(CHAPTER 111)CONTENTS

(CHAPTER 111)CONTENTS Section 1. Short title 2. Application 3. Interpretation 3A. Exercise of powers and duties 4. Appointment as commissioner for oaths 5. Estate duty 6. What property is deemed to pass on death 7. Dispositions in favour of relatives 7A. Presumption of simultaneous death 8. Exemptions 9. Accretions to gifts inter vivos 10. Exceptions for transactions for money consideration, property situate outside Hong Kong, shares on local registers and certain land in the New Territories 10A. Exception for matrimonial home 11. Aggregation of property 12. Payment of estate duty 13. Value of property; allowance for debts and funeral expenses 14. Recovery of estate duty, etc.

14A. Exemption of executors of small estates 15. Probate not to be issued until estate duty paid 16. Increase of estate duty when delay in lodging affidavit 17. Duty of executor as to unregistered shares 18. Charge of estate duty on property 19. Apportionment of estate duty 20. Remission and refunding of estate duty on certain grounds. Proviso regarding war deaths 21. Remission in case of successive war deaths 22. Appeal to High Court 23. Schedule of property to be annexed to probate 24. Penalties for intermeddling 25. Notification of interest of deceased person in bank or business undertaking 26. Executor's accounts 27. Power to reduce penalty and duty 28. Power to Governor in Council to make rules and prescribe forms, fees and charges 29. Presumption as to shares standing in the name of the deceased 30. Relief in the case of certain settlements 31. Relief in respect of quick succession where property consists of leasehold property or a business 32. Reduction of full amount of duty where the margin above the limit of value is small 33. Relief in the case of certain interests which do not fall into possession 34. Controlled companies 35. Charge on assets of controlled companies 36. Benefits from company to deceased 37. Surrender of benefits 38. Determination of net profits of company 39. Allowances in the valuation of assets 40. Limitation on charge 41. Limitation of exceptions 42. Duty to give information on death 43. Collection and incidence of duty 44. Value of shares and debentures of controlled companies 45. Limitation on dispositions through a controlled company in favour of relatives First Schedule Duty applicable to deaths before 27 February 1931 Second Schedule Duty applicable to deaths on or after 27 February 1931 and before 1 July 1936 Third Schedule Duty applicable to deaths on or after 1 July 1936 and before 1 April 1941 Fourth Schedule Duty applicable to deaths on or after 1 April 1941 and before 1 April 1948 Fifth Schedule Duty applicable to deaths on or after 1 April 1948 and before 1 February 1959 Sixth Schedule Duty applicable to deaths on or after 1 February 1959 and before 1 January 1963 Seventh Schedule Duty applicable to deaths on or after 1 January 1963 and before 1 April 1967 Eighth Schedule Duty applicable to deaths on or after 1 April 1967 and before 1 April 1970 Ninth Schedule Duty applicable to deaths on or after 1 April 1970 and before 1 April 1972 Tenth Schedule Duty applicable to deaths on or after 1 April 1972 and before 1 April 1974 Eleventh Schedule Duty applicable to deaths on or after 1 April 1974 and before the Commencement of the Estate Duty (Amendment) Ordinance 1976 Twelfth Schedule Duty applicable to deaths on or after the Commencement of the Estate Duty (Amendment) Ordinance 1976 and before the commencement of the Estate Duty (Amendment) Ordinance 1977 Thirteenth Schedule Duty applicable to deaths on or after the commencement of the Estate Duty (Amendment) Ordinance 1977 and before the commencement of the Estate Duty (Amendment) Ordinance 1980 Fourteenth Schedule Duty applicable to deaths on or after the commencement of the Estate Duty (Amendment) Ordinance 1980 and before the commencement of the Estate Duty (Amendment) Ordinance 1981 Fifteenth Schedule Duty applicable to deaths on or after the commencement of the Estate Duty (Amendment) Ordinance 1981 and before the commencement of the Estate Duty (Amendment) Ordinance 1982 Sixteenth Schedule Duty applicable to deaths on or after the commencement of the Estate Duty (Amendment) Ordinance 1982 and before the commencement of the Estate Duty (Amendment) Ordinance 1987 Seventeenth Schedule Duty applicable to deaths on or after the commencement of the Estate Duty (Amendment) Ordinance 1987 and before the commencement of the Estate Duty (Amendment) Ordinance 1990 Eighteenth Schedule Duty applicable to deaths on or after the commencement of the Estate Duty (Amendment) Ordinance 1990 and before the commencement of the Estate Duty (Amendment) Ordinance 1993 Nineteenth Schedule Duty applicable to deaths on or after the commencement of the Estate Duty (Amendment) Ordinance 1993 Twentieth Schedule Provisions supplementary to sections 34 to 45 inclusive To amend and consolidate the law relating to estate duty.

[26 February 1932] 1. Short title This Ordinance may be cited as the Estate Duty Ordinance.

2. Application This Ordinance shall apply in the case of every deceased person dying or who shall have died on or after 1 January 1976; and it shall also apply in the case of every deceased person who shall have died before that date if representation to his estate has not been applied for before 2 May 1921.

3. Interpretation (1) In this Ordinance, unless the context otherwise requires- "account" means an account of the particulars and value of the estate of a deceased person in such form as may be prescribed by the Governor in Council, and verified by affidavit; "affidavit for the Commissioner" means an affidavit in such form as may be prescribed by the Governor in Council verifying the particulars and value of the estate of a deceased person; "applicable Schedule" in the case of persons dying before 27 February 1931 means the First Schedule, and in the case of persons dying thereafter but before 1 July 1936 means the Second Schedule, and in the case of persons dying on or after 1 July 1936 but before 1 April 1941 means the Third Schedule, and in the case of persons dying on or after 1 April 1941 but before 1 April 1948, means the Fourth Schedule, and in the case of person dying on or after 1 April 1948 but before 1 February 1959 means the Fifth Schedule, and in the case of persons dying on or after 1 February 1959 but before 1 January 1963 means the Sixth Schedule, and in the case of persons dying on or after 1 January 1963 but before 1 April 1967 means the Seventh Schedule, and in the case of persons dying on or after 1 April 1967 but before 1 April 1970 means the Eighth Schedule, and in the case of persons dying on or after 1 April 1970 but before 1 April 1972 means the Ninth Schedule, and in the case of persons dying on or after 1 April 1972 but before 1 April 1974 means the Tenth Schedule, and in the case of persons dying on or after 1 April 1974 but before the commencement of the Estate Duty (Amendment) Ordinance 1976 means the Eleventh Schedule, and in the case of persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1976 but before the commencement of the Estate Duty (Amendment) Ordinance 1977 means the Twelfth Schedule, and in the case of persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1977 but before the commencement of the Estate Duty (Amendment) Ordinance 1980 means the Thirteenth Schedule, and in the case of persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1980 but before the commencement of the Estate Duty (Amendment) Ordinance 1981 means the Fourteenth Schedule, and in the case of persons dying on or after the commencement of the Estate duty (Amendment) Ordinance 1981 but before the commencement of the Estate Duty (Amendment) Ordinance 1982 means the Fifteenth Schedule, and in the case of persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1982 but before the commencement of the Estate Duty (Amendment) Ordinance 1987 means the Sixteenth Schedule, and in the case of persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1987 but before the commencement of the Estate Duty (Amendment) Ordinance 1990 (31 of 1990) means the Seventeenth Schedule, and in the case of persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1990 (31 of 1990) but before the commencement of the Estate Duty (Amendment) Ordinance 1993 (29 of 1993) means the Eighteenth Schedule, and in the case of persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1993 (29 of 1993) means the Nineteenth Schedule; (Amended 47 of 1962 s. 2; 24 of 1967 s. 2; 37 of 1970 s. 2; 27 of 1972 s. 2; 24 of 1974 s. 2; 31 of 1976 s. 2; 31 of 1977 s. 2; 33 of 1980 s. 2; 29 of 1981 s. 2; 28 of 1982 s. 2; 29 of 1987 s. 2; 31 of 1990 s. 2; 29 of 1993 s. 2) "assets" includes goodwill; "associated operations" means any 2 or more operations of any kind being- (a) operations which affect the same property, or one of which effects some property and the other or others of which affect property which represents, whether directly or indirectly, that property or income arising from that property, or any property representing accumulations of any such income; or (b) any 2 operations of which one is effected with reference to the other, or with a view to enabling it to be effected or to facilitating its being effected, and any third operation having a like relation to either of those two, and any fourth operation having a like relation to any of those three, and so on, whether those operations are effected by the same person or by different persons, whether they are connected otherwise than as aforesaid or not, and whether they are contemporaneous or any of them precedes or follows any other; "average rate" means, in relation to a company, a rate per cent per annum, the percentage being ascertained by- (a) computing the aggregate amount of the net profits of the company for the relevant accounting years, a deduction being made, where the company sustained a loss in any of those years, of the amount of the loss; (b) dividing that amount by the number of those years; and (c) comparing the result with the principal value of the assets of the company passing on the death of the deceased by virtue of section 35 after making the allowances to be made under section 39; "Commissioner" means such person as the Governor may appoint as Commissioner for the purpose of this Ordinance; (Amended 21 of 1972 s. 2) "company" includes any body corporate, wheresoever incorporated; "debenture" means, in relation to a company, any obligation of the company in respect of any loan capital issued by the company otherwise than as consideration for a loan made to it in the ordinary course of banking business, or in respect of any debt incurred by the company- (a) for any money borrowed by the company, otherwise than by way of temporary loan made in the ordinary course of a banking business; (b) for any transfer of capital assets made to the company by any person, unless the obligation is one resulting from a dealing with a person who transferred such assets to the company in, and on terms consistent with, the ordinary course of a business carried on by him; (c) without consideration, or for consideration the value of which to the company at the time when the debt was incurred was substantially less than the value at that time of the debt, including any premium thereon; or (d) where the debt was of such a nature that it would in the ordinary course of business and apart from some special arrangement, have carried interest, if the debt did not carry interest or carried interest at a rate which was either unreasonably high or unreasonably low; "disposition" includes any trust, covenant, agreement or arrangement, whether made by a single operation or by associated operations, and also, in relation to shares in or debentures of a company, the extinguishment or any alteration of rights attaching thereto, whether effected by a single operation or by associated operations; "distributed assets" means, in relation to a company, assets of the company to which section 35 (3) applies which were disposed of or distributed by the company as mentioned in that subsection, and "value of the distribution" means, in relation to any distributed assets, the value thereof or, if partial consideration, other than the extinguishment, or an alteration, of rights attaching to shares in or debentures of a company to which that section applies, was given for the distribution in money or money's worth received by the company for its own use and benefit, the value thereof less the value of the consideration given; "dividend" includes a bonus chargeable to tax under the Inland Revenue Ordinance (Cap. 112) and also any bonus which would be so chargeable if it had arisen in or been derived from Hong Kong; (Amended 31 of 1990 s.

10) "estate duty" means duty chargeable under this Ordinance; "executor" means the executor or administrator of a deceased person and includes, as regards any obligation under this Ordinance, any person who takes possession of or intermeddles with the property of a deceased person or any portion thereof; "incumbrance" includes mortgage and terminable charge; "interest in expectancy" includes an estate in remainder or reversion and every future interest whether vested or contingent, but does not include a reversion expectant upon the determination of a lease; "member" means, in relation to a company, a holder in his own right of any share in or debenture of the company, and a person interested in any share in or debenture of the company held, whether by himself or another, otherwise than in the holder's own right; "officer" means, in relation to a company, any person who exercises the functions of a director, manager, secretary or liquidator of the company; "payment" includes a transfer of property and a set-off or release of an obligation, and references to the amount of a payment include, in relation to property transferred or to an obligation set-off or release, references to the value thereof; "periodical payment" means a payment by way of dividend or interest, a payment by way of remuneration not being a single lump sum payment, and any other payment being one of a series of payments, whether inter-connected or not, whether of the same or of varying amounts, and whether payable at regular intervals or otherwise; "property" includes movable and immovable property and the proceeds of sale thereof respectively and any money or investment for the time being representing the proceeds of sale; "property passing on the death" includes property passing either immediately on the death or after any interval, and either certainly or contingently, and either originally or by way of substitutive limitation, and "on the death" includes "at a period ascertainable only by reference to the death"; "power" includes any right or power exercisable by virtue of the holding of shares in or debentures of a company, and any right or power to procure an issue of shares in or debentures of a company; "settlement" means any non-testamentary disposition in writing, whether made voluntarily or upon a good or valuable consideration othe than a bona fide pecuniary consideration, whereby any definite and certain property is settled or agreed to be settled in any manner for any purpose whatsoever; "Unified Exchange" means the stock market established under section 27 of the Stock Exchanges Unification Ordinance (Cap. 361). (Added 31 of 1990 s.

2) [cf. 1894 c. 30 s. 22 (1) U. K; 1940 c. 29 ss. 44, 47 (2) & 59 U. K.; 1944 c. 23 s. 36 U. K.] (2) For the purposes of this Ordinance- (a) a person shall be deemed competent to dispose of property if he has such an estate or interest therein or such general power as would, if he were sui juris, enable him to dispose of the property; and "general power" includes every power or authority enabling the donee or other holder thereof to appoint or dispose of property as he thinks fit, whether exercisable by instrument inter vivos or by will, or both, but exclusive of any power exercisable either in a fiduciary capacity under a disposition not made by himself or as mortgagee; (b) a disposition taking effect out of the interest of the deceased person shall be deemed to have been made by him, whether the concurrence of any other person was or was not required; (c) money which a person has a general power to charge on property shall be deemed to be property of which he has power to dispose; (d) the creation by a person or with his consent of a debt or other right enforceable against him personally or against property of which he was or might become competent to dispose or to charge or burden for his own benefit, shall be deemed to have been a disposition made by that person, and in relation thereto the expression "property" shall include the debt or right created; [cf. 1940 c. 29 s. 45 (1) U. K.] (e) the extinguishment at the expense of the deceased of a debt or other right shall be deemed to have been a disposition made by the deceased in favour of the person for whose benefit the debt or right was extinguished, and in relation thereto the expression "property" shall include the benefit conferred by the extinguishment of the debt or right.

[cf. 1940 c. 29 s. 45 (2) U. K.] [cf. 1894 c. 30 s. 22 (2) U. K.] (3) A person shall be deemed to have made a transfer of property to a company if the property came to be included in the resources of the company by the effect of a disposition made by him or with his consent or of any associated operations of which such a disposition formed one. [cf.

1940 c. 29 s. 58 (2) U. K.] (4) A person shall be deemed to have received or had any payment, income, profit, enjoyment, assets, or interest, the receipt or having whereof by him is relevant for the purposes of this Ordinance, if any of the following conditions have been satisfied in relation thereto, that is to say- (a) if the relevant payment or other matter has been applied in any manner for the benefit of that person, or has been dealt with by that or any other person in any manner calculated to cause it to inure for the benefit of that person at any time, whether in the form of income or not or if any property which was or would be available for the purpose by reason of the effect or successive effects of any one or more of associated operations relating to the relevant payment or other matter has been so applied or dealt with; (b) if any advantages received or to be received at any time by that person have been provided out of that payment or other matter, or out of any such property as aforesaid; (c) if that person became able in any manner to control the application of the relevant payment or other matter, or of any such property as aforesaid, otherwise than in a fiduciary capacity; (d) if the relevant payment or other matter, or any such property as aforesaid, has been applied in any manner so as to increase the value to that person of any property in which he was beneficially interested; or (e) as respects such profits as are mentioned in section 36, if the receipt by, or accrual to, the company of those profits operated in any manner so as to increase the value to that person of any property in which that person was beneficially interested, so however that the amount of the income or profits which that person is to be treated as having received by virtue of this paragraph shall be limited to the amount of the increase in value of the property in question, and references in the Ordinance to the deceased's receiving or having, or being or becoming entitled to receive or have, any such payment or other matter as aforesaid shall be construed accordingly. [cf. 1940 c. 29 s. 58 (3) U. K.] (5) References in this Ordinance- (a) to a disposition's being made by any person, to a power's being exercised or exercisable by any person, or to any other act's being done by any person, include references to its being made, or being exercised or exercisable, or being done, by him and another jointly or by another at his direction or by a company of which he had control, or powers equivalent to control, within the meaning of section 44 (3), whether with or without the consent of any other person having similar powers; references importing an omission on the part of any person in relation to any such matter as aforesaid shall be construed in like manner; and references in relation to any such matter, as aforesaid to its being made, or being exercised or exercisable, or being done or omitted, with the consent of any person include references to its being made, or being exercised or exercisable, being done or omitted, at his request or with or subject to his acquiescence; [cf. 1940 c. 29 s. 58 (4) U. K.; 1954 c. 44 s. 29 (6) U. K.] (b) to a person having any power or control or doing any act in a fiduciary capacity shall be construed as references to his having that power or control or doing that act in a fiduciary capacity imposed on him otherwise than by a disposition made by him and in such a capacity only; [cf. 1940 c. 29 s. 58 (5) U. K.] (c) to an interest ceasing or being limited to cease on a death shall be construed as including references to its being subject to a limitation, in whatsoever form, having the effect of providing in the alternative for its cesser on the death or on the occurrence of some event, or the expiration of some period, before the death; [cf. 1940 c. 29 s. 58 (6) U. K.] (d) to a transfer of property, (except in the definition of "payment" in subsection (1)) shall include a reference to a payment of money, and the expressions "disposition" and "value" respectively, in relation to money shall include payment and amount. [cf. 1952 c. 33 s. 72 (2) U. K.] (Replaced 1 of 1959 s. 2) 3A. Exercise of powers and duties (1) Where under this Ordinance any power is conferred or any duty is imposed on the Commissioner and it is not provided that the power or duty shall be exercised or performed by the Commissioner personally, such power may be exercised or such duty may be performed by a deputy commissioner of estate duty or an assistant commissioner of estate duty.

(2) Except where this Ordinance provides that a power or duty shall be exercised or performed by the Commissioner personally, the Commissioner may, subject to such limitations as he may think fit, authorize in writing any public officer to exercise any power or perform any duty conferred or imposed upon him by this Ordinance. (Added 21 of 1972 s. 3) 4. Appointment as commissioner for oaths (1) The Chief Justice may, by a commission signed by him, appoint the Commissioner or any deputy commissioner to be a commissioner to administer oaths and take declarations and affirmations for the purposes of this Ordinance, and may revoke any such appointment.

(2) Every person so appointed shall be styled a commissioner for oaths and shall have all the powers and discharge all the duties which now belong to the office of a commissioner to administer oaths.

(Added 32 of 1934 s. 2) 5. Estate duty In the case of every deceased person there shall, save as hereinafter expressly provided, be levied and paid upon the principal value, ascertained as hereinafter provided, of all property passing on the death of such person, a duty called estate duty at the graduated rates mentioned in the applicable Schedule: Provided that, where the principal value of an estate comprises a fraction of $100, such fraction shall, for the purpose of determining the amount of estate duty payable, be reckoned as $100; [cf. 1894 c. 30 s. 1 U. K.] Provided also that where an interest in expectancy in any property has, before 27 February 1931, been bona fide sold or mortgaged for full consideration in money or money's worth, then no higher duty on that property shall be payable by the purchaser or mortgagee when the interest falls into possession than is in accordance with the rates mentioned in the First Schedule, and in the case of a mortgage any higher duty payable by the mortgagor shall rank as a charge subsequent to that of the mortgagee. [cf. 1919 c. 32 s. 29 U. K.; 1940 c. 48 s. 17 U. K.] (Amended 47 of 1962 s. 3) 6. What property is deemed to pass on death (1) Property passing on the death of the deceased shall be deemed to include the property following- (a) property of which the deceased was at the time of his death competent to dispose; [cf. 1894 c. 30 s. 2 (1) U. K.] (b) property in which the deceased or any other person had an interest ceasing on the death of the deceased, to the extent to which a benefit accrues or arises by the cesser of such interest, and such property shall be deemed to pass on the death of the deceased notwithstanding that estate or interest has been surrendered, assured, divested or otherwise disposed of, whether for value or not, to or for the benefit of any person entitled to an estate or interest in remainder or reversion in such property, unless that surrender, assurance, divesting or disposition was bona fide made or effected 3 years before the death, or if it was made or effected for such purposes as are recognized by the Commissioner as public or charitable, one year before the death, and bona fide possession and enjoyment of the property was assumed thereunder immediately upon the surrender, assurance, divesting or disposition, and thenceforward retained to the entire exclusion of the person who had the estate or interest limited to cease as aforesaid, and of any benefit to him by contract or otherwise: Provided that where property affected by such a surrender, assurance, divesting or disposition is deemed to be property passing on the death of the deceased by reason only that the property was not, as from the date of the surrender, assurance, divesting or disposition, retained to the entire exclusion of the deceased or a person who had an estate or interest limited to cease on the death of the deceased, and of any benefit to him by contract or otherwise, the property shall not be deemed to pass on the death of the deceased if subsequently, by means of the surrender of the benefit reserved or otherwise, it is enjoyed to the entire exclusion of the deceased or such other person as aforesaid, and of any benefit to him by contract or otherwise, for a period of 3 years immediately preceding the death, or in the case of such purposes as are recognized by the Commissioner as public or charitable, one year immediately preceding the death: Provided also that this paragraph shall not apply to any property the interest in which of the deceased or other person was only an interest as holder of an office or as recipient of the benefits of a charity or as a corporation sloe; (Amended 1 of 1959 s. 3) [cf. 1900 c. 7 s. 11 U. K.; 1910 c. 8 s. 59 U. K.; 1940 c. 29 s. 43 (2) U. K.; 1946 c. 64 s. 47 U.

K.] (C) property taken as a donatio mortis causa made by the deceased or taken under a disposition made by him, purporting to operate as an immediate gift inter vivos, whether by way of transfer, delivery, declaration of trust, or otherwise, which shall not have been bona fide made 3 years before the death or in the case of a gift inter vivos made or effected for such purposes as may be recognized by the Commissioner as public or charitable, one year before the death, or taken under any gift, whenever made, of which property bona fide possession and enjoyment shall not have been assumed by the donee immediately upon the gift and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise: Provided that this paragraph shall not apply to gifts inter vivos which are made in consideration of marriage, or which are proved to the satisfaction of the Commissioner to have been part of the normal expenditure of the deceased, and to have been reasonable having regard to the amount of his income or to the circumstances, or which in the case of any donee do not exceed in the Aggregate $100,000 in value or amount: (Amended 28 of 1979 s. 2; 29 of 1987 s. 3) Provided also that where property taken under a disposition purporting to operate as an immediate gift inter vivos is deemed to be property passing on the death of the deceased by reason only that the property was not, as from the date of the disposition, retained to the entire exclusion of the deceased or a person who had an estate or interest limited to cease on the death of the deceased, and of any benefit to him by contract or otherwise, the property shall not be deemed to pass on the death of the deceased if subsequently, by means of the surrender of the benefit reserved or otherwise, it is enjoyed to the entire exclusion of the deceased or such other person as aforesaid, and of any benefit to him by contract or otherwise, for a period of 3 years immediately preceding the death or in the case of such purposes as are recognized by the Commissioner as public or charitable, one year before the death: (Amended 29 of 1981 s. 3) Provided also that money or money's worth paid or applied by the deceased in or towards satisfaction or discharge of a debt or incumbrance in the case of which section 13 (2) would have had effect on his death if the debt or incumbrance had not been satisfied or discharged, or in reduction of a debt or incumbrance in the case of which that subsection has effect on his death, shall, unless so paid or applied 3 years before the death, be treated as property deemed to be included in the property passing on the death and estate duty shall, notwithstanding anything in section 10 (a), be payable in respect thereof accordingly; (Amended 1 of 1959 s. 3) [cf. 1881 c. 12 s. 38 (2) U. K.; 1889 c. 7 s. 11 U. K.; 1894 c. 30 s. 2 (1) U. K.; 1910 c. 8 s. 59 U. K.; 1939 c. 41 s. 31 (2) U. K.; 1940 c. 29 s. 43 (2) U. K.; 1946 c. 64 s. 47 U. K.] (d) property to which the deceased has been absolutely entitled, and which he has caused to be transferred to or vested in himself and any other person jointly, whether by disposition or otherwise (including also any purchase or investment effected by the deceased either by himself alone, or in concert, or by arrangement with any other person), so that the beneficial interest therein or in some part thereof passes or accrues by survivorship on his death to such other person; [cf. 1881 c. 12 s. 38 (2) U. K.; 1889 c. 7 s. 11 U. K.; 1894 c. 30 s. 2 (1) U. K.] (e) property passing under any past or future settlement made by the deceased by deed or any other instrument not taking effect as a will, whereby an interest in such property or the proceeds of sale thereof, for life or any other period determinable by reference to death is reserved, either expressly or by implication, to the settlor, or whereby the settlor may have reserved to himself the right by the exercise of any power to restore to himself, or to reclaim the absolute interest in such property or the proceeds of sale thereof; [cf. 1881 c. 12 s. 38 (2) U. K.; 1889 c.

7 s. 11 U. K.; 1894 c. 30 s. 2 (1) U. K.] (f) any annuity or other interest purchased or provided by the deceased either by himself alone or in concert or by arrangement with any other person, to the extent of the beneficial interest accruing or arising by survivorship or otherwise on the death of the deceased, except that the foregoing provisions of this paragraph shall have effect in relation to an annuity or other interest purchased or provided wholly or in part by any person who was at any time entitled to, or amongst whose resources there was at any time included, any property derived from the deceased, as if that annuity or other interest had been provided by the deceased, or, if it is proved to the satisfaction of the Commissioner that the application of all the property derived from the deceased would have been insufficient to provide the whole of that annuity or other interest, as if a similar annuity or interest of an amount reduced to an extent proportionate to the insufficiency proved had been provided by the deceased: Provided that for the purpose of determining whether there would have been any such insufficiency as aforesaid, and the extent thereof, there shall be excluded from the property derived from the deceased any part thereof as to which it is proved to the satisfaction of the Commissioner that the disposition of which it, or the property which it represented, was the subject matter was not made with reference to, or with a view to enabling or facilitating, the purchase or provision of the annuity or other interest, or the recoupment in any manner of the cost thereof. [cf. 1894 c. 30 s. 2 (1) U. K.; 1939 c. 41 s. 30 (1) & (3) U. K.] In this paragraph- "property derived from the deceased" shall include any property which was the subject matter of a disposition, made by the deceased, either by himself alone or in concert or by arrangement with any other person, notwithstanding that the disposition was made for full consideration in money or money's worth paid to the deceased for his own use or benefit, or which represented any of the subject matter of such disposition, whether directly or indirectly, and whether by virtue of one or more intermediate dispositions, and whether any such intermediate disposition was or was not for full or partial consideration: Provided that where the first-mentioned disposition was for full consideration in money or money's worth paid to the deceased for his own use or benefit and it is proved to the satisfaction of the Commissioner that the disposition was not part of associated operations which included a disposition by the deceased, either by himself alone or in concert or by arrangement with any other person, otherwise than for full consideration in money or money's worth paid to the deceased for his own use or benefit; or a disposition by any other person operating to reduce the value of the property of the deceased, then, in considering whether estate duty should be charged by virtue of this paragraph, paragraph (c) and section 13 (2), the said first-mentioned disposition shall be left out of the account as if this sub-paragraph did not apply in relation to it; and (Amended L. N.

100 of 1968) [cf. 1943 c. 28 s. 26 U. K.] "subject matter" includes, in relation to any disposition, any annual or periodical payment made or payable under or by virtue of the disposition; (Amended 1 of 1959 s. 3) [cf. 1943 c. 48 s. 26 U. K.] (g) debts and sums of money due and owing from persons in Hong Kong to any deceased person at the time of his death on obligation or other specialty, to the same extent as if they were owing to the deceased upon simple contract, without regard to the place where the obligation or specialty shall be at the time of the death of the deceased; and (Amended 1 of 1959 s. 3; 31 of 1990 s. 10) [cf. 1862 c. 22 s. 39 U. K.] (h) an interest limited to cease on the death which has been disposed of or has determined, whether wholly or partly, whether by surrender, assurance, divesting, forfeiture or in any other manner, except by the expiration of a fixed period at the expiration of which the interest was limited to cease, and whether for value or not, after becoming an interest in possession and the disposition or determination, or any of them if there are more than one, is not excepted by the proviso hereto, then- (i) if, had there been no disposition or determination as aforesaid of that interest and no disposition of any interest expectant upon or subject to that interest, the property in which the interest subsisted would have passed on the death under section 5, that property shall be deemed by virtue of this paragraph to be included as to the whole thereof in the property passing on the death; or (ii) if, had there been no disposition or determination as aforesaid of that interest and no disposition of any interest expectant upon or subject to that interest, the property in which the interest subsisted would have been deemed by virtue of paragraph (b) to be included to a particular extent in the property passing on the death, then, the property in which the interest subsisted shall be deemed by virtue of this paragraph to be included to that extent in the property passing on the death: Provided that where a disposition or determination of an interest limited to cease on the death was bona fide effected or suffered 3 years before the death, or, if it was effected or suffered for such purposes as are recognized by the Commissioner as public or charitable, one year before the death, the disposition or determination shall be excepted by this proviso- (a) if bona fide possession and enjoyment of the property in which the interest subsisted was assumed immediately thereafter by the person becoming entitled by virtue of or upon the disposition or determination and thenceforward retained to the entire exclusion of the person who immediately before the disposition or determination had the interest and of any benefit to him by contract or otherwise; or (b) in the case of a partial determination, if the conditions specified in sub-paragraph (a) were not satisfied by reason only of the retention or enjoyment by the deceased of possession of some part of the property, or of some benefit, by virtue of the provisions of the instrument under which he had the interest. (Added 1 of 1959 s. 3) [cf. 1940 c. 29 s. 43 (1) & (2) U. K.; 1950 c. 15 s. 43 U. K.] (2) In the application of subsection (1) (h) to a case in which an incumbrance on the property in which the interest in question subsisted has been created by associated operations which included a disposition of that interest, references to that property shall be construed as references to that property free from the incumbrance except in a case in which the incumbrance was created for consideration in money or money's worth which was applied for purposes calculated to maintain or increase the value of that property, and, in that case, shall be construed as references to that property subject to the incumbrance to the extent to which the consideration was so applied. (Added 1 of 1959 s. 3) [cf. 1940 c. 29 s. 43 (3) U. K.] (3) Subsection (1) (h) shall have effect only in relation to a person dying after the commencement of the Estate Duty (Amendment) Ordinance 1959 (1 of 1959), and paragraph (b) of that subsection shall not have effect in relation to such a person. (Added 1 of 1959 s. 3) [cf. 1940 c. 29 s. 43 (6) U. K.] (4) Property passing on the death of the deceased shall not be deemed to include property held by the deceased as trustee for another person, under a disposition not made by the deceased or under a disposition made by the deceased more than 3 years before the death, or in the case of a disposition made for such purposes as are recognized by the Commissioner as public or charitable, one year before the death where possession and enjoyment of the property was bona fide assumed by the beneficiary immediately upon the creation of the trust and thenceforward retained to the entire exclusion of the deceased or of any benefit to him by contract or otherwise: Provided that where property taken under such a disposition as a foresaid is deemed to be property passing on the death of the deceased by reason only that the property was not, as from the date of the disposition, retained to the entire exclusion of the deceased or a person who had an estate or interest limited to cease on the death of the deceased, and of any benefit to him by contract or otherwise, the property shall not be deemed to pass on the death of the deceased if subsequently, by means of the surrender of the benefit reserved or otherwise, it is enjoyed to the entire exclusion of the deceased or such other person as a foresaid and of any benefit to him by contract or otherwise, for a period of 3 years immediately preceding the death or in the case of a disposition made for such purposes as are recognized by the Commissioner as public or charitable, one year immediately preceding the death. (Amended 1 of 1959 s. 3) [cf. 1894 c. 30 s. 2 (3) U. K.; 1910 c. 8 s. 59 U. K.; 1946 c. 64 s.

47 U. K.] (5) Where property is settled by a person on himself for life, and after his death on any other person with an ultimate reversion of an absolute interest or absolute power of disposition to the settlor, the property shall not be deemed for the purpose of this Ordinance to pass to the settlor on the death of any such other person after the commencement of this Ordinance, by reason only that the settlor, being then in possession of the property as tenant for life, becomes, in consequence of such death, entitled to dispose of the whole property. [cf. 1896 c. 28 s. 14 U. K.] (6) (a) Where by a disposition of any property an interest is conferred on any person other than the disponer for the life of such person or determinable on his death, and such person enters into possession of the interest and thenceforward retains possession thereof to the entire exclusion of the disponer or of any benefit to him by contract or otherwise, and the only benefit which the disponer retains in the said property is subject to such life or determinable interest, and no other interest is created by the said disposition, then, on the death of such person the property shall not be deemed for the purposes of this Ordinance to pass by reason only of its reverter to the disponer in his lifetime.

(b) Where by a disposition of any property any such interest as above in this subsection mentioned is conferred on 2 or more persons, either severally or jointly, or in succession, this subsection shall apply in like manner as where the interest is conferred on one person.

(c) Provided that paragraphs (a) and (b) shall not apply where such person or persons taking the said life or determinable interest had at any time prior to the disposition been himself or themselves competent to dispose of the said property. [cf. 1896 c. 28 s. 15 U. K.] (7) Notwithstanding paragraphs (b), (c) and (h) of subsection (1) and notwithstanding subsection (4), property passing on the death of the deceased shall not be deemed to include property the subject of any surrender, assurance, divesting, disposition, forfeiture, disposal, donatio mortis causa, gift inter vivos or determination of an interest made, effected or suffered to or for the benefit in Hong Kong of any charitable institution or trust of a public character, or to the Government, the Urban Council or the Regional Council, for charitable purposes. (Added 29 of 1970 s. 2. Amended 74 of 1981 s. 2; 31 of 1990 ss.

3 &10) 7. Dispositions in favour of relatives (1) For the purposes of section 6 (1) (c), any disposition made by the deceased in favour of a relative of his shall be treated as a gift unless- (a) the disposition was made on the part of the deceased for full consideration in money or money's worth paid to him for his own use or benefit; or (b) the deceased was concerned in a fiduciary capacity imposed on him otherwise than by a disposition made by him and in such a capacity only: Provided that where the disposition was made on the part of the deceased for partial consideration in money or money's worth paid to him for his own use or benefit, the value of the consideration shall be allowed as a deduction from the value of the property for the purpose of estate duty.

[cf. 1950 c. 15 s. 46 (1) U. K.] (2) Where the deceased made a disposition of property in favour of a relative of his, the creation or disposition in favour of the deceased of an annuity or other interest limited to cease on the death of the deceased or of any other person shall not be treated for the purposes of this section or of section 13 (1) as consideration for the disposition made by the deceased, except as provided in section 8.

(3) Where there have been associated operations effected with reference to the receiving by the deceased of any payment in respect of such an annuity or other interest as is mentioned in subsection (2), or effected with a view to enabling him to receive or to facilitating the receipt by him of any such payment, this section and section 45 shall have effect in relation to each of those associated operations as they have effect in relation to the creation or disposition in favour of the deceased of such an annuity or other interest. [cf. 1940 c. 29 s. 44 (5) U. K.; 1950 c. 15 s. 46 (2) (a) U. K.] (4) In this section, section 8 and section 45- "annuity" includes any series of payments, whether inter-connected or not, whether of the same or of varying amounts, and whether payable at regular intervals or otherwise, and payments of dividends or interest on shares in or debentures of a company shall be treated for the purposes of the said provisions as a series of payments constituting an annuity limited to cease on a death if the payments are liable to cease on the death, or the amounts thereof are liable to be reduced on the death, by reason directly or indirectly of the extinguishment or any alteration of rights attaching to, or of the issue of, any shares in or debentures of a company; "relative" means- (a) wife or husband; (b) father and mother; (c) child, uncle and aunt; (d) any issue of a person falling within either (a), (b) or (c) above and the other party to a marriage with any such person or issue; (e) concubine recognized as such by the law appropriate to the marriage; and (f) references to "child" and "issue" include references to any illegitimate child and to any adopted child. [cf. 1940 c. 29 s. 44 (2) & (3) U. K.] (Added 1 of 1959 s. 4) 7A. Presumption of simultaneous death Where, after the commencement of the Estate Duty (Amendment) Ordinance 1982 (28 of 1982), 2 or more persons die in circumstances rendering it uncertain that any one of them, or which of them, survived the other or others, the property chargeable with estate duty in respect of each death shall be ascertained as if they had died at the same time and all relevant property had devolved accordingly.

(Replaced 28 of 1982 s. 3. Amended 62 of 1984 s. 11) 8. Exemptions (1) Subject to the provisions of this section, the relief specified herein shall be granted where, on the death of a person who 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 form 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 subsection (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 Commissioner, 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 property; 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 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 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 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 (1) of that section: Provided that in applying the said subsection (2) 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. [cf. 1944 c. 23 3rd Schd. 1 U. K.] (6) Where under section 7 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 consideration 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. [cf. 1950 c. 15 s. 46 (2) U. K.] (7) Where the amount to be allowed as a deduction under this section is allowed as a deduction from the value of the property liable to a debt or incumbrance created by the deceased, it shall not exceed the amount, if any, which would be allowed under section 13 (1) if sections 7 and 45 had not been passed. [cf. 1944 c. 23 3rd Schd. 3 U. K.] (Added 1 of 1959 s. 4) [cf. 1944 c. 23 s. 40 U. K.] 9. Accretions to gifts inter vivos (1) Where any shares in or debentures of a company are comprised in a gift inter vivos and the donee 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 debentures, 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.

(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 consideration 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 2 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 donee who dies before the donor, subsections (1) to (4) inclusive shall apply as if he had not died, 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 shall be deemed to be property in which the deceased had an interest, except in so far as it is derived from property originally comprised in the gift in which the deceased never had an interest.

(7) For the purposes of estate duty, any question whether, possession and enjoyment of any property comprised in a gift inter vivos was at a particular time assumed or had by any person to the exclusion of any other person shall, so for as the question depends on the identity of the property, be determined by reference to the property which would for the time being be treated, in relation to the death if it occurred at that time, as property comprised in the gift.

(8) For the purposes of this section, the principal value of any property at a time before the death of the deceased shall be ascertained as it would be for the purposes of estate duty chargeable on his death if he had died immediately before that time. (Added 1 of 1959 s. 4) [cf. 1957 c. 49 s. 38 U. K.] 10. Exceptions for transactions for money consideration, property situate outside Hong Kong, shares on local registers and certain land in the New Territories Estate duty shall not be payable in respect of- (a) property passing on the death of the deceased by reason only of a bona fide purchase from the person under whose disposition the property passes nor in respect of the determination of any annuity for lives where such purchase was made or such annuity granted for full consideration in money or money's worth paid to the vendor or grantor for his own use or benefit.

Where any such purchase was made, or annuity granted, for partial consideration in money or money's worth paid to the vendor or grantor for his own use or benefit, the value of the consideration shall be allowed as a deduction from the value of the property for the purpose of estate duty; (Amended L. N. 63 of 1970) (b) property situate outside Hong Kong; (Amended 31 of 1990 s. 10) (c) any share or other interest of a deceased member of a company registered in a branch register kept out of Hong Kong under the Companies Ordinance (Cap. 32); (Amended 29 of 1970 s. 3; 6 of 1984 s. 259; 31 of 1990 s. 10) (d) property situate in the New Territories, other than New Kowloon, where the principal value of the estate does not exceed $2,000 or the minimum principal value for which a rate for the payment of estate duty has been provided under the applicable Schedule, whichever is the greater, and property situate elsewhere in Hong Kong, where the principal value of the estate does not exceed the minimum principal value for which a rate for the payment of estate duty has been provided under the applicable Schedule; (Replaced 47 of 1962 s. 4. Amended 31 of 1990 s. 10) (e) any temple for the worship of ancestors, situate in the New Territories, other than New Kowloon, registered in the name of the manager of a clan, family or t'ong, and so much of any clan, family or t'ong property similarly registered as is used for the maintenance of such temple; (Added 38 of 1935 s. 2) (f) any other temple in the New Territories, other than New Kowloon, certified by the Secretary for Home Affairs to be a Chinese temple as defined in section 2 of the Chinese Temples Ordinance (Cap. 153), and so much of any property as is used for the maintenance of such temple; (Added 38 of 1935 s. 2. Amended L. N. 94 of 1974; L. N. 370 of 1981; L. N. 14 of 1983; L. N. 262 of 1989) (g) property devised or bequeathed by the deceased or otherwise passing on the death of the deceased to or for the benefit in Hong Kong of any charitable institution or trust of a public character, or to the Government, the Urban Council or the Regional Council, for charitable purposes; (Added 29 of 1970 s. 3. Amended 74 of 1981 s. 3; 31 of 1990 ss.

4 & 10) (h) any property consisting of a pension, annuity, lump sum, gratuity or other like benefit (including any right or entitlement thereto) passing on the death of a deceased member of an approved retirement scheme (within the meaning of the Inland Revenue Ordinance (Cap. 112)), that is to be paid or afforded under the terms or provisions of that scheme. (Added 31 of 1990 s. 4) [cf. 1894 c. 30 s. 3 U. K.] 10A. Exception for matrimonial home (1) Estate duty shall not be payable in respect of property- (a) which was; immediately before the death of the deceased- (i) a residence owned by him and occupied solely by him exclusively for residential purposes; and (ii) the matrimonial home of the deceased and his spouse; and (b) which is devised or bequeathed by the deceased, or otherwise passes on his death, to or for the benefit of his spouse.

(2) For the purposes of subsection (1) and (3)- (a) property shall be deemed to be a residence and deemed to be capable of being a matrimonial home if the property is the exclusive right to enjoy the residence together with the right to an undivided share in land on which the residence is situated; (b) a residence shall be deemed to be owned by the deceased if the property is owned by him or by him and his spouse; (c) a residence shall be deemed to be occupied solely by the deceased if it is occupied solely by him or by him and his spouse and family; (d) property to which subsection (1) (a) applies shall, if the deceased- (i) died intestate as to that property; and (ii) is survived by his spouse, be deemed to have passed on his death to or for the benefit of his spouse.

(Added 18 of 1986 s. 2) (3) Where more than one residence would, under subsection (1) and but for this subsection, be exempt from estate duty, only one residence shall be so exempt and the executor may, by notice in writing to the Commissioner, elect which residence shall be exempt; in default of which, the Commissioner shall make the election.

(4) For the purpose of determining the rate of estate duty to be paid on property passing on death in respect of which estate duty is payable, the property of the deceased exempt from estate duty under this section and the property in respect of which estate duty is payable shall be aggregated and, subject to section 11, estate duty shall be paid on the property in respect of which estate duty is payable as if the value of the property of the deceased exempt from estate duty under this section formed part of the principal value of the estate.

(Added 28 of 1982 s. 4) 11. Aggregation of property (1) For determining the rate of estate duty to be paid on any property passing on the death of the deceased, all property so passing in respect of which estate duty is payable shall be aggregated so as to form one estate, and the duty shall be paid at the proper graduated rate on the principal value thereof: Provided that any property so passing, in which the deceased never had an interest, shall not be aggregated with any other property but shall be an estate by itself, and the duty shall be paid at the proper graduated rate on the principal value thereof. (Amended 1 of 1959 s. 5) [cf. 1894 c. 30 s. 4 U. K.] (2) For the purposes of this section, the deceased shall be deemed to have had an interest in any property included, or deemed to be included, by virtue of- (a) section 6 (1) (f); or (b) section 35, in the property passing on his death. (Added 1 of 1959 s. 5) [cf. 1939 c.

41 s. 30 (2) U. K.; 1940 c. 29 s. 52 U. K.] (3) The proviso to subsection (1) shall not have effect in relation to property consisting of a debt, or right, or benefit, passing on the death of the deceased, that is treated as property by virtue of section 3 (2) (d) or (e). (Added 1 of 1959 s. 5) [cf. 1940 c. 29 s. 45 (3) U. K.] (4) Where the property which passes on a death, but in which the deceased never had an interest, includes any policies of assurance on his life, or moneys received under such a policy, or interests in such a policy or moneys, then the rate of estate duty to be paid on any such policy, money or interest so included (hereinafter referred to as "a life insurance") shall be determined as follows- (a) in respect of the value of any life insurance or interest in a life insurance to which immediately after the death any one person is absolutely and indefeasibly entitled for his own benefit otherwise than by virtue of a purchase for consideration in money or money's worth, whether of that life insurance or interest or of the policy or otherwise, the rate shall be that appropriate to the value or aggregate value of that life insurance or interest and of any other life insurance or interest in a life insurance to which he is so entitled; (b) subject to paragraph (a) the rate shall be that appropriate to the aggregate value of all the life insurance or, if there is only one, to the value of that life insurance: Provided that for the purposes of this subsection- (i) where any life insurance or interest in a life insurance is immediately after the death subject to a mortgage or charge, the mortgage or charge shall be disregarded and the life insurance or interest shall be valued accordingly; and (ii) in relation to life insurances and interests therein which then form part of the unadministered estate of a deceased person this subsection shall have effect as if that person had been then living and entitled to those life insurances and interests. [cf. 1954 c. 44 s. 33 U. K.] (5) For the purposes of subsection (4) (a), the value of any interest in a policy of assurance or moneys received under such a policy shall be arrived at by apportioning the total value of the policy or moneys according to the respective values of the interest in question and of the interest a person would have if, except for the interest in question, he were absolutely and indefeasibly entitled to the policy or moneys. (Added 1 of 1959 s. 5) 12. Payment of estate duty (1) Estate duty shall be payable as hereinafter mentioned.

(2) The executor of the deceased shall pay the estate duty in respect of all property, of which the deceased was competent to dispose at the date of his death, on delivering the affidavit for the Commissioner, and may pay in like manner the estate duty in respect of any other property passing on such death, which by virtue of any testamentary disposition of the deceased is under the control of the executor or, in the case of property not under his control, if the persons accountable for the estate duty in respect thereof request him to make such payment. (Amended 47 of 1962 s. 5) (3) Where the executor does not know the amount or value of any property which has passed on the death, he may state in the affidavit for the Commissioner that such property exists, but that he does not know the amount or value thereof and that he undertakes as soon as the amount and value are ascertained to bring in an account thereof and to pay both the estate duty for which he is or may be liable and any further estate duty payable by reason thereof for which he is or may be liable in respect of the other property mentioned in the affidavit.

(4) Estate duty so far as not paid by the executor shall be paid on an account setting forth the particulars of the property and delivered to the Commissioner within 6 months after the death, by the person accountable for the estate duty or within such further time as the Commissioner may allow. Such duty shall be paid on delivering the account. (Amended 47 of 1962 s. 5) (5) Every estate shall include all income accrued upon the property included therein down to and outstanding at the date of the death of the deceased.

(6) In addition to any estate duty payable, interest shall accrue and be payable on such duty while it remains unpaid at the rate of 4 per cent per annum from the date of the death of the deceased until the expiration of 6 months from the death and at the rate of 8 per cent per annum thereafter: (Replaced 47 of 1962 s. 5) Provided that unless the Commissioner in any particular case with the approval of the Governor in Council otherwise directs- (a) in the case of any death occurring on or before 7 December 1941, no interest under this subsection shall be payable in respect of the period from 8 December 1941 to 2 March 1946 and no part of the said period shall be taken into consideration for the purpose of computation of the period of 6 months referred to in this subsection, and (b) in the case of any death occurring subsequent to 7 December 1941 and prior to 2 March 1946, the latter date shall be substituted for the date of death for the purposes of this subsection. (Added 24 of 1950 Schedule.

Amended 47 of 1962 s. 5) (7) The estate duty which is to be collected upon an affidavit for the Commissioner or on an account, shall be due on the delivery thereof or on the expiration of 6 months from the death, whichever first happens.

(8) A rateable part of the estate duty on an estate in proportion to the value of any leasehold property held solely by the deceased may at the option of the person delivering the account be paid by 8 equal yearly instalments, or 16 half-yearly instalments, and the first instalment shall be due at the expiration of 6 months from the death, and the interest on the unpaid portion of the duty shall be added to each instalment and paid accordingly; but the duty for the time being unpaid, with such interest to the date of payment, may be paid at any time, and in case the property is sold shall be paid on completion of the sale, and if not so paid shall be duty in arrear. (Added 1 of 1959 s. 14. Amended 47 of 1962 s. 5) (Amended 47 of 1962 s. 5) [cf. 1894 c. 30 s. 6 U. K.] 13. Value of property; allowance for debts and funeral expenses (1) In determining the value of an estate for the purpose of estate duty, allowance shall be made for reasonable funeral expenses incurred in Hong Kong not exceeding-(Amended 31 of 1990 s. 10) (a) in the case of persons dying before 1 January 1963 $1,000 or 2.5 per cent of the ascertained value of the estate, whichever is the smaller; (b) in the case of persons dying on or after 1 January 1963 but before 1 April 1972, $2,000 or 2.5 per cent of the ascertained value of the estate, whichever is the smaller; (c) in the case of persons dying on or after 1 April 1972 but before the commencement of the Estate Duty (Amendment) Ordinance 1977, $5,000 or 2.5 per cent of the ascertained value of the estate, whichever is the smaller; (d) in the case of persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1977, $10,000, and for debts and incumbrances but an allowance shall not be made- (i) for debts incurred by the deceased and incumbrances created by a disposition made by the deceased, unless such debts or incumbrances were incurred or created bona fide for full consideration for money or money's worth wholly for the deceased's own use and benefit and take effect out of his interest; nor (ii) for any debt in respect whereof there is a right to reimbursement from any other estate or person unless such reimbursement cannot be obtained; nor (iii) more than once for the same debt or incumbrance changed upon different portions of the estate, and any debt or incumbrance for which an allowance is made shall be deducted from the value of the property liable thereto. (Replaced 31 of 1977 s. 3) (2) Any allowance which but for this subsection would be made under subsection (1) for a debt incurred by the deceased as mentioned in paragraph (i) of that subsection, or for an incumbrance created by a disposition made by the deceased, as therein mentioned shall be subject to abatement to an extent proportionate to the value of any of the consideration given therefor which consisted of- (a) property derived from the deceased; or (b) consideration not being such property as aforesaid, but given by any person who was at any time entitled to, or amongst whose resources there was at any time included, any property derived from the deceased: Provided that if, where the whole or a part of the consideration given consisted of such consideration as is mentioned in paragraph (b) of this subsection, it is proved to the satisfaction of the Commissioner that the value of the consideration given, or of that part thereof, as the case may be, exceeded that which could have been rendered available by application of all the property derived from the deceased, other than such, if any, of that property as is included in the consideration given or as to which the like facts are proved in relation to the giving of the consideration as are mentioned in the first provision to section 6 (1) (f) in relation to the purchase or provision of an annuity or other interest, no abatement shall be made in respect of the excess, and in this subsection the expressions "property derived from the deceased" and "subject matter" have the meanings respectively attributed to them in section 6 (1) (f). (Added 1 of 1959 s. 6) [cf. 1939 c. 41 s. 31 (1) U. K.; 1943 c. 28 s. 26 U. K.] (3) Where a debt or incumbrance has been incurred or created in whole or in part for the purpose of or in consideration for the purchase or acquisition or extinction, whether by operation of law or otherwise, of any interest in expectancy in any property passing or deemed to pass on the death of a deceased person, and any person whose interest in expectancy is so purchased, acquired, or extinguished becomes (under any disposition made by, or through devolution of law from, or under the intestacy of, the deceased) entitled to any interest in that property, than in determining the value of the estate of the deceased for the purpose of estate duty no allowance shall be made in respect of such debt or incumbrance, and any property charged with any such debt or incumbrance shall be deemed to pass freed from that debt or incumbrance: Provided that- (a) if part only of such debt or incumbrance was incurred or created for such purpose or as such consideration as aforesaid, this provision shall apply to that part of such debt or incumbrance only; and (b) if a person whose interest in expectancy in the property so purchased, acquired, or extinguished becomes entitled to an interest in part only of that property, this provision shall apply only to such part of the debt or incumbrance as bears the same proportion to the whole debt or incumbrance as the value of the part of the property to an interest in which he becomes entitled bears to the value of the whole of that property. [cf.

1910 c. 8 s. 57 U. K.] (4) No allowance shall be made for debts due from the deceased, other than debts contracted in Hong Kong to persons ordinarily resident therein, unless charged on property situate within Hong Kong. (Amended 31 of 1990 s. 10) (5) (a) The principal value of any property shall be estimated to be the price which, in the opinion of the Commissioner, such property would fetch if sold in the open market at the time of the death of the deceased.

(b) In estimating such principal value the Commissioner shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time: Provided that where it is proved to the Commissioner that the value of the property has been depreciated by the reason of the death of the deceased the Commissioner in fixing the price shall take such depreciation into account. [cf. 1894 c. 30 s. 7 (5) U. K.; 1910 c. 8 s. 60 U. K.] (6) When an estate includes an interest in expectancy, estate duty in respect of that interest shall be paid, at the option of the person accountable for the estate duty, either with the duty in respect of the rest of the estate or when the interest falls into possession, and if the duty is not paid with the estate duty in respect of the rest of the estate, then- (a) for the purpose of determining the rate of estate duty in respect of the rest of the estate the value of the interest shall be its value at the date of the death of the deceased; and (b) the rate of estate duty in respect of the interest when it falls into possession shall be calculated according to its value when if falls into possession, together with the value of the rest of the estate as previously ascertained. [cf. 1894 c. 30 s. 7 (6) U. K.] (7) The value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased shall- (a) if the interest extended to the whole income of the property, be the principal value of that property; and (b) if the interest extended to less than the whole income of the property, be the principal value of an addition to the property equal to the income to which the interest extended. [cf. 1894 c.

30 s. 7 (7) U. K.] (8) The value of any property for the purpose of estate duty shall be ascertained by the Commissioner in such manner and by such means as he thinks fit, and, if he authorizes any person to inspect any property and to report to him the value thereof for the purposes of this Ordinance, the person having the custody or possession of that property shall permit the person so authorized to inspect it at such reasonable times as the Commissioner considers necessary. [cf. 1894 c. 30 s. 7 (8) U.

K.] (9) When the Commissioner requires a valuation to be made by a person named by him, the reasonable costs of such valuation shall be defrayed by the Commissioner. [cf. 1894 c. 30 s. 7 (9) U. K.] 14. Recovery of estate duty, etc.

(1) All duty, interest and penalties payable under this Ordinance shall be recoverable by the Commissioner by action in the District Court, notwithstanding that the amount is in excess of the sum mentioned in section 33 of the District Court Ordinance (Cap. 336): (Amended 68 of 1973 s. 5; 79 of 1981 s. 3) Provided that nothing in this section shall affect any other remedy for the recovery of duty, interest or penalties payable under this Ordinance.

(Replaced 47 of 1962 s. 7) (2) In proceedings in the District Court under this section the production of a certificate signed by the Commissioner stating the name and last known postal address of the person sued and the particulars of the duty, interest or penalty claimed from him shall be sufficient evidence of the amount so claimed and sufficient authority for the District Court to give judgment for such amount. (Added 47 of 1962 s.

7. Amended 31 of 1976 s. 3) (2A) In proceedings under this section for the recovery of any duty, interest or penalties the court shall not entertain any plea that the amount claimed is excessive, incorrect or under appeal. (Added 31 of 1976 s. 3) (3) In proceedings in the District Court under this section, the Commissioner may appear in person or may be represented either by a legal officer within the meaning of the Legal Officers Ordinance (Cap. 87) or by any other person authorized by him in writing. (Added 47 of 1962 s. 7) (4) In any proceedings for the recovery of any such duty, interest, fine, penalty or forfeiture in respect of any property passing on the death of any person on or after 1 January 1916, it shall not be necessary to issue concurrent writs, informations or other process. Service of the writ, information or other process shall, where practicable, be personal; but the order of a judge may be obtained, in special circumstances, to dispense with personal service and giving directions as to substituted service or as to notice of the proceedings and time for appearance whether by posting copies to addresses within or without the jurisdiction or otherwise as in the circumstances may seem just. [cf. Exchequer Rules 1860 r. 3 U. K.] (5) In any such proceedings the court shall have jurisdiction to appoint a receiver of the property and the rents and profits thereof and to order a sale of the property. The provisions of Order 30, rules 2 and 3 of the Rules of the Supreme Court (Cap. 4 sub. leg.) shall apply in the case of any order made under this subsection. [cf. 1894 c. 30 s. 8 (13) U. K.] (6) Subject to section 14A, every executor shall, to the best of his knowledge and belief, specify in appropriate accounts annexed to an affidavit for the Commissioner all the property in respect of which estate duty is payable upon the death of the deceased, and also (unless exempted in writing by the Commissioner) any property of which the deceased was a trustee for another person, and shall be accountable for the estate duty in respect of all property, of which the deceased was competent to dispose at his death, but shall not be liable for any duty in excess of the assets which he has received as executor or might but for his own neglect or default have received. (Amended 27 of 1972 s. 4) [cf. 1894 c. 30 s. 8 (3) U. K.] (7) Where property passes on the death of the deceased and his executor is not accountable for the estate duty in respect of such property, every person to whom any property so passes for any beneficial interest in possession, and also to the extent of the property actually received or disposed of by him, every trustee, guardian, committee or other person in whom any interest in the property so passing or the management thereof is at any time vested, and every person in whom the same is vested in possession by alienation or other derivative title, shall be accountable for the estate duty on the property, and shall, within the time required by this Ordinance or such later time as the Commissioner allows, deliver to the Commissioner an appropriate account specifying the property in question to the best of his knowledge and belief: Provided that nothing in this section shall render a person accountable for duty who acts merely as agent for another person in the management of property. [cf. 1894 c. 30 s. 8 (4) U. K.] (7A) Notwithstanding subsections (6) and (7), where a beneficial interest in property vested in the deceased and another person jointly passes or accrues by survivorship on the death of the deceased- (a) the executor; and (b) the person to whom the beneficial interest so passes or accrues, shall be accountable for the estate duty in respect of such property and shall, within the time required by this Ordinance, or such later time as the Commissioner allows, deliver to the Commissioner an appropriate account specifying the property in question to the best of his (or their) knowledge and belief. (Added 29 of 1970 s. 4) (8) The Commissioner may summon before him any person accountable for estate duty or any person who is, in the opinion of the Commissioner, so accountable, and any person whom the Commissioner believes to have taken possession of or administered any part of the estate in respect of which estate duty is leviable on the death of the deceased, or of the income of any part of such estate, and any person whom the Commissioner believes to be indebted to the deceased, and any person whom the Commissioner believes to be capable of giving information as to such estate and may examine such person and may require any such person to produce any documents in his custody or power the inspection whereof may tend to secure the payment of any duty under this Ordinance or the proof or discovery of any fraud or omission in relation to any such duty. Any such person shall at all reasonable times permit any person thereunto authorized by the Commissioner to inspect all such documents as aforesaid and to make such notes, copies or extracts thereof or therefrom as he may deem necessary without fee or reward. The Commissioner may also require any such person to deliver to him and verify on oath a statement in writing of such particulars. (Amended 29 of 1970 s. 4) [cf. 1894 c. 30 s. 8 (5) U. K.] (9) Subsection (8) shall apply to any company on a death on which it appears to the Commissioner that section 35 or 44 has effect in respect of that company, and to every person who is or was at any time an officer, or an auditor of that company, as it applies to a person whom the Commissioner believes to have taken possession of or administered any part of an estate in respect of which estate duty is leviable. (Added 1 of 1959 s. 7) [cf. 1940 c. 29 s. 57 (1) U. K.] (10) Nothing in this section shall render a bona fide purchaser for valuable consideration without notice liable to or accountable for estate duty. [cf. 1894 c. 30 s. 8 (18) U. K.] (11) All affidavits and accounts required under this section shall be delivered to the Commissioner, who shall make such inquiry respecting the contents of, or the particulars verified by, such affidavit or accounts and the value of the various properties included therein as he thinks necessary, and the person making or tendering any such affidavit shall attend at the office of the Commissioner, whenever required by him, and shall furnish and produce such explanations and documentary or other evidence as the Commissioner may require.

(12) When the Commissioner has ascertained the amount of estate duty payable in respect of any accounts delivered to him in pursuance of this Ordinance he shall notify the accountable person of his decision by means of a certificate in the prescribed form. If such amount exceeds the amount of estate duty already paid in respect of the said accounts the accountable person shall forthwith pay the excess to the Commissioner.

(13) In every case in which the Commissioner is satisfied that too much estate duty has been paid, the excess, together with any interest which has been paid in accordance with section 12 (6), shall be repaid by the Commissioner. (Replaced 29 of 1970 s. 4) (14) Where the accountable person discovers that for any reason too little estate duty has been paid he shall forthwith deliver to the Commissioner a further account, verified by oath, and shall at the same time pay the difference between the estate duty chargeable according to the true value of the estate and the estate duty already paid.

(15) Notwithstanding subsection (12) and section 12, if- (a) the Commissioner is not satisfied with the affidavit or accounts delivered by any person; or (b) a person has not delivered an affidavit or accounts within 6 months after the death, whether or not he has been requited by the Commissioner so to do, and the Commissioner is of the opinion that such person is accountable for estate duty, the Commissioner may, according to the best of his judgment, assess the amount of estate duty which is in his opinion payable and he shall thereupon notify the person who is in his opinion accountable and call upon him to pay such estate duty. (Replaced 29 of 1970 s. 4) (15A) Notwithstanding subsection (12) and section 12, the amount of estate duty assessed under subsection (15) shall be paid within one month after the giving of notice by the Commissioner. (Added 29 of 1970 s. 4) (16) The Commissioner may remit the interest payable on estate duty where the amount of such interest is in his opinion so small as not to repay the expense and labour of calculation and account.

(17) Every person or company who without lawful authority or reasonable cause fails to comply with any of the provisions of this section shall be liable to pay to the Commissioner, in addition to the estate duty (if any)- (a) a penalty of $1,000 or, in the case of such a company as is referred to in subsection (9) or an officer or auditor of such a company, $5,000; or (b) a penalty equal to the amount of the estate duty (if any) at the rate set out in the applicable Schedule remaining unpaid for which he or the company is accountable, according as the Commissioner elects. (Replaced 29 of 1970 s. 4) 14A. Exemption of executors of small estates (1) If the Commissioner is satisfied- (a) that an executor has, to the best of his knowledge and belief, disclosed in such manner as the Commissioner may determine- (i) all of the property belonging to a deceased; and (ii) all of the property held by the deceased as trustee for another person; (b) that the principal value of the property belonging to the deceased does not exceed $400,000; and (c) that no estate duty is payable on the death of the deceased, the Commissioner may, subject to any conditions which he may specify, exempt the executor from section 14 (6).

(2) Where the Commissioner exempts any executor under subsection (1) he shall issue to the executor a certificate of exemption in such form as he may determine.

(3) If, at any time after he has issued to an executor a certificate of exemption under subsection (2), the Commissioner has reasonable grounds for believing- (a) that the principal value of the property belonging to the deceased exceeds $400,000; or (b) that estate duty is payable on the death of the deceased, the Commissioner may withdraw the exemption granted to the executor under subsection (1) and cancel the certificate of exemption, whereupon this Ordinance shall apply as if the exemption had not been granted.

(Added 21 of 1972 s. 5. Amended 29 of 1981 s. 5) 15. Probate not to be issued until estate duty paid (1) No probate or letters of administration shall be issued by the court until the Commissioner shall have certified in writing that the estate duty payable by the executor upon the estate in respect of which probate or letters of administration is sought has been paid or that he has allowed payment thereof to be postponed under subsections (2) and (3).

(Amended 1 of 1959 s. 8) (2) When the affidavit for the Commissioner contains the statement and undertaking specified in section 12 (3), the Commissioner may allow payment of the whole or any part of the estate duty to be postponed until after the issue of probate or letters of administration upon condition that a further and complete affidavit shall be filed and the proper estate duty paid thereon as soon as the full value of the estate has been ascertained and the Commissioner may require the person applying for such probate or letters of administration to enter into a bond with or without sureties in such an amount as he shall think fit to escure the filing of such affidavit as aforesaid and the payment of the proper estate duty thereon within such time as shall be named in such bond. Such bond may be in the prescribed form.

(3) Where the Commissioner is satisfied that the estate duty leviable in respect of any property cannot without excessive sacrifice be raised at once, he may allow payment to be postponed for such period, to such extent and on payment of such interest not exceeding 8 per cent per annum or any higher interest yielded by the property, and on such terms as the Commissioner may think fit.

[cf. 1894 c. 30 s. 8 (9) U. K.] (4) Where the Commissioner allows payment to be postponed under subsection (2), he may reduce or remit any interest payable.

16. Increase of estate duty when delay in lodging affidavit (1) In every case where any account is delivered after the lapse of 12 months from the death, the estate duty shall, without prejudice to the exercise of the Commissioner's discretion under section 27, be charged at twice the rates set out in the applicable Schedule, unless the person accountable for the estate duty satisfies the Commissioner that there is a reasonable excuse for the delay in the delivery of the account: (Replaced 47 of 1962 s. 8) Provided that in any case in which, before the delivery of the account, a grant of probate or of letters of administration or its equivalent had been obtained from a competent court outside Hong Kong, the period shall be 18 months from the death instead of one year: (Amended 31 of 1990 s.

10) Provided also that unless the Commissioner in any particular case with the approval of the Governor in Council otherwise directs- (a) in the case of any death occurring before 8 December 1941, the period from such date to 2 March 1946 shall not be taken into consideration for the purposes of this subsection; and (b) in the case of any death occurring on or after 8 December 1941 and before 2 March 1946, the latter date shall be substituted for the date of the death referred to in the second and eleventh lines of this subsection.

(Added 24 of 1950 Schedule) (2) For the purposes of this section, no account shall be deemed to have been delivered until the duty which reasonably appears to be payable in respect thereof has been paid, unless the Commissioner shall have allowed payment of the estate duty in respect of the said account to be postponed.

(3) For the purposes of this section, interest shall be charged only on the duty which would have been payable if the duty had been charged at the rate set out in the applicable Schedule. (Added 47 of 1962 s. 8) 17. Duty of executor as to unregistered shares (1) Every executor, within one year after obtaining probate or letters of administration to the estate of a deceased person and before selling or otherwise disposing of any shares in any company, registered under or incorporated by any Ordinance of Hong Kong, of which shares the deceased person was at the date of his death the beneficial owner under a transfer in blank and not the registered owner, shall cause such shares to be transferred on the registers of the appropriate companies into the name of the deceased, who shall then be deemed to have been so registered at the time of his death. (Amended 31 of 1990 s. 10) (2) Every such company, notwithstanding anything in any enactment or in its constitution, memorandum, articles or regulations to the contrary, shall effect registration on payment of the usual registration charges (if any) and in default shall be liable on summary conviction to a fine of $1,000.

(3) Every executor who without reasonable excuse omits to obtain the registration of any such shares as aforesaid within the time limit aforesaid shall be liable to pay to the Commissioner in addition to the estate duty (if any) a penalty of $1,000, or, at the option of the Commissioner, a penalty equal to the amount of the estate duty (if any) at the rate set out in the applicable Schedule.

18. Charge of estate duty on property (1) Subject to subsection (2)- (a) a rateable part of the estate duty on an estate, in proportion to the value of any property which does not pass to the executor as such, shall be a first charge on the property in respect of which estate duty is leviable; (b) a rateable part of the estate duty on an estate paid by instalments under section 12 (8), in proportion to the value of any leasehold property held solely by the deceased, shall be a first charge on the property: Provided that the property shall not be chargeable as against a bona fide purchaser thereof for valuable consideration without notice. (Replaced 1 of 1959 s. 15) (2) Notice of any charge on any leasehold property constituted by subsection (1) may be given by the Commissioner registering in the Land Registry against the property affected thereby a Memorial signed by him specifying the subsection under which the charge is constituted, the name, description, and date of death of the deceased in respect of whose estate the claim to estate duty arises, and particulars of the property charged.

(Added 1 of 1959 s. 15. Amended 8 of 1993 s. 2) (3) A notice in writing of any charge under subsection (1) or (2) may be entered in the Land Registry as an instrument affecting land. (Added 1 of 1959 s. 15. Amended 8 of 1993 s. 2) (4) If the rateable part of the estate duty in respect of any property is paid by the executor, it shall where occasion requires be repaid to him by the trustees or owners of the property.

(5) A person authorized or required to pay the estate duty in respect of any property shall, for the purpose of paying the estate duty or raising the amount of the estate duty when already paid, have power, whether the property is or is not vested in him, to raise the amount of such estate duty and any interest and expenses properly paid or incurred by him in respect thereof by the sale or mortgage or a terminable charge on that property or any part thereof.

(6) A person having a limited interest in any property who pays the estate duty in respect of that property shall be entitled to the like charge as if the estate duty in respect of that property had been raised by means of a mortgage to him.

(7) Any money arising from the sale of property comprised in a settlement or held upon trust to lay out upon the trusts of a settlement may be expended in paying any estate duty in respect of property comprised in the settlement and held upon the same trusts. [cf. 1894 c. 30 s. 9 U. K.] 19. Apportionment of estate duty (1) In the case of property which does not pass to the executor as such, an amount equal to the proper rateable part of the estate duty may be recovered by the person, who being authorized or required to pay the estate duty in respect of any property has paid such duty, from the person entitled to any sum charged on such property (whether as capital or as an annuity or otherwise) under a disposition not containing any express provision to the contrary.

(2) Any dispute as to the proportion of estate duty to be borne by any property or person may be determined upon application by way of summons in the High Court, and where the amount claimed does not exceed the sum mentioned in section 33 of the District Court Ordinance (Cap. 336) such application shall be made to the District Court. (Amended 35 of 1950 s. 4; 35 of 1966 s. 6; 68 of 1973 s. 5; 79 of 1981 s. 3) (3) Any party from whom a rateable part of estate duty can be recovered under this section shall be bound by the accounts and valuations as settled between the person entitled to recover the same and the Commissioner.

[cf. 1894 c. 30 s. 14 U. K.] 20. Remission and refunding of estate duty on certain grounds. Proviso regarding war deaths The Governor in Council may remit the payment of any estate duty or may order a refund of the whole or any portion of any estate duty which may have been paid to the Commissioner, for the remission or refund of which any equitable claim is proved to his satisfaction: Provided that in respect of deaths occurring on or between 8 June 1941 and 1 March 1946, the Commissioner in lieu of the Governor in Council may remit the payment of any estate duty or order the refund of the whole or any portion of any estate duty, and for the purpose of the exercise of such discretion the Commissioner shall take into account the provisions of paragraph 1 of Order No. 3, made on 1 March 1946, under Proclamation No.

16 made by the British Military Administration, as amended from time to time, whether that Order shall have been repealed or not. (Added 24 of 1950 Schedule) 21. Remission in case of successive war deaths Where the Commissioner is satisfied- (a) that estate duty has become payable on property passing on a death between 8 December 1941 and 16 September 1945 of a person who- (i) dies from wounds inflicted, accident occurring or disease contracted, within 3 years before death, on active service against the enemy on land or sea or in the air or on service which in the opinion of the Commissioner is of a warlike nature or involves the same risk as active service and such person was at the time when the wounds were inflicted or when the accident occurred or disease was contracted subject to any naval military or air force discipline; or (ii) dies from injuries received within 3 years of death and which were in the opinion of the Commissioner caused by operations of war or received during internment or imprisonment in Hong Kong or in any territory controlled at the time of such internment or imprisonment by a sovereign or state then at war with His Majesty or dies from any cause which in the opinion of the Commissioner was attributable to such internment or imprisonment; and (Amended 31 of 1990 s. 10) (b) that subsequent estate duty has again become payable during the same period on the same property or any part thereof on another such death, being the death of a person to whom that property or that part thereof passed on the earlier death, then the whole of the estate duty payable on the later death on that property or that part thereof shall be remitted or, if paid, shall be repaid. That property or that part thereof shall not be aggregated with any other property passing on a later death for the purpose of determining the rate of estate duty.

(Added 24 of 1950 Schedule) 22. Appeal to High Court (1) Any person who is aggrieved by a decision of the Commissioner under section 14 (12) or by an assessment of the Commissioner under section 14 (15) as to the amount of estate duty payable and whether he is aggrieved on the ground of- (a) property being considered to be property in respect of which estate duty is payable and for which he is considered accountable; (b) the valuation of any property; or (c) the rate of duty charged, may, subject to subsection (1A), on payment of or giving security for as hereinafter mentioned, the duty claimed by the Commissioner or such portion of it as is then payable by him, appeal to the High Court within 3 months from the date of notification of the decision or assessment and his accountability or the amount of duty payable shall be determined by the High Court and if the duty is less than that paid to the Commissioner or if no duty is payable the excess shall be repaid. (Replaced 29 of 1970 s.

5) (1A) The Commissioner may, where satisfied that a person proposes to appeal under subsection (1), allow payment of the duty claimed by him to be postponed for such period, to such extent and on payment of such interest (if any) not exceeding 8 per centum per annum and on such terms as the Commissioner may think fit. (Added 29 of 1970 s. 5) (1B) Where the value of the property as alleged by the Commissioner in respect of which the dispute arises does not exceed $200,000 the appeal under this section shall be to the District Court. (Added 29 of 1970 s. 5.

Amended 79 of 1981 s. 2) (1C) The amount mentioned in subsection (1B) may be amended by resolution of the Legislative Council. (Added 79 of 1981 s. 2) (2) No appeal shall be allowed from any order, direction, determination or decision of the High Court or the District Court under any appeal under this section except with the leave of the High Court or the District Court, as the case may be, or of the Court of Appeal. (Added 29 of 1970 s.

5) (3) The costs of the appeal shall be in the discretion of the court, and the court, where it appears to the court just, may order the Commissioner to pay on any excess of duty repaid by him interest at such rate per cent per annum and for such period as appears to the court just.

(4) Provided that the High Court or the District Court, as the case may be, if satisfied that it would impose hardship to require the appellant as a condition of the appeal to pay the whole or, as the case may be, any part of the duty claimed by the Commissioner or of such portion of it as is then payable by him, may allow an appeal to be brought on payment of no duty or of such part only of the duty as to the court seems reasonable and on security to the satisfaction of the court being given for the duty or so much of the duty as is not paid, but in such case the court may order interest at such rate per cent per annum as appears to the court just to be paid on the unpaid duty so far as it becomes payable under the decision of the court. (Amended 29 of 1970 s. 5) 23. Schedule of property to be annexed to probate (1) A schedule under the hand of the Commissioner of all the property passing on the death of a deceased person upon which estate duty has been paid or is payable on the death, and of all the property of a deceased person which, being trust property, is exempt from duty on the death shall be annexed to the probate or letters of administration, and any person who, without lawful authority or reasonable excuse, in any way deals with any estate of the deceased or any property held by the deceased in trust, which is not set out in such schedule, shall be liable to a penalty of $1,000, or to a penalty equal to 3 times the amount of the estate duty at the rate set out in the applicable Schedule to this Ordinance payable upon the estate so dealt with, at the election of the Commissioner: Provided that the disclosure of any trust relating to property in any such schedule shall not constitute notice of the trust as against any purchaser or mortgagee for valuable consideration.

(2) Whenever a further affidavit is delivered, the probate or letters of administration in respect of which such affidavit is delivered shall be lodged with the Commissioner who shall insert in the schedule particulars of the additional property set out in the said affidavit.

(3) Where the Commissioner has granted exemption to an executor under section 14A (1)- (a) there shall be annexed to the probate or letters of administration the certificate of exemption issued to the executor under section 14A (2); and (b) the penalties referred to in subsection (1) of this section shall apply to any person who, without lawful authority or reasonable excuse, in any way deals with any property- (i) belonging to a deceased; or (ii) held by a deceased in trust for another person, which was not disclosed to the Commissioner under section 14A (1). (Added 21 of 1972 s. 6) 24. Penalties for intermeddling (1) Subject to subsection (3A), every person who, being neither the executor appointed by the will of the deceased nor (in the case of an intestacy) the person entitled in priority to the administration of the estate of the deceased, without lawful authority or excuse or without first delivering to the Commissioner accounts of the estate of the deceased as required by section 14, takes possession of or in any way administers any part of the estate of a deceased person, or any part of the income of any part of such estate, shall be liable to a penalty of $1,000 and shall also be liable to a further penalty equal to 3 times the amount of the estate duty at the rate set out in the applicable Schedule payable upon the whole estate of the deceased. (Amended 21 of 1972 s. 7) (2) Subject to subsection (3A), every person who, being the executor appointed by the will of the deceased or (in the case of an intestacy) the person entitled in priority to the administration of the estate of the deceased, takes possession of or in any way administers any part of the estate of a deceased person or any part of the income of any part of such estate, within 6 months of the death of the deceased, and fails within the said period of 6 months to deliver to the Commissioner accounts of the estate of the deceased as required by section 14, shall be liable to a penalty of $1,000, and shall also be liable to a further penalty equal to 3 times the amount of the estate duty at the rate set out in the applicable Schedule payable upon the whole estate of the deceased.

(Amended 21 of 1972 s. 7) (3) Subject to subsection (3A), every person who, being the executor appointed by the will of the deceased or (in the case of an intestacy) the person entitled in priority to the administration of the estate of the deceased, takes possession of or in any way administers any part of the estate of a deceased person, or any part income of any part of such estate, after the expiration of 6 months from the death of the deceased, without first delivering to the Commissioner accounts of the estate of the deceased as required by section 14, shall be liable to a penalty of $1,000 and shall also be liable to a further penalty equal to 3 times the amount of estate duty at the rate set out in the applicable Schedule payable on the whole estate of the deceased. (Amended 21 of 1972 s. 7) (3A) Subsections (1), (2) and (3) shall not apply in any case where the Commissioner has granted exemption to an executor under section 14A (1).

(Added 21 of 1972 s. 7) (4) The Commissioner shall have power to allow in writing the use of any specified part of the estate of a deceased person, or of any specified part of the income of any such estate, for the purpose of the burial of the deceased or for the purpose of the maintenance of the former dependants of the deceased notwithstanding the non-delivery of the accounts required by section 14, or for the purpose of preparing such accounts, and such authorized use of the estate or income as the case may be shall not render the person in question liable to any of the penalties provided by this section.

(5) The recovery of any penalty provided in this section shall be without prejudice to the liability of the accountable person to the payment of estate duty on the estate of the deceased: Provided however that the amount of the estate duty and the penalty shall not in any case exceed 4 times the rate set out in the applicable Schedule.

(6) For the purposes of this section, no account shall be deemed to have been delivered until the duty which reasonably appears to be payable in respect thereof has been paid, unless the Commissioner shall have allowed payment of the estate duty in respect of the said account to be postponed.

25. Notification of interest of deceased person in bank or business undertaking (1) Where a deceased person had at the date of his death any interest, whether as partner, depositor or creditor, in any bank or business undertaking within Hong Kong, the bank or business undertaking, or, in the case of a bank or business undertaking which is not a body corporate, the person having the management thereof, shall, within one month from the date of first receiving information of either his interest or the death of such deceased person, whichever shall be the later, notify the Commissioner of such death and of the extent of the interest of the deceased in the bank or business undertaking, and in default of such notification as aforesaid a penalty of $1,000 shall be recoverable from the bank or business undertaking, or the owner thereof in the case or an unincorporated body. (Amended 31 of 1990 s. 10) (2) Where any business undertaking is carried on in a firm name the penalty prescribed by this section shall also be deemed to be due from the firm and may be recovered in an action against the firm in the firm name.

(3) In any proceedings for the recovery of the penalty prescribed by this section, the onus of proving that he has not rendered himself liable to the penalty shall be on the person, company or firm from whom it is sought to recover it.

(Replaced 29 of 1970 s. 6) 26. Executor's accounts At any time or times after the date of the probate or letters of administration, it shall be lawful for the Commissioner, by notice in writing sent to an executor at his last-known address, to require him to deliver to the Commissioner a statement in writing (which statement in writing shall be supported by a statutory declaration if the Commissioner shall so require) containing the names and addresses of all persons who were and are beneficially interested in the estate of the deceased, together with the respective dates on which such persons respectively became so interested and the extent of their respective interests, and also all such particulars in regard to such persons or any of them as the Commissioner may from time to time require, and the executor shall, within 2 months from the date of the service of such notice at such address, deliver the said statement to the Commissioner and shall verify the same to his satisfaction within the further period of one month, and in default the executor shall be personally liable on summary conviction to a fine of $1,000 or to imprisonment for 6 months, unless he can prove to the satisfaction of the magistrate that his default was due to circumstances not under his control.

27. Power to reduce penalty and duty The Commissioner may in his discretion remit or reduce any penalty or the interest on any duty and he may reduce any duty chargeable under this Ordinance, provided that such duty is not reduced below the rate set out in the applicable Schedule. (Amended 47 of 1962 s. 10) 28. Power to Governor in Council to make rules and prescribe forms, fees and charges Subject to the provisions of this Ordinance, the Governor in Council may make such rules, prescribe such forms and generally do such things as he thinks expedient for regulating the practice under this Ordinance. The powers conferred by this section shall include a power to prescribe fees and charges in respect of affidavits for the Commissioner.

29. Presumption as to shares standing in the name of the deceased (1) If the registered owner of any share on a share register which is by law required to be kept within Hong Kong dies, such shares shall for the purposes of this Ordinance be deemed to be part of the estate of the deceased, unless the executor of the deceased proves to the satisfaction of the Commissioner that such share did not form part of the estate of the deceased at his death. (Amended 29 of 1970 s. 7; 31 of 1990 s. 10) (2) An appeal to the High Court as under section 22 shall lie from any decision of the Commissioner under subsection (1).

30. Relief in the case of certain settlements (1) If estate duty has already been paid in respect of any settled property since the date of the settlement, upon the death of one of the parties to a marriage, no estate duty shall be payable on the death of the other party to the marriage unless such person was at the time of his or her death or had been at any time during the continuance of the settlement competent to dispose of such property.

(2) For the purposes of this section, the term "settlement" means any deed, will, agreement for a settlement, or other instrument, or any number of instruments, whether made before or after or partly before and partly after the commencement of this Ordinance, under or by virtue of which instrument or instruments any property, or any estate or interest in any property, stands for the time being limited to or in trust for any persons by way of succession, and the term "settled property" means the property comprised in a settlement.

[cf. 1894 c. 30 s. 5 (2) U. K.; 1914 c. 10 s. 14 U. K.] 31. Relief in respect of quick succession where property consists of leasehold property or a business Where the Commissioner is satisfied that estate duty has become payable on any property consisting of leasehold property or a business (not being a business carried on by a company), or any interest in leasehold property or such a business, passing upon the death of any person, and that subsequently within 5 years estate duty has again become payable on the same property or any part thereof passing on the death of the person to whom the property passed on the first death, the amount of estate duty payable on the second death (if the death occurs on or after 27 February 1931), in respect of the property so passing shall be reduced as follows- (a) where the second death occurs within 1 year of the first death, by 50 per cent; (b) where the second death occurs within 2 year of the first death, by 40 per cent; (c) where the second death occurs within 3 year of the first death, by 30 per cent; (d) where the second death occurs within 4 year of the first death, by 20 per cent; (e) where the second death occurs within 5 year of the first death, by 10 per cent; Provided that where the value, on which the duty is payable, of the property on the second death exceeds the value, on which the duty was payable, of the property on the first death, the latter value shall be substituted for the former for the purpose of calculating the amount of duty on which the reduction under this section is to be calculated.

[cf. 1914 c. 10 s. 15 U. K.] 32. Reduction of full amount of duty where the margin above the limit of value is small The amount of estate duty payable on an estate at the rate applicable thereto under the scale of rates of duty shall, where necessary, be reduced so as not to exceed the highest amount of duty which would be payable at the next lower rate, with the addition of the amount by which the value of the estate exceeds the value on which the highest amount of duty would be so payable at the lower rate.

[cf. 1914 c. 10 s. 13 (1) U. K.] 33. Relief in the case of certain interests which do not fall into possession (1) In the case of settled property, where the interest of any person under the settlement fails or determines by reason of his death before it becomes an interest in possession, and subsequent limitations under the settlement continue to subsist, the property shall not be deemed to pass on his death.

(2) For the purposes of this section, the term "settlement" means any deed, will, agreement for a settlement, or other instrument, or any number of instruments, whether made before or after or partly before and partly after 27 February 1931, under or by virtue of which instrument or instruments any property, or any estate or interest in any property, stands for the time being limited to or in trust for any persons by way of succession, and the term "settled property" means the property comprised in a settlement.

[cf. 1894 c. 30 s. 5 (3) U. K.] 34. Controlled companies (1) The companies to which sections 35, 41, 44 and 45 respectively apply are any company which, at any relevant time, is deemed to have been under the control of not more than 5 persons not being a company which, at any such time, is deemed to have been either a subsidiary company or a company in which the public were substantially interested. [cf. 1922 c. 17 s. 21 (6) U. K.; 1936 c. 34 s. 19 U. K.; 1940 c. 29 s. 58 (1) U. K.] (2) A company shall be deemed to be under the control of not more than 5 persons- (a) if any 5 or fewer persons together exercise, or are able to exercise, or are entitled to acquire, control, whether direct or indirect, over the company's affairs, and in particular, but without prejudice to the generality of the foregoing words, if any 5 or fewer persons together possess, or are entitled to acquire, the greater part of the share capital or voting power of the company; or (b) if any 5 or fewer persons together possess, or are entitled to acquire, either the greater part of the issued share capital of the company, or such part of that capital as would, if the whole of the profits of the company had been in fact distributed to the members, entitle them to receive the greater part of the amount so distributed; or [cf. 1936 c. 34 s. 19 (1) (a) & (b) U. K.] (c) if in any relevant accounting year, more than half of the profits of the company have been, or could have been, apportioned among not more than 5 persons; or [cf. 1936 c. 34 s. 19 (1) (c) U. K.] (d) if any 5 or fewer persons would, if the company were wound up, be entitled as members or loan creditors of the company to receive more than half of the assets of the company which would be available for distribution to members and loan creditors. [cf. 1936 c. 34 s. 20 (3) U.

K.] (3) In determining for the purposes of subsection (2) whether a company is deemed to be under the control of not more than 5 persons, persons in any one of the following classes shall be treated as a single person with other persons of that same class, namely- (a) persons who are relatives of one another; (b) nominees of another person together with that person; (c) persons in a partnership within the meaning of section 3 of the Partnership Ordinance (Cap. 38); and (d) persons interested in any shares or obligations of the company which are subject to any trust or are part of the estate of a deceased person.

[cf. 1936 c. 34 s. 19 (2) U. K.] (4) For the purposes of subsection (3), a person shall be deemed to be the nominee of another person if, whether directly or indirectly, he possesses on behalf of that other person, or may be required to exercise on the direction of or on behalf of that other person, any right or power which is material in determining whether a company is, or is not to be deemed to have been under the control of not more than 5 persons.

(5) A company shall be deemed to be- (a) "a subsidiary company" if, by reason of the beneficial ownership of shares therein, the control of the company is in the hands of a company not being a company to which the provisions of this section apply, or of 2 or more companies none of which is a company to which the said provisions apply; and (b) "a company in which the public were substantially interested" if shares of the company (not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) carrying not less than 25 per cent of the voting power were allotted unconditionally to, or acquired unconditionally by, and were at the end of the year or other period for which the accounts of the company were made up beneficially held by, the public (not including a company to which the provisions of this section apply), and any such shares were in the course of such year or other period the subject of dealings on the Unified Exchange and the shares were quoted in any list of that exchange.

(Amended 12 of 1974 s. 150; 31 of 1990 s. 5) [cf. 1922 c. 17 s. 21 (6) U.

K.] (6) For the purpose of this section and in relation to any body corporate incorporated outside Hong Kong- (Amended 31 of 1990 s. 10) (a) references to winding-up shall include references to the dissolution or cancellation of the registry of the body corporate in any manner authorized by any rules, regulations or other instrument constituting or regulating the body corporate or any enactment applying to the body corporate; and (b) references to an order or resolution for winding-up shall include references to the signing of any instrument, the making of any application or the doing of any other act which is authorized as aforesaid with a view to dissolving, or cancelling the registry of, the body corporate; and (c) references to the liquidator shall include references to any person in charge of the winding up of the affairs of the body corporate. [cf. 1936 c. 34 s. 19 (3) U. K.; 1940 c. 29 s. 58 (1) (b) (i) U. K.] (7) In this section- "loan creditor" means a creditor in respect of any debt incurred by the company- (a) for any money borrowed or capital assets acquired by the company; or (b) for any right to receive income created in favour of the company; or (c) for consideration the value of which to the company was, at the time when the debt was incurred, substantially less than the amount of the debt including any premium thereon, or in respect of any redeemable loan capital issued by the company: Provided that a bank licensed to carry on banking business under section 16 of the Banking Ordinance (Cap. 155), shall not be deemed to be a loan creditor in respect of any loan capital or debt issued or incurred by the company for money lent by such bank to the company in the ordinary course of the bank's business; (Amended 27 of 1986 s. 137) "member" includes any person having a share or interest in the capital or profits of a company; [cf. 1922 c. 17 s. 21 (7) U. K.] "relative" has the meaning attributed thereto in section 7; and "relevant time" means any time during the period ending with the death of the deceased and beginning, as respects section 44, 3 years before his death, and, as respects sections 35, 41 and 45 at the date of the disposition transfer or other transaction or event relevant for the purposes of those sections, or if that disposition transfer or other transaction or event was one of associated operations, at the date of the earliest of those operations. [cf. 1940 c. 29 s. 58 (1) (a) U. K.] [cf. 1936 c. 34 s. 20 (7) U. K.] (Added 1 of 1959 s. 10) 35. Charge on assets of controlled companies (1) Where a person has made to a company to which this section applies a transfer of any property, other than an interest limited to cease on his death or property which he transferred in a fiduciary capacity, and any benefits accruing to the deceased from the company accrued to him in the 3 years ending with his death, the assets of the company shall be deemed for the purposes of estate duty to be included in the property passing on his death to an extent determined, in accordance with subsection (2), by reference to the proportion that the aggregate amount of the benefits accruing to the deceased from the company bore to the net profits of the company.

(2) The extent to which the assets of the company are to be deemed to be included as aforesaid shall be the proportion ascertained by comparing the aggregate amount of the benefits accruing to the deceased from the company in the last 3 accounting years with the aggregate amount of the net profits of the company for the said years: Provided that- (a) where, in any of the said accounting years, the company sustained a loss, the amount of that loss shall be deducted in ascertaining the said aggregate net profits of the company; (b) where the company came into existence in the last but one, or in the last, of the said accounting years, the references in this subsection to the said accounting years shall be construed as references to the last 2 or the last, of those years, as the case may be.

(3) The assets of the company which are deemed to be included in the property passing on the death of the deceased by virtue of this section shall include any assets thereof which have been disposed of or distributed by the company at any time between the beginning of the first of the accounting years aforesaid and the death of the deceased, either- (a) in or towards satisfaction of rights attaching to shares in or debentures of the company; or (b) otherwise howsoever except as follows, that is to say, by way of sale for full consideration in money or money's worth received by the company for its own use and benefit, or in or towards discharge of taxes or rates or other liability imposed by or under any enactment, or in or towards discharge of a fine or penalty or of a liability for tort incurred without collusion with the injured party, including assets which have been so disposed of or distributed in a winding-up, whether continuing at or completed before the death: Provided that this subsection shall not apply to assets disposed of or distributed by way of payments of dividends of amounts not exceeding in the aggregate, as respects payments made in any accounting year or in the period between the end of the last accounting year and the death of the deceased, the amount of the profits of the company for that year or period.

(4) The provisions contained in the Twentieth Schedule shall have effect for the purpose of supplementing and interpreting this section, section 34 and sections 36 to 45 inclusive.

(Added 1 of 1959 s. 10. Amended 47 of 1962 s. 11; 24 of 1967 s. 3; 37 of 1970 s. 3; 27 of 1972 s. 4; 24 of 1974 s. 3; 31 of 1976 s. 4; 31 of 1977 s. 4; 33 of 1980 s. 3; 29 of 1981 s. 6; 28 of 1982 s. 5; 29 of 1987 s. 4; 31 of 1990 s. 6; 29 of 1993 s. 3) [cf. 1940 c. 29 s. 46 U. K.; 1946 c. 64 s. 47 U. K.] 36. Benefits from company to deceased The following shall be treated as benefits accruing to the deceased from the company, that is to say- (a) any profits of the company, and any periodical payment out of the resources or at the expense of the company, which the deceased received for his own benefit whether directly or indirectly, and any enjoyment in specie of land or other property of the company or of a right there over which the deceased had for his own benefit whether directly or indirectly; (b) any such profits or payment or enjoyment which the deceased was entitled to receive or have as aforesaid; and (c) any such profits or payment or enjoyment which the deceased could have become entitled to receive or have as aforesaid by an exercise in the 3 years ending with his death of any power exercisable by him or with his consent, and where the deceased could, by an exercise in the said 3 years of any such power as aforesaid, have become entitled to receive as aforesaid any payment out of the resources or at the expense of the company not being a periodical payment, but did not in fact receive or become entitled to receive that payment, there shall be treated as a benefit accruing to the deceased from the company interest on that payment at the average rate from the earliest date on which he could have become entitled to receive it. (Added 1 of 1959 s. 10) [cf. 1940 c. 29 s. 47 (1) U. K.] 37. Surrender of benefits (1) Subject to the provisions of subsection (3), if the deceased has made, whether for value or not, a surrender of his title to receive any such profit or payment or enjoyment as is mentioned in section 36, or of any such power as is therein mentioned, section 36 shall have effect as if the surrender had not been made.

(2) The deceased shall be deemed to have made such a surrender as aforesaid if a right which he had to receive any such profit or payment or enjoyment as aforesaid, or if any such power as aforesaid, has been extinguished or suspended by the effect solely or partly of any disposition made by him or with his consent of shares in or debentures of a company or of any other property or right, or of the exercise or the leaving unexercised by him or with his consent of any power or right, or of the extinguishment or suspension by him or with his consent of any power or right, otherwise than in a fiduciary capacity, or if apart from such a disposition or other act or omission he would have become entitled to receive any such profit or payment or enjoyment as aforesaid but by the effect solely or partly thereof he did not become entitled to receive it.

(3) This section shall not apply to a surrender bona fide made before the beginning of the 3 years ending with the death of the deceased, or, if it was made for such purposes as are recognized by the Commissioner as public or charitable, one year before the beginning of the year ending with his death, if the deceased was at all times during those 3 years, or during that year, as the case may be, entirely excluded from receiving, or being entitled to receive, or having any capacity by an exercise of any power exercisable by him or with his consent to receive, any periodical payment by virtue of the surrender or of any associated operations of which the surrender was one. (Added 1 of 1959 s. 10) [cf. 1940 c. 29 s. 48 U. K.] 38. Determination of net profits of company (1) The profits of the company for any accounting year, or for the period between the end of the last accounting year and the death of the deceased, hereinafter referred to as the assessable profits, shall be determined by ascertaining the profits of the company from all sources, in accordance with the provisions of the Inland Revenue Ordinance (Cap. 112) relating to the ascertainment of assessable profits as if that Ordinance applied to profits not arising in or not derived from Hong Kong, in the same way as it does to profits arising in or derived from Hong Kong, subject to the modification that such assessable profits shall be computed by reference to the actual profits for that year or period, and not by reference to the profits for any other period: (Amended 31 of 1990 s. 10) Provided that- (a) there shall be excluded from the ascertainment of such assessable profits any profits which were not bona fide acquired in the ordinary course of business nor the produce of income yielding assets; and (b) in determining such assessable profits no account shall be taken of sections 19, 19C and 26 of the Inland Revenue Ordinance (Cap. 112).

(Replaced 7 of 1975 s. 43) (2) The net profits of the company for the purpose of this Ordinance for any accounting year shall be determined by adding to the assessable profits for that year computed in accordance with subsection (1) the amount of any interest on debentures in the company deduction for which has already been made under the Inland Revenue Ordinance (Cap. 112) in assessing the assessable profits of the company.

(3) The provisions of subsection (1) shall, for a like purpose and with any necessary adaptations, apply to the determination of any loss sustained by a company, as it applies to the determination of the assessable profits of a company. [cf. 1944 c. 23 s. 37 U. K.] (Added 1 of 1959 s. 10) [cf. 1940 c. 29 s. 49 U. K.] 39. Allowances in the valuation of assets (1) In determining the value of the estate for the purpose of estate duty the provisions of section 13 (1) as to making allowance for debts and incumbrances shall not have effect as respects any debt or incumbrance to which assets of the company passing on the death by virtue of section 35 were liable, but the Commissioner shall make an allowance from the principal value of those assets for all liabilities of the company (computed as regards liabilities which have not matured at the date of death, by reference to the value thereof, at that date, and, as regards contingent liabilities, by reference to such estimation as appears to the Commissioner to be reasonable) other than- (a) liabilities in respect of shares in or debentures of the company; and (b) liabilities incurred otherwise than for the purposes of the business of the company wholly and exclusively.

(2) In estimating for the purpose of subsection (1), the principal value of the assets deemed to pass on the death by virtue of section 35, the Commissioner shall fix the price thereof on the basis of a sale of the business of the company as a going concern, and the proportion of that value upon which estate duty is payable by virtue of section 5 as modified by section 10 (b), shall be ascertained by comparing- (a) the aggregate value at the date of death of the deceased of those items of property which together form the assets of the company other than those situate at that date outside Hong Kong; with (Amended 31 of 1990 s. 10) (b) the aggregate value at that date of those items of property wheresoever situate, which together form the assets of the company.

(3) Where the assets passing on the death by virtue of section 35 include any distributed assets, if partial consideration, other than the extinguishment, or an alteration of rights attaching to shares in or debentures of a company to which that section applies, was given for the distribution in money or money's worth received by the company for its own use and benefit, a further allowance shall be made, in addition to the allowances specified in subsection (1), of an amount equal to the value of the consideration given.

(4) For the purpose of the estimation of the principal value of any distributed assets, section 13 (5) (a) shall have effect with the substitution for the reference therein to the time of the death of the deceased of a reference to the time of the distribution, and effect shall be given to the proviso to paragraph (b) of the said subsection as at the time of the distribution only, due regard being had to the expectation of life of the deceased at that time.

(Added 1 of 1959 s. 10) [cf. 1940 c. 29 s. 50 (1) (4) U. K.] 40. Limitation on charge (1) If it is shown to the satisfaction of the Commissioner that- the value of all such property as is mentioned in section 35 (1) of which the deceased made a transfer to the company, together with an amount equal to any excess of interest at the average rate on the value thereof from the date or respective dates of transfer to the death of the deceased over the aggregate amount of the benefits received by the deceased by virtue of the transfer is less than the value on which estate duty would be chargeable on the death under section 35 if all benefits accruing to him from the company other than benefits received by him by virtue of the transfer were disregarded, then, an amount equal to the deficiency shall be deducted from the proportion of the value of the company's assets that corresponds to the benefits received by him by virtue of the transfer. [cf. 1940 c. 29 s. 51 (1) U. K.] (2) References in subsection (1) to benefits received by the deceased by virtue of a transfer shall be construed as references to benefits accruing to him from the company which he received or had as consideration for the transfer, or in consequence of his having received as consideration therefor shares or debentures or other property which produced any of those benefits. [cf. 1940 c. 29 s. 51 (1) U. K.] (3) Where the following conditions are satisfied, that is to say, that the deceased has, within 3 years before his death, disposed of any shares in or debentures of the company for consideration in money or money's worth paid to him for his own use or benefit, and that any benefits accrued to the deceased from the company by virtue of those shares or debentures or by virtue of a power's having been exercisable by him or with his consent in relation to those shares or debentures, then- (a) if the value of the said consideration or the aggregate value of the shares or debentures ascertained as if they passed on the death, whichever is the greater, is equal to or greater than the proportion of the value of the company's assets that corresponds to the benefits that so accrued to him, or if the Commissioner is satisfied that the said proportion would not, if fully ascertained, be found to be substantially in excess of that value, duty on the said proportion shall not be payable; (b) in any other case, the amount on which duty is to be charged in respect of the said proportion shall be reduced by the amount of the value of the said consideration or of the said aggregate value whichever is the greater: Provided that- (i) if estate duty on the death is payable upon such shares or debentures on their value or any part thereof, or would be so payable but for an exemption from estate duty, that value, aggregated if necessary, shall be taken into account as aforesaid, and in such a case references in this subsection to the value of the consideration shall not apply; and (ii) in assessing the value of such shares or debentures for the purposes of this subsection if they have since the deceased disposed of them, been substantially increased in value by reason of a transfer of property to any company by any person, or by reason of the extinguishment of, or any alteration of the rights attaching to, shares in or debentures of any company, their principal value shall be reduced to such an extent as in the opinion of the Commissioner is necessary to offset the increase attributable to the transfer, extinguishment or alteration.

[cf. 1950 c. 15 s. 47 U. K.; 1952 c. 33 s. 72 U. K.] (4) Where the following conditions are satisfied, that is to say, that any benefits accrued to the deceased from the company by virtue of any interest that he at any time had in shares or in debentures of the company, or by virtue of a power's having at any time been exercisable by him or with his consent in relation to shares in or debentures of the company, and apart from this subsection estate duty would be payable on the death both on the value of those shares or debentures by virtue of any provision of this Ordinance other than section 35 and on the proportion of the value of the company's assets that corresponds to the benefits that so accrued to him by virtue of that section, then- (a) if the value of the shares or debentures is equal to, or greater than, the said proportion, or if the Commissioner is satisfied that the said proportion would not, if fully ascertained, be found to be substantially in excess of the value of the shares or debentures, duty on the said proportion shall not be payable; (b) in any other case, the amount on which duty is to be charged in respect of the said proportion shall be reduced by the amount of the value of the shares or debentures. [cf. 1944 c. 23 s. 38 U. K.] (5) Where the conditions set out in subsection (4) would be satisfied but for the fact that, by reason of an exemption from estate duty, not being an exemption on the ground that the deceased or other person having an interest in the shares or debentures ceasing on the death of the deceased had only an interest as the holder of an office, nor being, in the case of a person dying on or after the commencement of the Estate Duty (Amendment) (No. 2) Ordinance 1979, an exemption conferred by section 10 (b), that duty is not payable on the value of the shares or debentures, paragraphs (a) and (b) of that subsection shall apply as if that exemption did not operate and as if the duty had been payable on the value of the shares and debentures accordingly: (Amended 44 of 1979 s. 2) Provided that where- (a) the exemption in question depends on a payment of any duty on an earlier death, or does not depend on such a payment but depends wholly or partly on any dispositions having been made; and (b) since the date of that death or disposition, as the case may be, the shares or debentures have been substantially increased in value by reason of a transfer of property to any company by any person or by reason of the extinguishment of, or any alteration of the rights attaching to, shares in or debentures of any company, then, unless the exemption takes the form of a deduction from the value of the shares or debentures of a fixed amount which is independent of the value of the shares or debentures, the references in paragraphs (a) and (b) of subsection (4) to the value of the shares or debentures therein mentioned shall have effect as if they were references to the value thereof reduced to the extent to which, in the opinion of the Commissioner, that value is attributable to that transfer, extinguishment or alteration. [cf. 1944 c. 23 s. 38 U. K.] (6) Where, by reason of an exemption from estate duty, that duty is payable on part only of the value of the shares or debentures, subsection (4) shall, with the necessary adaptations, be applied to the part of the value of the shares or debentures on which duty is payable and subsection (5) shall be applied to the part of the value of the shares or debentures affected by the exemption; and, where there are 2 or more exemptions from estate duty each of which operates on part only of the value of the shares or debentures and the exemptions are such that subsection (5) would operate differently in relation to them, then, whether or not there is any part of the value of the shares or debentures on which estate duty is payable, subsection (5) shall, with the necessary adaptations, be applied separately in relation to the parts of the value of the shares or debentures affected by each exemption. [cf. 1944 c. 23 s. 38 U. K.] (7) In this section, the expression "exemption from estate duty" includes any exemption conferred by any provision of this or any other enactment which has the effect of exempting property, in whole or in part, from estate duty, whether that provision takes the form that the property is not to be deemed to pass, or the form that the duty is not to be payable, or the form that a deduction is to be made from the value of the property, or any other form; and the reference in paragraph (b) of the proviso to subsection (5) to an increase in the value of shares or debentures includes, where those shares or debentures have been acquired in substitution for any other property, any increase in the value of any property which those shares or debentures directly or indirectly represent. [cf. 1944 c. 23 s. 38 U. K.] (8) References in this section to the proportion of the value of the company's assets that corresponds to any particular benefits shall be construed as references to so much of the value on which estate duty is chargeable on the death by virtue of section 35 as is chargeable by reason of the bringing of those benefits into the computation made under subsection (2) of that section.

[cf. 1940 c. 29 s. 51 (3) U. K.] (9) So much of any profit or periodical payment or enjoyment of a kind mentioned in section 36 as is shown to the satisfaction of the Commissioner to have represented, or to have been such that it would if received have represented, reasonable remuneration to the deceased for any services rendered by him as the holder of an office under the company shall, notwithstanding anything in that section, not be treated for the purposes of sections 34 to 45 inclusive, as a benefit accruing to the deceased from the company; and any liability of the company in respect of the remuneration of any person as the holder of an office under the company shall be treated for the purposes of the aforesaid sections as incurred for the purposes of the business of the company wholly and exclusively to the extent to which it is shown to the satisfaction of the Commissioner that the amount thereof was reasonable, and that extent only.

[cf. 1940 c. 29 s. 51 (4) U. K.] (Added 1 of 1959 s. 10) 41. Limitation of exceptions (1) If a company to which section 35 applies was concerned in a transaction falling within the scope of that section, or in any one or more of associated operations of which that transaction formed one, the provisions of section 10 (a), and of section 40 (3), shall have no effect as respects that transaction or operation. [cf. 1940 c. 29 s. 56 (1) U.

K.; 1950 c. 15 s. 47 (b) (ii) U. K.] (2) Where a disposition has been made or an interest determined or surrendered to which either the proviso to section 6 (1) (h), or section 37 (3), applies and, that disposition, determination or surrender, or one or more associated operations of which that disposition or determination or surrender formed one, concerned- (a) a company to which section 35 applies; and (b) another person being the owner of the beneficial interest involved, then the conditions as to the entire exclusion of the person referred to in paragraph (b) shall not be treated for the purpose of the aforesaid provisions as having been satisfied if it can be shown that at the time of the said disposition, determination or surrender, or at any time thereafter, the said person had any benefit by virtue of that disposition, determination or surrender. [cf. 1940 c. 29 s. 56 (2) U. K.; 1950 c. 15 s.

43 (1) U. K.] (Added 1 of 1959 s. 10) 42. Duty to give information on death (1) A company to which section 35 applies shall be under obligation to inform the Commissioner, within one month from the date of the death of the deceased, of the death, of the fact that the deceased made a transfer of property to the company, and of the fact that benefits accrued to the deceased from the company, and every person who was an officer of the company at that date, or, if the company has been wound up and dissolved before that date, who was an officer of the company at any time, shall be under the like obligation as respects such of the facts aforesaid as are within his knowledge, unless he knows, or has reasonable cause for believing, that the information in question has already been given to the Commissioner by the company or some other person.

(2) If such company or any such person as aforesaid who is under obligation by virtue of subsection (1) to give any information to the Commissioner makes default in the performance of that obligation, every such defaulter shall be liable to a penalty of $10,000 and shall also be liable to a further penalty equal to 3 times the amount of the estate duty at the rate set out in the applicable Schedule payable upon the whole estate of the deceased. (Added 1 of 1959 s. 10) [cf. 1940 c. 29 s. 53 U. K.] 43. Collection and incidence of duty (1) The following persons shall be accountable for the duty payable on the death of the deceased by virtue of section 35, that is to say- (a) the company; (b) any person, other than a bona fide purchaser for full consideration in money or money's worth received by the company for its own use and benefit, who receives, whether directly from the company or otherwise, or disposes of, any assets which the company had, whether as capital or as income, at the death or at any time thereafter; (c) any person who received any distributed assets of the company on their distribution: Provided that a person shall not- (i) by virtue of paragraph (b), be accountable in respect of any assets for any duty in excess of the value of those assets; or (ii) by virtue of paragraph (c), be accountable in respect of any assets for more than a part of the duty bearing to the whole thereof the same proportion that the value of the distribution of those assets bears to the principal value of the assets of the company passing on the death by virtue of section 35 after making the allowances to be made under section 39.

(2) For the purposes of subsection (1), the expressions "distributed assets" and "assets of the company passing on the death" do not include any distributed assets of the company which the deceased received on their distribution; and a person who, having received any distributed assets of the company, has died before the deceased shall be deemed to have been a person accountable by virtue of paragraph (c) of that subsection.

(3) Where a company incorporated outside Hong Kong is accountable for any duty by virtue of subsection (1) or of this subsection, every person who is a member of that company at the death shall also be accountable for a rateable part of that duty in proportion to the value of his interest in that company. (Amended 31 of 1990 s. 10) (4) A person accountable for any duty by virtue of this section shall, for the purpose of raising and paying the duty, have all the powers conferred on accountable parties by this Ordinance.

(5) On a winding-up of the company section 265 (1) of the Companies Ordinance (Cap. 32) (which determines what debts shall have priority over other debts in a winding-up) shall have effect as if there were included in paragraph (d) of that subsection a reference to any duty payable in respect of assets of the company passing on a death by virtue of section 35 of this Ordinance, and section 79 of the Companies Ordinance (Cap. 32) shall have effect accordingly. (Amended 6 of 1984 s. 259) (6) The duty payable on the death of the deceased by virtue of section 35 shall be a first charge by way of floating security on the assets which the company had at the death or has at any time thereafter, and any part of the duty for which by virtue of subsection (1) (c) any person is accountable in respect of any distributed assets shall be a first charge also on those assets: Provided that nothing in this subsection shall operate to make any property chargeable as against a bona fide purchaser thereof for valuable consideration without notice.

(7) Where any duty has been- (a) paid by a person accountable therefor by virtue only of subsection (1) (c); or (b) raised by virtue of subsection (6) out of any distributed assets charged therewith, that person, or, as the case may be, the person who was entitled to those assets subject to the charge, may, without prejudice to any right of contribution or indemnity which he may have apart from this subsection, recover the amount of duty so paid or raised as aforesaid from any person who is accountable therefor otherwise than by virtue of subsection (1) (c).

(8) No part of the duty paid by the company shall be recoverable by it from any person on the ground only that he is entitled to any interest in, or to any sum charged on, the assets which the company had at the death of the deceased.

(9) The following provisions shall not have effect in relation to the duty payable by virtue of section 35, that is to say- (a) so much of section 12 (2) as relates to payment of estate duty on all property of which the deceased was competent to dispose at his death; (b) so much of section 14 (6) as relates to the accountability of the executor of the deceased in respect of all property of which the deceased was competent to dispose at his death, and subsection (7) of that section, and section 18 (1) shall have effect in relation to the estate as if the property passing by virtue of section 35 had been property passing to the executor as such. (Added 1 of 1959 s. 10) [cf. 1940 c. 29 s. 54 U. K.] 44. Value of shares and debentures of controlled companies (1) Where for the purposes of estate duty there pass shares in or debentures of a company to which by virtue of section 34 this section applies, then if the deceased had the control of the company at any time during the 3 years ending with his death, the principal value of the shares or debentures, in lieu of being estimated in accordance with the provisions of section 13 (5) (a), shall be estimated by reference to the net value of the assets of the company in accordance with the provisions of subsection (2) of this section: Provided that any liability of the company arising, or which may arise, after the death for corporation profits tax shall be taken into account as if it were an actual but contingent liability at the date of the death, in so far as the liability or its amount is referable to profits accruing before the death, whether then realized or not; and in estimating any such liability for taxation charged on profits arising after the death the Commissioner shall take into account the extent, if any, to which the last-mentioned profits are likely to be insufficient to meet the liability.

[cf. 1940 c. 29 s. 55 U. K.; 1954 c. 44 ss. 29 (1) (a) & 30 (3) U. K.] (2) The principal value of the shares and debentures mentioned in subsection (1) shall be estimated as follows- (a) the net value of the assets of the company shall be taken to be the principal value thereof estimated in accordance with the said section 13 (5) (a), less the like allowance for liabilities of the company as is provided by section 39 (1) in relation to the assets of a company passing on a death by virtue of section 35, but subject to the modification that allowance shall be made for such a liability as is mentioned in section 39 (1) (b) unless it also falls within paragraph (a) thereof; (b) the aggregate value of all the shares and debentures of the company issued and outstanding at the death of the deceased shall be taken to be the same as the net value of the assets of the company; (c) in a case in which there are both shares in and debentures of the company issued and outstanding at the death, or different classes of either, the net value of the assets of the company shall be apportioned between them with due regard to the rights attaching thereto respectively; and (d) the value of any share, or of any debenture, or of a share or debenture of any class, shall be a rateable proportion, ascertained by reference to nominal amount, of the net value of the assets of the company as determined under paragraph (a), or, in the case mentioned in paragraph (c), of the part thereof apportioned under that paragraph to the shares of the company, or to its debentures, or to that class thereof, as the case may be. [cf. 1940 c. 29 s. 55 (2) U. K.] (3) For the purposes of this section, a person shall be deemed- (a) to have control of a company at any time if he then had the control of powers of voting on all questions, or on any particular question, affecting the company as a whole, which if exercised would have yielded a majority of the votes capable of being exercised thereon, or if he could have obtained such control by an exercise at that time of a power exercisable by him or with his consent; or (b) to have powers equivalent to control of a company if he either has the capacity, or could by an exercise of a power exercisable by him or with his consent obtain the capacity, to exercise or to control the exercise of any of the following powers, that is to say, the powers of a board of directors or of a governing director of the company, power to nominate a majority of directors or a governing director thereof, power to veto the appointment of a director thereof, or powers of a like nature. [cf. 1940 c. 29 s. 55 (3) U. K.; 1954 c. 44 ss. 29 (1) (b) & 31 (1) (e) U. K.] (4) This section shall not apply to the valuation of shares or debentures of a class which have been dealt with on the Unified Exchange in the ordinary course of business on that exchange and such dealings have been recorded during the year ending with the death of the deceased, and, in making an apportionment under subsection (2) (c) in the case of a company having shares or debentures of such a class, the part of the value of the assets of the company to be apportioned to shares or debentures of that class shall be determined by reference to the prices recorded of such dealings. (Amended 31 of 1990 s. 7) [cf. 1940 c. 29 s. 55 (4) U. K.] (5) Control of a company which a person had in a fiduciary capacity shall be disregarded for the purposes of this section but in the cases dealt with in subsection (7), this section shall apply as if the deceased had, within 3 years of his death, had control of the company otherwise than in a fiduciary capacity, but only as to the valuation of the shares in or debentures of the company as respects which one of the conditions contained in paragraph (a) or (b) or the proviso hereto is satisfied, namely- (a) that immediately after the deceased's death a person having control or powers equivalent to control of the company, either alone or in conjunction with his relatives, has a beneficial interest in possession in the shares or debentures; (b) that immediately before and after the death the shares or debentures are held by the trustees of some trust who then have control of the company by virtue of shares in or debentures of the company held by them as such trustees, notwithstanding the fact that such trustees had control in a fiduciary capacity: Provided that, in the case of shares or debentures falling to be valued on the death by virtue of a gift inter vivos made by the deceased, or by virtue of a disposition or determination, in relation to which subsection (1) (h) and subsection (2) of section 6 have effect, of an interest limited to cease on the death, the above conditions shall not apply, and the conditions shall be that immediately after the death or at any previous time since the gift, or since the disposition or determination, as the case may be, the donee, or the person becoming entitled by virtue of or upon the disposition or determination, has or had control or powers equivalent to control of the company, either alone or in conjunction with his relatives. [cf. 1940 c. 29 s. 55 (5) U. K.; 1954 c. 44 ss. 29 (1) & (5) &31 (2) U. K.] (6) In determining for the purpose of subsection (5), whether a person at any time has or had control of a company either alone or in conjunction with his relatives, or a beneficial interest in possession in any shares in or debentures of a company- (a) where that person or a relative of his is or was at any time entitled under a trust, either alone or in conjunction with that person's relatives, to not less than nine-tenths of the income arising from any such shares or debentures, that person or the relative in question, as the case may be, shall be treated as being or having been able at that time to control the exercise by the trustees of the trust or other persons in whom those shares or debentures are or were vested of any powers attached to those shares or debentures; (b) any shares in or debentures of the company, or interests therein, which form part of a person's estate at his death shall be treated as vesting immediately on his death in the legatees or persons entitled on intestacy, without regard to the powers exercisable for the administration of the estate; (c) there shall, in so far as the Commissioner so directs, be disregarded- (i) any limited interest subsisting at the relevant time in any shares in or debentures of the company; and (ii) any voting rights exercisable by virtue of any preference shares in the company, being voting rights which the Commissioner is satisfied do not materially affect the effective control of the company's affairs. [cf.

1954 c. 44 s. 31 (3) U. K.] (7) The cases referred to in subsection (5) as being dealt with in this subsection are as follows- (a) if during a continuous period of 2 years falling wholly within the 3 years ending with his death, the deceased had powers equivalent to control of the company; or (b) if during any such period as aforesaid the dividends declared by the company and the interest accruing due on debentures of the company as defined in paragraph (c) (ii) are, as to amounts forming in the aggregate more than one-half of the total amount of the dividends and interest, to be treated by virtue of sections 36 and 37 as benefits accruing to the deceased from the company, or would have fallen to be so treated if the deceased had made a transfer of property to the company; or (c) if at any time during the 3 years ending with the death of the deceased, not being a time when some other person had control or powers equivalent to control of the company, the deceased had a beneficial interest in possession in shares in or debentures of the company, or in both, of an aggregate nominal amount representing one-half or more of the aggregate nominal amount of the shares in and debentures of the company then outstanding, but for this purpose- (i) at any time when both the deceased and another person had such an interest in the same share or debenture, the deceased's interest in it shall be treated as extending only to the same fraction of it as that interest would have been deemed for purposes of estate duty to extend to if the share or debenture had passed on his death at that time; and (ii) the expression "debenture" shall not include an obligation of the company in respect of a debt incurred by it for money borrowed by way of temporary loan, if the loan was not one of a series of temporary loans by the same person and either was repaid within 2 years of being made or was made less than 2 years before the deceased's death. [cf. 1954 c. 44 s. 29 (2) - (4) U. K.] (8) Where any shares or debentures which fall to be valued in accordance with this section have also fallen to be so valued on a previous death within 5 years, then for the purposes of section 31 those shares and debentures shall, in relation to those deaths, be treated in the same way as an interest in land or in a business not carried on by a company, if on both deaths their value is wholly or partly attributable to the value of land of the company or any subsidiary of it or to the value of assets used by the company or any subsidiary of it in a business not consisting mainly in the holding of or dealing in investments other than land: Provided that the amount on which the reduction under the said section 31 is to be calculated shall be limited, where necessary, to the duty on the part so attributable of the value, on which duty is payable, of the shares or debentures, and references to that part of the value shall, in the proviso to the said section 31, be substituted for the references to the whole value, whether in relation to the first or the second death. [cf.

1954 c. 44 s. 30 (4) U. K.] (9) In determining for the purposes of subsection (8) what part of the value of any shares in or debentures of a company is attributable to the value of particular assets, - (a) the value of the shares or debentures shall be apportioned in proportion to the net value of the company's assets after allowing for liabilities other than liabilities in respect of shares in or debentures of the company; and (b) the value apportioned under this subsection to the value of any shares in or debentures of another company, being a subsidiary either of the first-mentioned company or of a company of which that company is a subsidiary, shall, where material, be similarly apportioned between the other company's assets. [cf. 1954 c. 44 s. 31 (5) U. K.] (10) Where a company alters its share capital by sub-dividing any shares into shares of smaller amount, or by consolidating and dividing any shares into shares of large amount, subsection (8) shall apply to shares derived by those means from shares of the same class which have fallen to be valued in accordance with this section on a death occurring before the alteration of share capital, as if those shares and the equivalent amount of the shares from which they were so derived were the same shares; and if a company has issued to holders of any shares other shares as fully paid bonus shares, that subsection shall apply both to the shares in respect of which the issue was made and to the shares so issued as if they were derived from the former by sub-division. [cf. 1954 c. 44 s. 30 (5) U. K.] (11) In this section- (a) references to the assets of a company shall be construed as references to the assets that it had at the death of the deceased; (b) references to a subsidiary company shall be construed in accordance with the interpretation attributed to that expression in section 34 (5) (a); and (c) the expression "relative" has the meaning attributed to it in section 7. [cf. 1940 c. 29 s. 55 (6) U. K.; 1954 c. 44 s. 31 (1) (c) & (d) U. K.] (Added 1 of 1959 s. 10) 45. Limitation on dispositions through a controlled company in favour of relatives (1) If a company to which by virtue of section 34, this section applies, was concerned in a transaction in relation to which it is claimed that the provisions of paragraph (a) of or the proviso to section 7 (1) have effect, those provisions shall have effect in relation thereto if and only if, and to the extent only to which, the Commissioner is satisfied that those provisions would have had effect in the following circumstances, namely, if the assets of the company had been held by it on trust for the members thereof and any other person to whom it is under any liability incurred otherwise than for the purposes of the business of the company wholly and exclusively, in accordance with the rights attaching to the shares in and debentures of the company and the terms on which any such liability was incurred, and if the company had acted in the capacity of a trustee only with power to carry on the business of the company and to employ the assets of the company therein. [cf. 1950 c. 15 s. 46 (1) U.

K.] (2) Any gifts made in favour of a relative of the deceased by a company of which the deceased at the time of the gift had control within the meaning of section 44 (3) shall be treated for the purposes of section 6 (1) (c) as a gift made by the deceased, and the property taken under the gift shall be treated as included by virtue of that paragraph in the property passing on the death of the deceased, if and to the extent to which the Commissioner is satisfied that it would fall to be so treated in the circumstances mentioned in subsection (1).

(3) If the deceased has made in favour of a company to which, by virtue of section 34, this section applies, a disposition which, if it had been made in favour of a relative of his, would have fallen within section 7 (1), this section shall have effect in like manner as if the disposition had been made in favour of a relative of his, unless it is shown to the satisfaction of the Commissioner that no relative of the deceased was, at the time of the disposition or subsequently during the life of the deceased, a member of the company and for the purposes of this subsection a person who is, or is deemed by virtue of this provision to be, a member of a company to which this section applies and which is a member of another such company shall be deemed to be a member of that other company.

[cf. 1940 c. 29 s. 44 (4) U. K.] (4) In this section, the expressions "annuity" and "relative" have the meaning attributed to them respectively in section 7.

(Added 1 of 1959 s. 10) FIRST SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying before 27 February 1931) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 500 and does not exceed 1,000 ..... 1 " 1,000 " " " " 10,000 ..... 2 " 10,000 " " " " 100,000 ..... 3 " 100,000 " " " " 250,000 ..... 5 " 250,000 " " " " 500,000 ..... 5.50 " 500,000 " " " " 750,000 ..... 6 " 750,000 " " " " 1,000,000 ..... 6.50 " 1,000,000 " " " " 1,500,000 ..... 7 " 1,500,000 " " " " 2,500,000 ..... 7.50 " 2,500,000 ........................................ 8 (Amended 20 of 1948 s. 4) SECOND SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 27 February 1931 but before 1 July 1936) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 500 and does not exceed 5,000 ..... 1 " 5,000 " " " " 10,000 ..... 2 " 10,000 " " " " 25,000 ..... 3 " 25,000 " " " " 50,000 ..... 4 " 50,000 " " " " 100,000 ..... 5 " 100,000 " " " " 200,000 ..... 6 " 200,000 " " " " 400,000 ..... 7 " 400,000 " " " " 600,000 ..... 8 " 600,000 " " " " 800,000 ..... 9 " 800,000 " " " " 1,000,000 ..... 10 " 1,000,000 " " " " 2,000,000 ..... 11 " 2,000,000 ........................................ 12 (Amended 20 of 1948 s. 4) THIRD SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 July 1936 but before 1 April 1941) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 500 and does not exceed 5,000 ..... 1 " 5,000 " " " " 10,000 ..... 2 " 10,000 " " " " 25,000 ..... 3 " 25,000 " " " " 50,000 ..... 4 " 50,000 " " " " 100,000 ..... 5 " 100,000 " " " " 200,000 ..... 6 " 200,000 " " " " 300,000 ..... 7 " 300,000 " " " " 400,000 ..... 8 " 400,000 " " " " 500,000 ..... 9 " 500,000 " " " " 600,000 ..... 10 " 600,000 " " " " 700,000 ..... 11 " 700,000 " " " " 800,000 ..... 12 " 800,000 " " " " 1,000,000 ..... 13 " 1,000,000 " " " " 2,000,000 ..... 14 " 2,000,000 " " " " 3,500,000 ..... 15 " 3,500,000 " " " " 5,000,000 ..... 16 " 5,000,000 " " " " 10,000,000 ..... 17 " 10,000,000 " " " " 15,000,000 ..... 18 " 15,000,000 " " " " 20,500,000 ..... 19 " 20,000,000 ........................................ 20 (Amended 26 of 1936 s. 4) FOURTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 April 1941 but before 1 April 1948) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 500 and does not exceed 5,000 ..... 1 " 5,000 " " " " 10,000 ..... 2 " 10,000 " " " " 25,000 ..... 3 " 25,000 " " " " 50,000 ..... 4 " 50,000 " " " " 100,000 ..... 5 " 100,000 " " " " 200,000 ..... 6 " 200,000 " " " " 300,000 ..... 7 " 300,000 " " " " 350,000 ..... 8 " 350,000 " " " " 400,000 ..... 9 " 400,000 " " " " 450,000 ..... 10 " 450,000 " " " " 500,000 ..... 11 Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 500,000 and does not exceed 550,000 ..... 12 " 550,000 " " " " 600,000 ..... 13 " 600,000 " " " " 650,000 ..... 14 " 650,000 " " " " 700,000 ..... 15 " 700,000 " " " " 750,000 ..... 16 " 750,000 " " " " 800,000 ..... 17 " 800,000 " " " " 900,000 ..... 18 " 900,000 " " " " 1,000,000 ..... 19 " 1,000,000 " " " " 1,250,000 ..... 20 " 1,250,000 " " " " 1,500,000 ..... 21 " 1,500,000 " " " " 1,750,000 ..... 22 " 1,750,000 " " " " 2,000,000 ..... 23 " 2,000,000 " " " " 2,500,000 ..... 24 " 2,500,000 " " " " 3,000,000 ..... 25 " 3,000,000 " " " " 3,500,000 ..... 26 " 3,500,000 " " " " 4,000,000 ..... 27 " 4,000,000 " " " " 4,500,000 ..... 29 " 4,500,000 " " " " 5,000,000 ..... 31 " 5,000,000 " " " " 7,000,000 ..... 34 " 7,000,000 " " " " 10,000,000 ..... 37 " 10,000,000 " " " " 15,000,000 ..... 40 " 15,000,000 " " " " 20,000,000 ..... 43 " 20,500,000 " " " " 25,000,000 ..... 46 " 25,000,000 " " " " 30,000,000 ..... 49 " 30,000,000 ........................................ 52 (Added 7 of 1941 s. 3) FIFTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 April 1948 and before 1 February 1959) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 5,000 and does not exceed 10,000 ..... 2 " 10,000 " " " " 25,000 ..... 3 " 25,000 " " " " 50,000 ..... 4 " 50,000 " " " " 100,000 ..... 5 " 100,000 " " " " 200,000 ..... 6 " 200,000 " " " " 300,000 ..... 7 " 300,000 " " " " 350,000 ..... 8 " 350,000 " " " " 400,000 ..... 9 " 400,000 " " " " 450,000 ..... 10 " 450,000 " " " " 500,000 ..... 11 " 500,000 " " " " 550,000 ..... 12 " 550,000 " " " " 600,000 ..... 13 " 600,000 " " " " 650,000 ..... 14 Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 650,000 and does not exceed 700,000 ..... 15 " 700,000 " " " " 750,000 ..... 16 " 750,000 " " " " 800,000 ..... 17 " 800,000 " " " " 900,000 ..... 18 " 900,000 " " " " 1,000,000 ..... 19 " 1,000,000 " " " " 1,250,000 ..... 20 " 1,250,000 " " " " 1,500,000 ..... 21 " 1,500,000 " " " " 1,750,000 ..... 22 " 1,750,000 " " " " 2,000,000 ..... 23 " 2,000,000 " " " " 2,500,000 ..... 24 " 2,500,000 " " " " 3,000,000 ..... 25 " 3,000,000 " " " " 3,500,000 ..... 26 " 3,500,000 " " " " 4,000,000 ..... 27 " 4,000,000 " " " " 4,500,000 ..... 29 " 4,500,000 " " " " 5,000,000 ..... 31 " 5,000,000 " " " " 7,000,000 ..... 34 " 7,000,000 " " " " 10,000,000 ..... 37 " 10,000,000 " " " " 15,000,000 ..... 40 " 15,000,000 " " " " 20,000,000 ..... 43 " 20,000,000 " " " " 25,000,000 ..... 46 " 25,000,000 " " " " 30,000,000 ..... 49 " 30,000,000 ........................................ 52 (Added 17 of 1948 s. 3 Amended 1 of 1959 s. 11) SIXTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 February 1959 and before 1 February 1959) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 50,000 and does not exceed 100,000 ..... 2 " 100,000 " " " " 200,000 ..... 3 " 200,000 " " " " 300,000 ..... 5 " 300,000 " " " " 350,000 ..... 7 " 350,000 " " " " 400,000 ..... 8 " 400,000 " " " " 450,000 ..... 9 " 450,000 " " " " 500,000 ..... 10 " 500,000 " " " " 550,000 ..... 11 " 550,000 " " " " 600,000 ..... 12 " 600,000 " " " " 700,000 ..... 14 " 700,000 " " " " 800,000 ..... 15 " 800,000 " " " " 900,000 ..... 16 " 900,000 " " " " 1,000,000 ..... 17 " 1,000,000 " " " " 1,500,000 ..... 18 Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 1,500,000 and does not exceed 2,000,000 ..... 19 " 2,000,000 " " " " 3,000,000 ..... 20 " 3,000,000 " " " " 4,000,000 ..... 23 " 4,000,000 " " " " 5,000,000 ..... 27 " 5,000,000 " " " " 7,000,000 ..... 30 " 7,000,000 " " " " 10,000,000 ..... 33 " 10,000,000 " " " " 15,000,000 ..... 35 " 15,000,000 ........................................ 40 (Added 1 of 1959 s. 12. Amended 47 of 1962 s. 12) SEVENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 January 1963 and before 1 April 1967) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 100,000 and does not exceed 200,000 ..... 3 " 200,000 " " " " 300,000 ..... 5 " 300,000 " " " " 350,000 ..... 7 " 350,000 " " " " 400,000 ..... 8 " 400,000 " " " " 450,000 ..... 9 " 450,000 " " " " 500,000 ..... 10 " 500,000 " " " " 550,000 ..... 11 " 550,000 " " " " 600,000 ..... 12 " 600,000 " " " " 700,000 ..... 14 " 700,000 " " " " 800,000 ..... 15 " 800,000 " " " " 900,000 ..... 16 " 900,000 " " " " 1,000,000 ..... 17 " 1,000,000 " " " " 1,500,000 ..... 18 " 1,500,000 " " " " 2,000,000 ..... 19 " 2,000,000 " " " " 3,000,000 ..... 20 " 3,000,000 " " " " 4,000,000 ..... 23 " 4,000,000 " " " " 5,000,000 ..... 27 " 5,000,000 " " " " 7,000,000 ..... 30 " 7,000,000 " " " " 10,000,000 ..... 33 " 10,500,000 " " " " 15,000,000 ..... 35 " 15,000,000 ........................................ 40 (Added 47 of 1962 s. 13. Amended 24 of 1967 s. 4) EIGHTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 April 1967 and before 1 April 1970) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 100,000 and does not exceed 200,000 ..... 3 " 200,000 " " " " 300,000 ..... 5 " 300,000 " " " " 350,000 ..... 7 " 350,000 " " " " 400,000 ..... 8 " 400,000 " " " " 450,000 ..... 9 " 450,000 " " " " 500,000 ..... 10 " 500,000 " " " " 550,000 ..... 11 " 550,000 " " " " 600,000 ..... 12 " 600,000 " " " " 700,000 ..... 14 " 700,000 " " " " 800,000 ..... 15 " 800,000 " " " " 900,000 ..... 16 " 900,000 " " " " 1,000,000 ..... 17 " 1,000,000 " " " " 1,500,000 ..... 18 " 1,500,000 " " " " 2,000,000 ..... 19 " 2,000,000 " " " " 3,000,000 ..... 20 " 3,000,000 " " " " 4,000,000 ..... 23 " 4,000,000 ........................................ 25 (Added 24 of 1967 s. 5. Amended 37 of 1970 s. 4) NINTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 April 1970 and before 1 April 1972) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 200,000 and does not exceed 300,000 ..... 5 " 300,000 " " " " 350,000 ..... 7 " 350,000 " " " " 400,000 ..... 8 " 400,000 " " " " 450,000 ..... 9 " 450,000 " " " " 500,000 ..... 10 " 500,000 " " " " 550,000 ..... 11 " 550,000 " " " " 600,000 ..... 12 " 600,000 " " " " 700,000 ..... 14 " 700,000 " " " " 800,000 ..... 15 " 800,000 " " " " 900,000 ..... 16 " 900,000 " " " " 1,000,000 ..... 17 " 1,000,000 " " " " 1,500,000 ..... 18 " 1,500,000 " " " " 2,000,000 ..... 19 " 2,000,000 ....................................... 20 (Added 37 of 1970 s. 5. Amended 27 of 1972 s. 5) TENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 April 1972 and before 1 April 1974) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 200,000 and does not exceed 300,000 ..... 5 " 300,000 " " " " 400,000 ..... 6 " 400,000 " " " " 500,000 ..... 7 " 500,000 " " " " 550,000 ..... 8 " 550,000 " " " " 600,000 ..... 9 " 600,000 " " " " 650,000 ..... 10 " 650,000 " " " " 700,000 ..... 11 " 700,000 " " " " 800,000 ..... 12 " 800,000 " " " " 900,000 ..... 13 " 900,000 " " " " 1,000,000 ..... 14 " 1,000,000 ....................................... 15 (Added 27 of 1972 s. 6. Amended 24 of 1974 s. 4) ELEVENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after 1 April 1974 and before the commencement of the Estate Duty (Amendment) Ordinance 1976) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 300,000 and does not exceed 400,000 ..... 6 " 400,000 " " " " 500,000 ..... 7 " 500,000 " " " " 550,000 ..... 8 " 550,000 " " " " 600,000 ..... 9 " 600,000 " " " " 650,000 ..... 10 " 650,000 " " " " 700,000 ..... 11 " 700,000 " " " " 800,000 ..... 12 " 800,000 " " " " 900,000 ..... 13 " 900,000 " " " " 1,000,000 ..... 14 " 1,000,000 ....................................... 15 (Added 24 of 1974 s. 5. Amended 31 of 1976 s. 5) TWELFTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1976 and before the commencement of the Estate Duty (Amendment) Ordinance 1977) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 300,000 and does not exceed 400,000 ..... 6 " 400,000 " " " " 500,000 ..... 7 " 500,000 " " " " 550,000 ..... 8 " 550,000 " " " " 600,000 ..... 9 " 600,000 " " " " 650,000 ..... 10 " 650,000 " " " " 700,000 ..... 11 " 700,000 " " " " 800,000 ..... 12 " 800,000 " " " " 900,000 ..... 13 " 900,000 " " " " 1,000,000 ..... 14 " 1,000,000 " " " " 1,500,000 ..... 15 " 1,500,000 " " " " 2,000,000 ..... 16 " 2,000,000 " " " " 3,000,000 ..... 17 " 3,000,000 ....................................... 18 (Added 31 of 1976 s. 6. Amended 31 of 1977 s. 5) THIRTEENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1977 and before the commencement of the Estate Duty (Amendment) Ordinance 1980) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 400,000 and does not exceed 500,000 ..... 7 " 500,000 " " " " 550,000 ..... 8 " 550,000 " " " " 600,000 ..... 9 " 600,000 " " " " 650,000 ..... 10 " 650,000 " " " " 700,000 ..... 11 " 700,000 " " " " 800,000 ..... 12 " 800,000 " " " " 900,000 ..... 13 " 900,000 " " " " 1,000,000 ..... 14 " 1,000,000 " " " " 1,500,000 ..... 15 " 1,500,000 " " " " 2,000,000 ..... 16 " 2,000,000 " " " " 3,000,000 ..... 17 " 3,000,000 ....................................... 18 (Added 31 of 1977 s. 6. Amended 33 of 1980 s. 4) FOURTEENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1980 and before the commencement of the Estate Duty (Amendment) Ordinance 1981) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 600,000 and does not exceed 650,000 ..... 10 " 650,000 " " " " 700,000 ..... 11 " 700,000 " " " " 800,000 ..... 12 " 800,000 " " " " 900,000 ..... 13 " 900,000 " " " " 1,000,000 ..... 14 " 1,000,000 " " " " 1,500,000 ..... 15 " 1,500,000 " " " " 2,000,000 ..... 16 " 2,000,000 " " " " 3,000,000 ..... 17 " 3,000,000 ....................................... 18 (Added 33 of 1980 s. 5. Amended 29 of 1981 s. 7) FIFTEENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1981 and before the commencement of the Estate Duty (Amendment) Ordinance 1982) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 1,000,000 and does not exceed 1,500,000 ..... 15 " 1,500,000 " " " " 2,000,000 ..... 16 " 2,000,000 " " " " 3,000,000 ..... 17 " 3,000,000 ....................................... 18 (Added 29 of 1981 s. 8. Amended 28 of 1982 s. 6) SIXTEENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1982 and before the commencement of the Estate Duty (Amendment) Ordinance 1987) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 2,000,000 and does not exceed 2,500,000 ..... 10 " 2,500,000 " " " " 3,000,000 ..... 12 " 3,000,000 " " " " 3,500,000 ..... 14 " 3,500,000 " " " " 4,000,000 ..... 16 " 4,000,000 ....................................... 18 (Added 28 of 1982 s. 7. Amended 29 of 1987 s. 5) SEVENTEENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1987 and before the commencement of the Estate Duty (Amendment) Ordinance 1990) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 2,000,000 and does not exceed 2,500,000 ..... 6 " 2,500,000 " " " " 3,000,000 ..... 8 " 3,000,000 " " " " 3,500,000 ..... 10 " 3,500,000 " " " " 4,000,000 ..... 12 " 4,000,000 " " " " 4,500,000 ..... 14 " 4,500,000 " " " " 5,000,000 ..... 16 " 5,000,000 ....................................... 18 (Added 29 of 1987 s. 6. Amended 31 of 1990 s. 8) EIGHTEENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1990 and before the commencement of the Estate Duty (Amendment) Ordinance 1993) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 4,000,000 and does not exceed 4,500,000 ..... 6 " 4,500,000 " " " " 5,000,000 ..... 12 " 5,000,000 ....................................... 18 (Added 31 of 1990 s. 9. Amended 29 of 1993 s. 4) NINETEENTH SCHEDULE [ss. 3, 5, 14, 16, 17, 23, 24 & 27] (Persons dying on or after the commencement of the Estate Duty (Amendment) Ordinance 1993) Estate duty shall Where the principal value of the estate be payable at the rate per cent of $ $ Exceeds 5,000,000 and does not exceed 6,000,000 ..... 6 " 6,000,000 " " " " 7,000,000 ..... 12 " 7,000,000 ....................................... 18 (Added 29 of 1993 s. 5) TWENTIETH SCHEDULE [s. 35] PROVISIONS SUPPLEMENTARY TO SECTIONS 34 TO 45 INCLUSIVE Amounts to be taken into account in respect of benefits, and time when benefits are to be treated as accruing 1. (1) The provisions of this paragraph shall have effect for the purpose of determining the amounts to be taken into account, for the purposes of section 35 (2), as the amounts of benefits accruing to the deceased from the company.

(2) No amount shall be taken into account more than once.

(3) Where an amount is taken into account by reference to the deceased's having been entitled to a benefit which he did not in fact receive, or by reference to a power which was not in fact exercised or was surrendered, due regard shall be had to the effect that his receiving the benefit, or the power's being exercised, would have had in relation to other benefits.

(4) The amounts that are to be taken into account by reference to the deceased's having been entitled to a benefit which he did not in fact receive, or by reference to a power which was not in fact exercised or was surrendered, shall be such as would have fallen to be taken into account as benefits received by the deceased if he had acted in relation to the claiming to benefits and the exercising of powers during the 3 years ending with his death to his greatest financial advantage, due regard being had to any consideration which he would have had to give in respect of a claim to any benefit or the exercise of any power.

(5) In making for the purposes of sub-paragraph (4) a computation of any diminution of income which the deceased would have sustained by giving any such consideration as it therein mentioned, or of any increase of income which the company would have obtained from any such consideration to be given to the company, it shall be assumed that the consideration would have yielded income equal to interest at the average rate on the amount or value thereof.

(6) The amounts to be taken into account shall include any tax charged under the Inland Revenue Ordinance (Cap. 112), in respect of the benefits in question.

(7) The amount to be taken into account in respect of a benefit consisting of any enjoyment in specie of land or buildings or land and buildings or other property of the company or of a right thereover shall be the value of the enjoyment thereof for the period during which the benefit subsisted. and that value shall be calculated in the case of leasehold property situate in Hong Kong by reference to the annual assessment as ascertained for the purposes of section 5 of the Inland Revenue Ordinance (Cap. 112), and in the case of other land or buildings or land and buildings by such method as the Commissioner may consider just and reasonable. (Amended 31 of 1990 s. 10) 2. (1) The provisions of this paragraph shall have effect for the purpose of determining- (a) whether a benefit accruing to the deceased from the company is to be treated as having accrued to him during the 3 years ending with his death, or during a particular accounting year, or at any other relevant time; and (b) the period during which a benefit consisting of any enjoyment in specie of land or buildings or land and buildings or other property of the company or of a right thereover is to be treated as having subsisted.

(2) A benefit consisting of profits of the company or a periodical payment which the deceased received, or became entitled to, but did not in fact, receive, shall be treated as having accrued to him at the earliest time at which he could have obtained receipt thereof.

(3) A benefit consisting of profits of the company or a periodical payment which the deceased could have become entitled to receive by an exercise in the 3 years ending with his death of a power which was not in fact exercised or was surrendered shall be treated as having accrued to him at the earliest time at which he could have obtained receipt thereof if he had acted as mentioned in paragraph 1 (4).

(4) A benefit consisting of interest on such a payment other than a periodical payment as is mentioned in section 36 which the deceased could have become entitled to receive shall be treated as having accrued to him in any accounting year to the extent to which the period during which the interest is to be treated as accruing fell within that year.

(5) A benefit consisting of any such enjoyment is 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 is 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 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 would 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 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 subparagraph (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 (b) 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 (Cap. 112), 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.

(3) If a transfer of any of the added assets or of any interest in any of them was made to the company by the deceased, 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 addition of those assets had been income of the company which the deceased was entitled 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 consideration for the addition of the assets in question an interest in any shares in or debentures of the company in respect of which estate duty would be payable on his death apart from anything in section 40 (3), 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 section 40 (3) as a benefit accruing to him by virtue of his interest in those shares or debentures.

(5) In this paragraph, the expression "value of the addition" means, in relation to any added assets, the value thereof or, if partial consideration, other than an issue of, or an alteration of rights attaching to, shares in or debentures 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 section 40 (3), 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 had been made by virtue of rights attached to those shares or debentures, then- (a) if 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 (b) if the first-mentioned benefits are brought into the computation made section 35 (2) 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 Year 6. (1) The expression "accounting year" means in relation to a company, if the company has, before the death of the deceased, made up accounts for a period of 12 months ending in the last year of his life, that period and each previous period of 12 months ending on the date corresponding to that to which the accounts were made up, or, if not, a period of 12 months ending on such date in the last year of his life as the Commissioner may determine and each previous period of 12 months ending on the date corresponding to the date determined.

(2) The expression "relevant 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 35.

(3) Where an accounting year does not coincide with a period for which accounts of the company were made up, the Commissioner may, for the purpose 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 amounts 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 35 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 such death, give such an assurance. (Added 1 of 1959 s. 12. Amended 47 of 1962 s. 14; 24 of 1967 s. 6; 37 of 1970 s. 5; 27 of 1972 s. 6; 24 of 1974 s. 5; 31 of 1976 s. 6; 31 of 1977 s. 6; 33 of 1980 s. 5; 29 of 1981 s. 8; 28 of 1982 s. 7; 29 of 1987 s. 6; 31 of 1990 s. 9; 29 of 1993 s. 5) [cf. 1940 c. 29 7 th Sch. U.

K.]