on, the completion of the administration in respect of that interest—

(i) as regards a sum paid before the completion of the administration in the case of an Irish estate, such an amount as would, after deduction of income tax at the standard rate of tax for the year of assessment in which that sum was paid, be equal to that sum or, in the case of a foreign estate, the amount of that sum, and

(ii) as regards a sum payable on the completion of the administration in the case of an Irish estate, such an amount as would, after deduction of income tax at the standard rate of tax for the year of assessment in which the administration is completed, be equal to that sum or, in the case of a foreign estate, the amount of that sum.

(b) In the event of its appearing, on the completion of the administration of an estate in the residue of which, or in a part of the residue of which, a person had an absolute interest at the completion of the administration, that the aggregate of the benefits received in respect of that interest does not amount to as much as the aggregate for all years of the residuary income of the person having that interest, that person's residuary income for each year shall be reduced for the purpose of section 801 by an amount bearing the same proportion thereto as the deficiency bears to the aggregate for all years of that person's residuary income.

(3) In the application of subsection (2) to a residue or a part of a residue in which a person, other than the person having an absolute interest at the completion of the administration, had an absolute interest at any time during the administration period, the aggregates mentioned in that subsection shall be computed in relation to those interests taken together, and the residuary income of that other person shall also be subject to reduction under that subsection.

Special provisions as to certain interests.

[ITA67 s454]

803. —(1) Where the personal representatives of a deceased person have as such a right in relation to the estate of another deceased person such that, if that right were vested in them for their own benefit, they would have an absolute interest or a limited interest in the residue of that estate or in part of the residue of that estate, the personal representatives shall be deemed to have that interest notwithstanding that that right is not vested in them for their own benefit, and any amount deemed to be paid to them as income by virtue of this Chapter shall be treated as part of the aggregate income of the estate of the person whose personal representatives they are.

(2) Where different persons have successively during the administration period absolute interests in the residue of the estate of a deceased person or in a part of the residue of that estate, sums paid during that period in respect of the residue or of that part of the residue, as the case may be, shall be treated for the purpose of this Chapter as having been paid in respect of the interest of the person who first had an absolute interest in that residue or that part of that residue up to the amount of—

(a) in the case of an Irish estate, the aggregate for all years of that person's residuary income less income tax at the standard rate of tax, or

(b) in the case of a foreign estate, the aggregate for all years of that person's residuary income,

and, as to any balance up to a corresponding amount, in respect of the interest of the person who next had an absolute interest in that residue or that part of that residue, as the case may be, and so on.

(3) Where on the exercise of a discretion any of the income of the residue of the estate of a deceased person for any period (being the administration period or a part of the administration period) would, if the residue had been ascertained at the commencement of that period, be properly payable to any person, or to another person in that person's right, for that person's benefit, whether directly by the personal representatives or indirectly through a trustee or other person—

(a) the amount of any sum paid pursuant to an exercise of the discretion in favour of that person shall be deemed for the purposes of the Income Tax Acts to have been paid to that person as income for the year of assessment in which it was paid, and

(b) subsections (4) to (6) of section 800 shall apply in relation to an amount deemed to have been paid as income by virtue of paragraph (a).

Adjustments and information.

[ITA67 s455]

804. —(1) Where on the completion of the administration of an estate any amount is deemed by virtue of this Chapter to have been paid to any person as income for any year of assessment and—

(a) that amount is greater than the amount previously deemed to have been paid to that person as income for that year by virtue of this Chapter, or

(b) no amount has previously been so deemed to have been paid to that person as income for that year,

an assessment or additional assessment may be made on that person for that year and tax charged accordingly or, on a claim being made for the purpose, any relief or additional relief to which that person may be entitled shall be allowed accordingly.

(2) Where on the completion of the administration of an estate any amount is deemed by virtue of this Chapter to have been paid to any person as income for any year of assessment and that amount is less than the amount that has previously been so deemed to have been paid to that person, then—

(a) if an assessment has already been made on that person for that year, such adjustments shall be made in that assessment as may be necessary for the purpose of giving effect to the provisions of this Chapter which take effect on the completion of the administration, and any tax overpaid shall be repaid, and

(b) if—

(i) any relief has been allowed to that person by reference to the amount previously deemed by virtue of this Chapter to have been paid to that person as income for that year, and

(ii) the amount of that relief exceeds the amount of relief which could have been given by reference to the amount which, on the completion of the administration, is deemed to have been paid to that person as income for that year,

the relief so given in excess may, if not otherwise made good, be charged under Case IV of Schedule D and recovered from that person accordingly.

(3) Notwithstanding anything in the Income Tax Acts, the time within which—

(a) an assessment or additional assessment may be made for the purposes of this Chapter,

(b) an assessment may be adjusted for those purposes, or

(c) a claim for relief may be made by virtue of this Chapter,

shall not expire before the end of the third year following the year of assessment in which the administration of the estate in question was completed.

(4) The Revenue Commissioners may by notice in writing require any person, being or having been a personal representative of a deceased person, or having or having had an absolute interest or a limited interest in the residue of the estate of a deceased person or in a part of the residue of that estate, to furnish them within such time as they may direct (not being less than 28 days) with such particulars as they think necessary for the purposes of this Chapter.