1964_ESTATE_DUTY_ORDINANCE — Page 19

18

CAP. 111]

Estate Duty

[1983 Ed.

1944 c. 23, 3rd Schd. 1.

has made a disposition of property in favour of a relative of his or a company, any estate duty becomes, or would but for this section become payable by virtue of section 7(2),

(2) The sum on which estate duty would be payable apart from this section on the death in respect of the property which was the subject matter of the disposition or in respect of the property liable to a debt or incumbrance created by the deceased which was the subject matter of the disposition, as the case may be, shall first be computed and, subject to the limitations provided for by subsec- tion (4), there shall then be allowed as a deduction from that sum-

(a) the amount, if any, by which the aggregate of the payments

which have been made on account of the annuity or other interest for the period from the date when the annuity or other interest began to accrue in favour of the deceased until his death, exceeds the aggregate of the income derived from the deceased by virtue of the disposition for the period from the date of the disposition until his death; and (b) simple interest on so much, if any, of the amount aforesaid, and for such period, as, in the opinion of the Commis- sioner, is in all the circumstances just, at the rate of 4 per cent per annum.

(3) In subsection (2), the expression "the aggregate of the income derived from the deceased by virtue of the disposition"

means-

(a) in relation to so much of the property which was the subject matter of the disposition as did not consist of a debt or incumbrance created by the deceased, such amount as, in the opinion of the Commissioner, is in all the circumstances equal to a reasonable return from the prop- erty; and

(b) in relation to so much of the property which was the subject matter of the disposition as did consist of a debt or incumbrance created by the deceased, the aggregate amount of the interest paid or payable by the deceased in respect of that debt or incumbrance.

(4) The amount to be allowed as a deduction under subsec- tion (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 subsection (2)(a) had formed the consideration for a debt created by the deceased equal to the total amount of those payments, and if section 13(1) were applied to that debt, the full amount of that debt would not having regard to the operation of section 13(2) 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 deduc- tion under this section, be reduced so as not to exceed the amount, if any, which would have been allowable in the circumstances afore- said under subsection (1) of that section: