Finance Act, 1970

Restriction of exemption from duty of certain securities.

39.—(1) In this section—

“company” means a company controlled by the deceased within the meaning of section 20 of the Finance Act, 1965 ;

“deceased” means a person dying after the passing of this Act who immediately prior to his death was domiciled or ordinarily resident in the State;

“member”, in relation to a company, means a holder in his own right of any share in or debenture of the company and a person interested in any share in or debenture of the company held, whether by himself or another, otherwise than in the holder's own right and any other person to whom the company is under any liability otherwise than for the purposes of the business of the company wholly and exclusively;

“securities” means securities (including debentures, debenture stock, mortgage bonds and mortgage stock and certificates of charge under the Agricultural Credit Acts, 1927 to 1965) issued, whether before or after the passing of this Act, with a condition that they be exempt from taxation when in the beneficial ownership of persons neither domiciled nor ordinarily resident in the State.

(2) Where in respect of any securities the exemption from taxation applies in connection with the death of the deceased, then, subject to the exceptions provided by the following provisions of this section—

(a) there shall be deemed, for the purposes of estate duty, legacy duty or succession duty, as the case may be, to be included in the property in respect of which duty is leviable on the death a sum of money equal to the value upon which, but for the exemption, duty would have been payable;

(b) in relation to estate duty—

(i) the sum so deemed to be included shall for purposes of aggregation and of determining the persons accountable for duty be treated as having been property to which the deceased was absolutely entitled at his death, but where the circumstances in which the exemption so applies as regards the securities were not brought about by the deceased, paragraph (a) of this subsection shall not apply so as to make the personal representatives of the deceased accountable for the duty or to increase the amount of duty beyond what would have been due had there been no exemption;

(ii) in so far as the duty imposed by the said paragraph (a) has not been paid by the deceased's personal representatives, accountability for the duty shall be imposed on any person who, if the exemption had not applied to the securities, would have been accountable for the duty thereon under the enactments relating to estate duty;

(iii) any payment made by the deceased's personal representatives shall, for the purposes of this subsection, be regarded as a payment of the duty imposed by the said paragraph (a) only so far as there is no other estate duty leviable on the death for which they are accountable and which has not been paid;

(c) in relation to legacy duty or succession duty, as the case may be, the sum so deemed to be included shall, for the purpose of determining the rate of duty and the persons accountable for duty, be treated as a legacy or succession derived from the same testator or predecessor as are the securities and as being subject to the same trusts as the securities.

(3) Subsection (2) of this section shall not apply where 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 the circumstances in which the exemption applies in respect of the securities were not brought about for the purpose, or for purposes which include the purpose, of obtaining the benefit of the exemption directly or indirectly for, or for the estate of, a person domiciled or ordinarily resident in the State or for a company any member of which was so domiciled or ordinarily resident.

(4) Subsection (2) of this section shall not apply in respect of any securities if no person who would be accountable for the duty leviable on the death of the deceased in respect of such securities on the assumption that the exemption did not apply thereto is a person domiciled or ordinarily resident in the State or is a company.

(5) If a donee or other person being, on the assumption specified in subsection (4) of this section, contingently accountable for duty predeceases the deceased, that subsection shall apply, so far as it relates to that donee or other person, by reference to him and not by reference to his personal representatives or successors in title, and according to where he was domiciled or ordinarily resident at his death.

(6) (a) If the persons who would, on the assumption specified in subsection (4) of this section, be so accountable consist of or include trustees of a settlement created before the death, whether or not subsisting at the death, the said subsection (4) shall not have effect but subsection (2) of this section shall not apply in respect of the securities if and to the extent that 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 the burden of the duty, having regard to the interests subsisting immediately after the death, would be borne by any person who is neither domiciled nor ordinarily resident in the State, and for the purposes of this subsection, interests in income, interests in capital, interests in possesion and interests in reversion shall all be taken into account.

(b) Where, on the assumption specified in subsection (4) of this section, the burden of the duty would be borne, in whole or in part, by a company, paragraph (a) of this subsection shall have effect as if the assets of the company were held by it in trust for its members taking the interests of the members in the company as they subsisted immediately before the death of the deceased.

(7) If interests under a trust subsisting at the death fall to be taken into account under subsection (6) of this section, and all interests in the trust other than reversionary interests are interests contingent on the exercise of the discretion of any of the trustees or of any other person, subsection (2) of this section shall not be displaced by subsection (6) if any of the persons interested in the trust is domiciled or ordinarily resident in the State.

(8) Subsection (6), and not subsection (4), of this section shall apply if the persons who would, on the assumption specified in subsection (4) of this section, be so accountable consist of or include a company as if the assets of the company were held by it in trust for its members taking the interests of such members in the company as they subsisted immediately before the death of the deceased.

(9) Nothing in subsections (4) to (8) of this section shall prevent subsection (2) thereof from applying in respect of any securities settled under a settlement revocable in whole or in part at any time after the death of the deceased at the instance of any person.

(10) Section 8 (4) of the Finance Act, 1894 , shall apply as if “and his executor is not accountable for the estate duty in respect of such property” were deleted both for the purposes of accountability for duty leviable by virtue of this section and also for the purposes of this section as it relates to the persons who would be accountable for duty on the assumptions specified in subsections (2), (4) and (6) of this section.

(11) For the purposes of this section—

(a) the references in subsection (6) and subsection (8), of this section to a company holding its assets in trust for its members shall have effect as if the assets were held in trust for the members in accordance with the rights attaching to the shares in and the debentures of the company and the terms on which any such liability as is mentioned in subsection (1) of this section was incurred and as if the company had acted in the capacity of a trustee only with power to carry on the business of the company and to employ the assets of the company therein;

(b) interests contingent on the exercise of a discretion referred to in subsection (7) of this section include interests, whether in capital or income, which are affected by the exercise of a discretion in favour of some person other than the person entitled to the interest.