ESTATE DUTY (AMENDMENT) BILL

Order for Second Reading read.

10.36 a.m.

The Acting Financial Secretary (Mr Oon Khye Kiang): Mr Speaker, Sir, I have the Governor's recommendation to move, "That the Bill be now read a Second time."

Sir, this Bill introduces two important changes in the law which are considered desirable in the light of experience in the administration of the Ordinance, both here and in other countries. The first change proposed is that gifts of property should be deemed to be part of the property of the deceased at his death for the purpose of liability to estate duty if made within five years of the death of the deceased, instead of the present three years as provided in section 7 of the Ordinance as it stands. This change is effected by clause 4 of the Bill. Clauses 5 and 6 are consequential amendments. It is quite legitimate for a person during his lifetime to make a disposition of his property with a view to evasion of estate duty on his death. The object of these provisions of the Ordinance is to stop such a loophole. It has been found that the present era of three years is too short to be effective in preventing evasion of duty; both in the United Kingdom and Ceylon, the period has been extended to five years. A similar amendment has recently been introduced in Hongkong.

The second change, effected by clauses 7 and 9 of the Bill, seeks to remove what is considered to be a defect in the law relating to the assessment of estate duty. Under the existing law in sections 38 to 40 of the Ordinance, no transaction in any of the property contained in the estate of a deceased person can take place unless evidence is produced that the estate duty has been paid. But there is no direct obligation laid upon the executor or administrator or other accountable person to submit to the Commissioner of Estate Duty an estate duty affidavit relating to the duty payable; and in practice no such action is taken until it is intended to transact with the property. The result has often been delay in payment of duty and in some cases even non-payment. It is now proposed to make it obligatory on the executor or other accountable person, as defined in the Ordinance, to submit an estate duty affidavit within six months of the death of the deceased, and at the same time to give the Commissioner power to assess the estate duty payable in any case where he considers it desirable.

Both these new provisions are based on similar provision contained in the Ceylon legislation, and will bring estate duty practice more or less in line with income tax practice.

Clauses 8, 10 and 11 of the Bill introduce various consequential amendments. Clause 12 introduces two new sections containing formal provisions relating to certificates and notices issued by the Commissioner under the Ordinance.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole Assembly.

Assembly immediately resolved itself into a Committee on the Bill.-[Mr Oon Khye Kiang].

Bill considered in Committee.

[Mr Speaker in the Chair]

10.41 a.m.

Clauses 1 and 2 ordered to stand part of the Bill.

Clause 3-

Mr Oon Khye Kiang: Sir, I beg to move,

In page 2, line 10, to leave out "or" and insert "of".

This is to correct a drafting error.

Amendment agreed to.

Clause 3, as amended, ordered to stand part of the Bill.

Clause 4-

Mr Oon Khye Kiang: Sir, I beg to move,

In page 2, line 36, to leave out "and" and add-

'(b) by deleting the word "three" appearing in the sixth line of paragraph (c) thereof and substituting therefor the word "five"; and'.

Sir, this is a consequential amendment following the proposal to amend the period of three years to five years in respect of gifts of property.

Amendment agreed to.

Clause 4, as amended, ordered to stand part of the Bill.

Clauses 5 and 6 ordered to stand part of the Bill.

Clause 7-

Mr Oon Khye Kiang: Sir, I beg to move,

In page 3, line 34, to leave out "from" and insert "after".

This is to improve the drafting so as to maintain uniformity of expression as in line 11.

Amendment agreed to.

Mr Oon Khye Kiang: Sir, I beg to move,

In page 4, line 6, to leave out "of the deceased".

The words "of the deceased" are superfluous and should be deleted.

Amendment agreed to.

Clause 7, as amended, ordered to stand part of the Bill.

Clauses 8 to 12 inclusive ordered to stand part of the Bill.

Bill reported with amendments; read the Third time and passed.