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23 1971

FINANCE ACT, 1971

PART III

Death Duties

“Death duties”.

30. —In this Act and in every other enactment for the time being in force (whether passed or made before or after the passing of this Act), unless the contrary intention appears, “death duties” has, and in the case of enactments for the time being in force that were passed or made before the passing of this Act, shall be deemed always to have had the same meaning as in section 13 (3) of the Finance Act, 1894.

Alteration of rates of estate duty.

31. —In the case of persons dying after the passing of this Act, the scale set out in the Second Schedule to this Act shall be, and shall have effect as, the scale of rates of estate duty in lieu of the scale set out in the Second Schedule to the Finance Act, 1961 .

Interest on death duties.

32. —(1) Subject to subsection (2) of this section—

(a) section 18 (1) of the Finance Act, 1896, shall have effect, in its application to interest accruing due after the passing of this Act, as if—

(i) “nine per cent.” were substituted for “four per cent.” (inserted by the Finance Act, 1919), and

(ii) “the date of the expiration of four months after” were inserted before “the date of the death”,

and

(b) section 9 of the Finance Act, 1912, shall have effect, in its application to interest accruing due after the passing of this Act, as if “nine per cent.” were substituted for “three per cent.”.

(2) Notwithstanding anything in subsection (1) of this section, interest accruing due on any death duties payable in connection with the deaths of persons who have died before the passing of this Act shall—

(a) in any case in which such duties are being paid by instalments, continue to be payable at the rate of four per cent. per annum, and

(b) in any other case, continue, for a period of four months after such passing, to be payable at the rate of four per cent. per annum.

(3) In the case of a person dying after the passing of this Act, the Finance Act, 1894, shall have effect as if—

(a) in section 8 (9) “nine per cent.” were substituted for “four per cent. or any higher interest yielded by the property”,

(b) in section 8 (12) and section 10 (3) “nine per cent.” were substituted for “three per cent.” in each provision, and

(c) in section 10 (4) “nine per cent.” were substituted for “three per cent.”.

Amendment of section 8 of Finance Act, 1894.

33. —(1) Section 8 (4) of the Finance Act, 1894, is hereby amended by the deletion of “and his executor is not accountable for the Estate Duty in respect of such property”.

(2) This section shall have effect only in cases in which the deceased dies after the passing of this Act.

Amendment of section 28 of Finance Act, 1931.

34. Section 28 of the Finance Act, 1931 , is hereby amended by the insertion after subsection (5) of the following subsection:

“(6) (a) Where any objects to which this section applies passedor were deemed to pass on any death occurring after the passing of the Finance Act, 1971—

(i) in the event of a sale (other than a sale to which subsection (3) of this section applies) within six years after that death of any of those objects, being objects which passed on that death, or

(ii) in the event of a sale (other than a sale to which subsection (3) of this section applies) of any of those objects, being objects which were deemed to pass on that death, within six years after the date of the divesting, determination or other transaction by virtue of which the objects were so deemed to pass,

subsection (1) of this section shall, in respect of that death, cease to apply to any of those objects that were sold as aforesaid.

(b) References in this subsection to a death on which any objects to which this section applies passed or were deemed to pass shall be construed, in a case in which there was, in relation to those objects, more than one such death, as a reference to the last only of such deaths.”.

Amendment of section 28 of Finance Act, 1961.

35. —In the case of any person dying after the passing of this Act, section 28 of the Finance Act, 1961 , is hereby amended by—

(a) the insertion at the end of subsection (1) of the following proviso:

“Provided that this subsection shall not apply in any case where at the time of the making of the gift there was reserved to the donor or at any time thereafter there was granted or demised to him an interest in the property for a period other than a period determinable by reference to death, or he became entitled to or acquired any interest in or benefit from the property or any right or privilege over or in relation to the property other than an interest for a period determinable by reference to death, and he had not divested himself of any such interest, benefit, right or privilege more than five years before his death.”, and

(b) by the insertion at the end of subsection (3) of the following proviso:

“Provided that this subsection shall not apply in any case where at the time of the said disposition or the determination referred to in subsection (3) of this section there was reserved to the donor or at any time thereafter there was granted or demised to him an interest in the property for a period other than a period determinable by reference to death, or he became entitled to or acquired any interest in or benefit from the property or any right or privilege over or in relation to the property other than an interest for a period determinable by reference to death, and he had not divested himself of any such interest, benefit, right or privilege more than five years before his death.”.

Amendment of section 20 of Finance Act, 1965.

36. —(1) Section 20 of the Finance Act, 1965 , is hereby amended—

(a) by the deletion in subsection (1) in the definition of “company controlled by the deceased” of paragraphs (a) and (b), and by the insertion in that definition after “nominees of relatives of the deceased” of “or trustees of a settlement whose objects include the deceased or relatives of the deceased”,

(b) by the deletion in the said subsection (1) of the definition of “control”,

(c) by the substitution in the said subsection (1) for the definition of “relative” of the following definition:

“‘relative’ means a person who is a relative of another person for the purposes of subsection (4) of section 31 of the Finance Act, 1941 , and references to children and to issue in that subsection shall be deemed, for the purposes of this subsection to include references to step-children and children adopted under the Adoption Acts, 1952 and 1964.”,

(d) by the insertion in subsection (2) after paragraph (a) of the following paragraph:

“(aa) a person shall be deemed to have control of a company at any time if—

(i) he then had control of powers of voting on all questions, or on any particular question, affecting the company as a whole which, if exercised, would have yielded a majority of the votes capable of being exercised thereon, or could then have obtained such control by an exercise at that time of a power exercisable by him or at his direction or with his consent, or

(ii) he then had the capacity, or could then by an exercise of a power exercisable by him or at his direction or with his consent obtain the capacity, to exercise or to control the exercise of any of the following powers, that is to say, the powers of a board of directors or of a governing director of the company, power to nominate a majority of the directors or a governing director thereof, power to veto the appointment of a director thereof, or powers of a like nature, or

(iii) he then had a right to receive or the receipt of more than one half of the total amount of the dividends of the company, whether declared or not, and for the purposes of this subparagraph ‘dividend’ shall be deemed to include interest on any debentures of the company, or

(iv) he then had an interest in the shares in or the debentures of the company or in both of an aggregate principal value representing one half or more of the aggregate principal value of the shares and debentures of the company,”,

(e) by the insertion in subsection (5) after “deceased” of “at any time within the period of five years before his death”,

(f) by the substitution for subsection (6) of the following subsection:

“(6) Where there pass or are deemed to pass on a death shares in a company which is not a non-trading company and which was a company controlled by the deceased at any time within the period of five yearsbefore his death, the value of each such share shall, for all purposes of death duties, be determined as if it formed part of a group of shares sufficient in number to give the owner of the group control of the company, and for the purposes of this subsection ‘share’ includes any interest whatsoever in a company, by whatsoever name it is called, analogous to a share.”, and

(g) by the insertion in subsection (7) after “controlled by the deceased” of “or was a company controlled by the deceased at any time within the period of five years before his death”.

(2) (a) “income or benefits” in section 20 (4) (a) (ii) of the Finance Act, 1965 , shall be deemed to include any income of the company and any periodical payment out of the resources or at the expense of the company which the deceased received for his own benefit whether directly or indirectly or any such income or payment which the deceased was entitled to receive or could have become entitled to receive by the exercise of any power exercisable by him or with his consent and any such income or benefits shall be deemed to have accrued to him at the earliest time at which he could have obtained the receipt thereof and, without prejudice to the generality of the foregoing, the redemption by the company of any share or debenture of the company to which the deceased was entitled or the repayment of any other loan made by the deceased to the company shall be treated as income or benefits to which the deceased was entitled, and interest at the normal commercial rate on any interest free loan made by the company to the deceased shall likewise be deemed to be income to which the deceased was entitled, and

(b) “payment” in the said section 20 (4) (a) (ii) shall be deemed to include a transfer of property and a set-off or release of an obligation:

Provided however that, in any case in which it is shown to the satisfaction of the Revenue Commissioners or on appeal under section 10 of the Finance Act, 1894, of the court entertaining the appeal, that any loan made by the deceased to the company, other than a loan to enable the company to acquire additional assets, was in all respects a transaction at arm's length with the company, the repayments on foot of such loan or the payment of interest on such loan shall not be treated as income or benefits for the purposes of the said section 20 (4) (a) (ii).

(3) This section shall have effect only in cases in which the deceased dies after the passing of this Act.

Amendment of section 22 of Finance Act, 1965.

37. —(1) Section 22 (2) of the Finance Act, 1965 , shall have effect in relation to a death occurring after the passing of this Act as if—

(a) “other than land” were deleted, and

(b) the following paragraph were inserted after paragraph (a)—

“(aa) the property passes or is deemed to pass under or by virtue of a disposition, whether made before or after the passing of this Act, the proper law of which at the date when the disposition took effect was the law of the State, or”.

(2) Paragraphs (a) and (b) of the said section 22 (2) shall not apply, in the case of land situate out of the State, where the death is that of a person whose domicile of origin was not in the State and the land had been held by him or for his benefit prior to the date on which such person became ordinarily resident in the State.

Cesser of section 27(4) of Finance Act, 1965.

38. —(1) Section 27 (4) of the Finance Act, 1965 , shall cease to have effect in relation to property which is deemed to pass on a death occurring after the passing of this Act.

(2) Subsection (1) of this section shall have effect only in cases in which the relevant disposition, surrender, assurance, divesting, determination or other transaction was made or effected after or within two years before the passing of this Act.

Abatement of estate duty.

39. —(1) Section 45 of the Finance Act, 1969 , is hereby amended by the substitution of “£1,500” for “£1,000” and of “£750” for “£500” in each place where they respectively occur in subsections (2), (3), (4) and (5).

(2) This section shall have effect only in relation to benefits (within the meaning of the said section 45 ) accruing on or after the passing of this Act.

Removal of restriction on value of agricultural property in certain cases.

40. —(1) Subject to subsection (2) of this section, in the case of any person dying after the passing of this Act, the proviso to section 7 (5) of the Finance Act, 1894, and the provisions of section 61 (1) of the Finance (1909-10) Act, 1910, shall cease to have effect in relation to property which is sold within the period of six years after the date by reference to which such property is required to be valued for estate duty.

(2) In any case in which it is shown to the satisfaction of the Revenue Commissioners that any such sale as aforesaid was effected solely as part of a family arrangement for the distribution of the estate of a deceased person among his widow and children (including any illegitimate children, step-children and children adopted under the provisions of the Adoption Acts, 1952 and 1964) and that the property the subject of the sale remains in the possession of any one or more of them, subsection (1) of this section shall not apply unless the said property is subsequently sold within the period of six years after the date of the death of such deceased person.

Restriction of exemption from duty of marriage gifts.

41. —(1) Where a person makes a gift in consideration of marriage and the person is either a party to the marriage or the parent or remoter ancestor of a party to the marriage and the gift is for the benefit either of a party to the marriage or of the issue of the marriage, paragraphs (c) and (e) of section 2 (1) of the Finance Act, 1894, shall apply to so much only of the principal value of the property comprised in the gift as exceeds £5,000.

(2) Where a person makes a gift in consideration of marriage and the gift is for the benefit either of a party to the marriage or of the issue of the marriage and subsection (1) of this section does not apply, paragraphs (c) and (e) of section 2 (1) of the Finance Act, 1894, shall apply to so much only of the principal value of the property comprised in the gift as exceeds £1,000.

(3) In the case of any one death—

(a) the total amount of the relief conferred by subsection (1) of this section in respect of any one marriage shall not exceed £5,000, and

(b) the total amount of the relief conferred by subsection (2) of this section in respect of any one marriage shall not exceed £1,000.

(4) In this section “issue” includes a step-child and a child adopted under the provisions of the Adoption Acts, 1952 and 1964, and their issue and “parent” and “remoter ancestor” shall be construed accordingly.

(5) (a) Section 59 (2) of the Finance (1909-10) Act, 1910, as amended by the Finance Act, 1965 , shall have effect as if “which are made in consideration of marriage, to or for the benefit of a party to the marriage or of issue of the marriage, or” were deleted.

(b) Section 27 of the Finance Act, 1938 , shall have effect as if paragraph (a) were deleted.

(c) Section 24 (3) of the Finance Act, 1961 , shall have effect as if paragraph (c) were deleted.

(6) This section shall have effect only in respect of dispositions and gifts made on or after the 28th day of April, 1971.

Penalties.

42. —(1) A person who fails to comply with subsection (3), (4), (5) or (14) of section 8 of the Finance Act, 1894, shall be liable to a penalty not exceeding £500.

(2) (a) Where a person fraudulently or negligently, for the purposes of the enactments relating to estate duty, delivers, produces, furnishes, gives or sends to the Revenue Commissioners or otherwise makes use of any incorrect account, return, estimate, statement, information, book, document, record or declaration, he shall be liable to a penalty of—

(i) a sum not exceeding £500, and

(ii) the amount of, or in the case of fraud, double the amount of, the additional duty payable if the said account, return, estimate, statement, information, book, document, record or declaration had been correct.

Provided that the person shall be deemed not to have acted negligently if he had a reasonable excuse for his action and the incorrect account, return, estimate, statement, information, book, document, record or declaration, as the case may be, was corrected by him without unreasonable delay after the excuse had ceased.

(b) For the purposes of this subsection, any account, return, estimate, statement, information, book, document or declaration submitted on behalf of any person accountable for estate duty shall be deemed to have been submittedby that person unless he proves that it was submitted without his consent or knowledge.

(3) Any person who assists in or induces the making or delivery for any purpose of estate duty of an account, return, estimate, statement or declaration which he knows to be incorrect shall be liable to a penalty not exceeding £500.

(4) Where a person liable to pay any estate duty or any instalment thereof fails to pay the duty or the instalment within a period of one year after the date on which the duty or the instalment was payable or within such further period as the Revenue Commissioners may determine, he shall be liable to a penalty of the amount of the duty.

(5) A banker (within the meaning of section 33 of the Finance Act, 1935 ) who pays money in contravention of the said section 33 shall be guilty of an offence under that section and shall be liable, on conviction on indictment, to a penalty of £1,000.

(6) (a) Proceedings for the recovery of any penalty under this section may be commenced at any time within six years next after the date on which it was incurred.

(b) Where the person who has incurred any penalty under this section has died, any proceedings which have been or could have been commenced against him may be continued or commenced against his executor or administrator, as the case may be, and any penalty awarded in proceedings so continued or commenced shall be a debt due from and payable out of his estate.

(7) (a) In this section, a reference to estate duty includes a reference to the interest payable upon such duty.

(b) A penalty under this section may—

(i) if it is payable by an unincorporated body of persons, be recovered from all or any one or more of the members of the body, and

(ii) if it is payable by a body corporate, be recovered from all or any one or more of the directors or members of any committee of management or other controlling authority of such body or from the secretary or other officer of the body who is nominated by the body to deliver to the Revenue Commissioners any affidavit, account, statement or information relating to estate duty,unless, in the case of any person from whom it is sought to recover the penalty, it is proved that the act or omission to which the penalty relates took place without his knowledge or consent.

(8) The Revenue Commissioners may, in their discretion, mitigate any penalty under this section, or stay or compound any proceedings for the recovery thereof, and may also, after judgment, further mitigate or entirely remit the penalty.