TNAG-0259-FCO40-295-Legislation-for-prevention-of-bribery-in-Hong-Kong-1970 — Page 140

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The second case involves charitable gifts made by means of will. Here the same considerations do not apply as the testator is aware in advance of the effect of a charitable gift on the disposition of his estate. The justification commonly advanced for exempting charitable dona- tions made by will is that it would encourage such donations and possibly thereby relieve the public purse of a greater amount in public expenditure on charitable objects than the yield of estate duty, were there no such exemption. I am myself, I fear, rather sceptical of this and suspect that such bequests will be increased only, if at all, by the amount of estate duty saved. But exemption has the merit of making it easier to bring in the first, and much more readily justifiable, exemption of gifts made within a year of death, by removing the incentive to attempt an evasion of duty by a gift in anticipation of early dealth. Clause 3(b) seeks to amend section 10 to this effect.

I now come to the other purposes of the bill.

Section 14 of the principal Ordinance is amended in several respects by clause 4. First, a new subsection is added by paragraph (a) of clause 4 to make both the executor and the surviving joint tenant or tenants accountable for estate duty payable on a joint interest if one joint tenant has died. At present the law on this point is not clear. Until recently it was thought both in Hong Kong, and in Britain, where the legislation is identical, that it was the executor who was liable for duty under subsection (6) of section 14 on a joint interest and that a surviving joint tenant might be held accountable under subsection (7) of section 14 only if there was no executor or administrator. Legal advice has now been received that subsection (7) of section 14 is capable of different interpretations and that it is desirable to amend section 14 to make both the executor and the surviving joint tenant accountable.

This amendment is a clarifying measure and is not designed to place the surviving joint tenant in an unfavourable position; in practice duty is normally recovered from the executor. However, in some cases it is necessary for the Commissioner to be able to proceed directly against the surviving joint tenant. For example, where an estate consists of only one asset, such as a joint deposit in a bank, which passes by operation of law to the survivor or survivors on the death of a joint holder, the executor, although accountable for duty, is excused from liability by virtue of the provision in subsection (6) of section 14 because no assets have passed into his hands. In another instance, although Government has a charge on the property for the duty, the property may have been disposed of before the charge can be enforced. In these circumstances it is necessary for the Com- missioner to have some right of action against the surviving joint tenant personal.