1959-HKRS28-8-26_Part01 — Page 10

7 & 8 Gen.

Schd. [.

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(4) The amount to be allowed as a deduction under subsection (2) shall, in the circumstances specified in the provisions of subsections (5). (6) and (7) be limited to the extent specified in those subsections respectively.

(5) If the annuity payments specified in paragraph (2) 6, c. 23, 3rd of subsection (2) had formed the consideration for a debt created by the deceased equal to the total amount of those payments, and if subsection (1) of section 10 were applied to that debl, the full amount of that debt would not having regard to the operation of subsection (1A) of the said scolion 10 have been allowable under subsection (1) of that section, the said annuity payments shall, for the purpose of ascertaining the amount to be allowed as a deduction under this section, be reduced so as not to exceed the amount, if any, which would have been allowable in the circumstances aforesaid under subsection (I) of that section;

14 Obs. 6. c. 15,

46(2)

7 & Geo. 6, c. 29, 3rd Schd. 3.

Accretions to Gifts Inter VivoL. 5 & 6 Eliz. 2.

c. 49, s. 38.

Provided that in applying the said subsection (IA) for the purposes of this subsection, property which is the subject matter of the disposition shall not be treated as property derived from the deceased.

(6) Where under section 6A a deduction for partial consideration would have been allowable in respect of the annuity or other interest if subsection (2) of that section had not applied to the disposition and if any other coo- sideration for the disposition had not been given, the amount to be allowed as a deduction under this section shall not exceed the amount of that deduction.

(7) Where the amount to be allowed as a deduction under this section is allowed as a deduction from the valus of the property hable to a debt or incumbrance created by the deceased, it shall not exceed the amount, if any, which would be allowed under subsection (1) of section 10 if sections 6A and 42 had not been passed.

6C. (1) Where any shares in or debentures of a company are comprised in a gift inter vivos and the donce is, as the holder of those shares or debentures, issued with shares in or debentures of the same or any other company, or granted any right to acquire any such shares or debeo- tures, then, unless the issue or grant is made by way of exchange for the first mentioned shares or debentures, the shares or debentures so issued, or the right granted, shall be treated for the purposes of this Ordinance as having been comprised in the gift in addition to any other property so comprised.

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(2) In subsection (1) the reference to an issue being made or right being granted to the donee as the holder of shares or debentures shall be taken to include any case in which an issue or grant is made to him as having been the holder of those shares or debentures, or is made to him in pursuance of an offer or invitation made to him as being or having been the holder of those shares or debentures, or of an offer or invitation in connexion with which any preference is given to him as being or having been the holder thereof.

(3) Where subsection (1) applies to determine, for purposes of estate duty, the property comprised in a gift inter vivos made by the deceased, the value of any con- sideration in money or money's worth given by the donee for the issue or grant referred to in the said subsection (1) shall be allowed as a deduction in valuing the property comprised in the gift as property deemed to pass on the death by virtue of the gift; but if any part. not being a sum of money, of the said consideration consists of property comprised in the same or another gift from the donor and deemed for purposes of estate duty to pass on his death. no deduction shall be made in respect of it under this subsection.

(4) For the purposes of subsection (3) there shall be left out of account so much, if any, of the consideration for any shares in or debentures of a company or for the grant of any right to be issued with any such shares or debentures, as consists in the capitalization of reserves of that company, or in the retention by that company, by way of set-off or otherwise, of any property distributable by it. or is otherwise provided directly or indirectly out of the assets or at the expense of that or any associated company: and for this purpose two companies shall be deemed to be associated if one has a controlling interest in the other, or if some person has a controlling interest in both.

(5) In the case of a donce who dies before the donor, subsections (1) to (4) inclusive shall apply as if he had not dico, and as if the acts of his personal representative were his acts, and property taken by any person under his testamentary dispositions or on his intestacy, or partial intestacy, were taken under a gift made by him at the time of his death.

(6) For purposes of aggregation, any property which is by virtue of subsections (1) to (5) inclusive to be treated as comprised in a gift inter vivos made by the deceased