ESTATE DUTY

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ESTATE DUTY: 12.

Prof. Ivan Png Paak Liang asked the Prime Minister and Minister for Finance (a) what is the cost to taxpayers in terms of time and money of complying with the estate duty filing requirements; (b) whether his Ministry will raise the $50,000 limit on estates that can be managed by the Public Trustee; (c) whether estate duty can legally be avoided by investing in bungalows worth less than $9 million and renting them out for income; and (d) whether his Ministry is working towards equalising the exemptions for residential property with other assets.

Mr Raymond Lim Siang Keat (for the Prime Minister and Minister for Finance): Mr Speaker, Sir, we have been simplifying the estate duty process over the past few years to make it easier for those who have to pay estate duty. Few are actually affected, since 80% of deaths each year do not go through the probate or estate duty process and, for the 20% which go through the probate process, the majority are non-dutiable and take between two and six months to complete the probate process. Only 3% of deaths actually pay estate duty.

A person can invest in a few residential properties up to the aggregate

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$9 million exemption limit for residential properties, but his rental income could eventually still form part of his other assets, which are subject to the $600,000 limit. Mr Png alludes to the point that the $9 million limit is perhaps too high, while the $600,000 exemption limit is relatively low, and this biases investment choices. We will take note of his concern, but it is also not a simple matter to equalise the two since we must look for a solution that is equitable and does not drastically impact revenues at the same time.

The Public Trustee has been administering the estates of deceased persons not exceeding $50,000 in value, as provided for under the Probate and Administration Act for a number of years. The Ministry of Law, which supervises the Public Trustee's office, is currently reviewing the ceiling of $50,000 to assess if the sum of $50,000 is still a relevant sum in today's context or whether it should be raised to a higher sum.

Prof. Ivan Png Paak Liang: Mr Speaker, Sir, would the hon. Minister not agree that the $600,000 invested, say, at 3%, yields only $18,000 a year, whereas $9 million invested in housing will yield a much larger income? This imbalance will really encourage people to invest in real estate rather than in productive investments, such as businesses and factories.

Mr Raymond Lim Siang Keat: I agree that the difference would cause a certain bias in investment choices. I accept that. The issue is how do we balance it. This is something that we review constantly and we will take note of the point that the Member made. I think he had made the point before. We have taken note of that. And in my Ministry, we constantly look at these things. What is important is that

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even if we start to equalise it, we want to ensure that the amount of revenue we get is not severely impacted, and to review holistically within the whole tax system, how best to get the sums right.