1964_ESTATE_DUTY_ORDINANCE — Page 69

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CAP. 111]

Estate Duty

[1983 Ed.

(Cap. 112.)

(5) A benefit consisting of any such enjoyment in specie as aforesaid shall be treated as having accrued to the deceased in the said 3 years if any part of the period during which it subsisted fell within those years, and shall be treated as having accrued to him in any accounting year to the extent to which the period during which it subsisted fell within that year.

(6) A benefit consisting of any such enjoyment in specie as aforesaid shall be treated as having subsisted during the following period, that is to say-

(a) in the case of enjoyment that the deceased had, during the period for which he had it:

(b) in the case of enjoyment which he became entitled to, but did not in fact have, during the period for which he could have had it;

(c) in the case of enjoyment which he could have become entitled to have by an exercise in the 3 years ending with his death of a power which was not in fact exercised or was surrendered, during the period for which he could have had it if he had acted as mentioned in paragraph 1(4).

Adjustments as to Distributed Assets and Additions to Assets

3. (1) Where the assets of the company passing on the death of the deceased by virtue of section 35 include any distributed assets, or by reason of the company's having been wound up or dissolved before the death consist of distributed assets, the following provisions of this paragraph shall have effect.

(2) The net profits of the company shall be determined as 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 such distribution at the average rate from the date thereof.

(3) If on any distribution the deceased received beneficially an interest in any of the distributed assets, the benefits accruing 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 effect-

(a) the value on which, apart from this provision, estate duty would be payable on the death of the deceased by virtue of section 35 shall be reduced by an amount equal to the value of the distribution of the assets 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 of that value; and

(5) 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 section 40(1) and (2) 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 35 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; or

(b) 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.