1959-HKRS29-8-26_Part01 — Page 25

(Cxp. 112)

1956 Repailut),

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(2) The met profits of the company shall be determined us if the income of the company had included, or the company had had income equal to, interest on a sum equal to the value of each distribution at the average rate from the date thereof.

(3) If on any distribution the deceased received beneficlally an interest in any of the distributed assets, the benefits accroing to the deceased from the company shall be ascertained as if the amount brought into the income of the company under sub-paragraph (2) by reference to the value of the distribution of those assets had been income of the company which the deceased was entitled to receive immediately on its accrual to the company, or, where the interest in those assets which the deceased received was less than an absolute interest, had been such income to an extent corresponding to the proportion which the value of the interest in those assets received by him bore to the value of those assets.

(4) Where sub-paragraph (3) has cffcct-

(a) the value on which, apart from this provision, estate duty would be payable on the death of the deceased by virtue of section 32 shall be reduced by an amount equal to the value of the distribution of the assels in question, or, where the interest in those assets which the deceased received was less than an absolute interest, by an amount equal to the proportion aforesaid of that value; and

(6) any amount which is treated as a benefit accruing to the deceased from the company by virtue of that sub-paragraph shall be treated for the purposes of subsections (1) and (2) of section 37 as a benefit received by him.

4 (1) Where the principal value of the assets of the company passing on the death of the deceased by virtue of section 32 is increased by reason of an addition's having been made to the assets of the company, otherwise than by way of profits in respect of which the company was chargeable to tax under the Inland Revenue Ordinance, between the beginning of the first of the relevant accounting years and the death of the deceased, either-

(a) in consideration of an issue of shares in or debentures of the company;

ar

(6) otherwise howsoever, except by way of purchase for full consideration

in money or money's worth given by the company,

the following provisions of this paragraph shall have effect in relation to the added assets.

(2) The net profits of the company shall be determined as if the income of the company had included interest on a sum equal to the value of the addition at the average rate from the beginning of the first of the relevant accounting years to the date of the addition.

(3) If a transfer of any of the added assets or of any interest in any of thera was made to the company by the deceased, the benefits accruing to the deceased from the company shall bo siscertained as if the amount brought into the income of the company under sub-paragraph (2) by reference to the value of the addition of those assets had been income of the company which the deceased was caritled to receive immediately on its accrual to the company, or had been such income to an extent corresponding to the proportion which the value of the interest transferred bore to the value of those assets, as the case may be.

(4) Where sub-paragraph (3) has effect, if the deceased received as considera- tion for the addition of the asseta in question an interest in any shares in or debentures of the company in respect of which estate duty would be payable ou his death apart from anything in subsection (3) of section 37, any amount which is treated as a benefit accruing to him from the company by virtue of that sub-paragraph shall be treated for the purposes of subsection (3) of section 37 a a benefit accruing to him by virtue of his interest in those shares or debenturer (5) In this paragraph the expression "value of the addition" means, in relation to any added asicts, the value thereof or, if partial consideration, other than an issue of, or an alteration of rights attaching to, shares in or debentures

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of the company, was given therefor in money or money's worth out of the resources or at the expense of the company, the value thereof less the value of the consideration given.

Prevention of duplication of charge in respect of benefits and charge in respect of shares,

5. For the purposes of subsection (3) of section 37, where the benefits that accrued to the deceased from the company in the relevant accounting years included benefits that accrued to him otherwise than as mentioned in that subsection, but the deceased had at any time an interest in, or a power was at any time exercisable in relation to, shares in or debentures of the company in respect of which estate duty would be payable on his death apart from anything in that subsection, and by virtue of that interest or power benefits accrued to the deceased from the company in those years, or would so have accrued to him if any payments bad been made by virtue of rights attached to those abarcs or debeatures, then-

(a) it the first-mentioned benefits consisted to any extent of payments made out of moneys which, if not so applied, could have been applied in increasing the last-mentioned benefits, or as payments which would have constituted such benefits: or

(a) if the first-mentioned benefits are brought into the computation made subsection (2) of section 32 to the exclusion to any extent of the last- mentioned benefits,

the first-mentioned benefits shall to that extent be treated as if they had accrued to the deceased by virtue of his interest in, or of the power exercisable in relation to, the said shares or debentures.

Accounting Fear.

6. (1) The expression "accoupling year" means in relation to a company, if the company has, before the death of the deccased, made up accounts for a period of twelve months ending in the last year of his life, that period and each previous period of twelve months ending on the date corresponding to that to which the accounts were made up, or, if not, a period of twelve months ending on such date in the last year of his life as the Commissioner may determing and cach previous period of twelve months ending on the date corresponding to the date determined.

(2) The expression "ralavanı accounting years" means the accounting years by reference to which the extent of the passing of the assets of the company is to be determined under section 32.

0) Where an accounting year does not coincide with a period for which accounts of the company were made up, the Commissioner may, for the purpote of determining the profits or net profits of the company for that accounting year. divide any such period and make such apportionments and aggregations of the profits of the company as may be necessary, so, however, that any apportionments so made shall be made in proportion to the number of months or fractions of mooths in the respective periods for which the apportionment is made.

Grant of prior assurances.

7. Where at any time a transfer of property has been made by any person to a company to which section 32 applies the company may apply to the Commissioner for an assurance that the provisions of that section will not be applied on the death of such person by reason only of such transfer and the Commissioner may if he is satisfied that the transfer and any associated operations were effected bona fide for commercial reasons and such transfer and any associated operations have not been effected with the purpose of avoiding estate duty payable upon tuch death, give such an assurance.”.