ESTATE DUTY (AMENDMENT) BILL

Order for Second Reading read.

4.45 pm

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I beg to move, "That the Bill be now read a second time".

The Estate Duty (Amendment) Bill 1998 seeks to give legislative effect to reductions in the interest payable on estate duty, exemption of donations/gifts and bequests made to Institutions of a Public Character or the Government from estate duty, and to changes which will facilitate the administration of estate duty.

Currently, interest of 3% is payable on all estate duty within the first six months after death. The rate is 6% if estate duty is unpaid 6 to 18 months from the date of death, and there is no provision to reduce the rate if reasonable cause for the delay can be shown. For the period beyond 18 months, the 12% interest rate can be reduced to 6% provided reasonable cause for the delay can be shown.

To encourage the administrator or executor of an estate to file in a complete affidavit early, the rate for the first six months after death will be reduced to 0% if a complete affidavit is received. The rate on unpaid estate duty 6 to 18 months after death will also be reduced from 6% to 3% if reasonable cause for the delay can be shown. Clause 12 re-enacts the Sixth Schedule of the Estate Duty Act (the Act) to empower the Commissioner to reduce the interest rates payable under these circumstances.

Under the Act, gifts or donations made more than a year before the death of the donor for public or charitable purposes are not subject to estate duty. However, under the Income Tax Act, tax deductions are allowed for donations made to Institutions of a Public Character (IPCs) or the Government at any point of time. For consistency with the Income Tax Act, donations, gifts and bequests to IPCs or the Government will be exempt from estate duty regardless of the point of time they are made to these institutions. Clauses 3 and 4 amend the Act to provide for the estate duty exemption on donations/gifts and bequests made to these institutions while clause 13 repeals the Ninth Schedule which is no longer required.

To facilitate administration of estate duty, clauses 2, 5, 6 ,7 and 8 amend the Act to provide for the following:

(a) To empower the Commissioner of Estate Duty, instead of the Minister for Finance, to determine the forms for notice of assessment, estate duty affidavit and the estate duty form of account;

(b) To remove the requirement for the Commissioner of Estate Duty to certify the payment of estate duty on the estate duty affidavit or the form of account for internal record purposes; and

(c) To allow the shares of a deceased person in the CDP account or CPF investment account to be transferred without estate duty clearance if the market value of such shares in either account at the time of death does not exceed $50,000. Statistics show that such cases are generally not liable to estate duty.

Sir, I beg to move.

Question proposed.

Mr Shriniwas Rai: I rise to support the Bill. The new amendment would allow the Commissioner of Estate Duty flexibility in issuing notices of assessments in such form as he may determine. Similarly, the Estate Duty affidavit which has been in circulation for a long time would also be updated.

I applaud the exemption of gifts and donations to be made to Institutions of a Public Character (IPC) as well as to the Government and I hope that the media will give enough publicity so that more donations could be made.

Mr Speaker, Sir, I find clause 8 which amends section 44 of the Act very progressive. However, my complaint is why the Minister chose only a figure of $50,000 instead of $100,000. I think another method could have been adopted. Instead of setting the limit at $50,000, we could have empowered the Minister to vary the figure. As it now stands, he has to come back to this House whenever he has to make any amendment.

Sir, Singapore must be Asia's largest shareholding country and this is why I am appealing to the Minister to reconsider the position. I also hope the Minister would consider introducing legislation where small estates below $100,000 need not go to court. It could be administered either by the Public Trustee or even institutions like banks and solicitors.

The amendment to the Sixth Schedule is to be welcomed. However, I have one plea for the Minister, and that is, he should give outright exemption for interest for the first six months and thereafter the interest should be added in accordance with the current prime rate. I am aware of the fact that the Commissioner is quite generous in exempting interest but I am puzzled that the upper limit of 12% is indeed high. May I urge the Minister to reconsider the position.

I have got another request. I know I am not going to be happy at the end of the day but I am still asking the Minister to consider abolishing estate duty itself gradually. I am not asking him to do it now but eventually I hope he would consider that

Dr Richard Hu Tsu Tau: Mr Speaker, Sir, I would like to thank Mr Rai for his comments. I consider the figure $50,000 adequate for the time being although the suggestion that the Minister should be allowed to vary it is reasonable which may be incorporated in future.

On the introduction of legislation to exempt small estates, I will consider the suggestion.

On interest rates, if an affidavit is filed within six months, the interest rate should be zero. Thereafter, the interest rates are applied to induce estates to submit their affidavits in a timely manner so as to expedite the process. But we will always review this from time to time.

Finally, on his suggestion to abolish estate duty altogether, I would like to assure him that the issue of estate duty revision is reviewed annually, and I will take his request into consideration in the next Budget, although I cannot promise anything now.

Question put, and agreed to.

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

The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau].

Bill considered in Committee; reported without amendment, read a Third time and passed.