I move:—
That where in the case of persons dying on or after the 1st day of April, 1924, property situate out of Saorstát Eireann is bequeathed to or settled on different persons in succession and legacy duty or succession duty has, whether before or after the commencement of this Act, been paid thereon, such duty shall, for the purposes of sub-section (2) of Section 2 of the Finance Act, 1894 (which provides that property situate out of Saorstát Eireann shall be deemed to be included in property, passing on the death of the deceased only if legacy or succession duty is payable in respect thereof, or would be so payable but for the relationship of the person to whom it passes), be deemed to be payable in respect of the property on the death of each of those persons in succession notwithstanding that the whole amount of the legacy was paid on one death only, as in the case of a legacy to one person.
This Resolution is necessitated by the fact that the decision of the British Courts in the case of the Attorney-General v. Burns, in 1923, upset, so far as Great Britain is concerned, the practice that had prevailed from 1914 onwards, and presumably if a case came before the Irish Courts, the result might be the same. The British Government rectified the position by legislation in Section 37 of their Finance Act of last year. The Resolution I now propose is in the same terms. The position of estate duty is that payment, so far as movable property outside the Saorstát is concerned, depends on the fact as to whether or not the legacy duty would have been payable on that property. The custom and the law is that where property is settled or bequeathed to certain persons in succession, if the same rate of legacy duty would be payable on the property passing from one to the other, that the entire legacy duty should be charged in the first instance.
If a man left, say, £10,000 worth of Guinness's shares to his brother for life, and afterwards to his brother's children, the amount of legacy duty payable on that would be charged on the actual sum; consequently, on the brother's death no legacy duty would be payable, the amount having been paid, as it were, in advance. The practice was to regard the legacy duty as being payable on the brother's death, but as having been paid merely in advance, so that estate duty was charged when the brother died, and the property passed to his children.
To follow the illustration, suppose a man left property to his brother in the first instance, and then to some stranger, the rate of legacy duty that would be payable in the second case would be different, and consequently in the first instance the value of the brother's life interest in the property would be calculated, and legacy duty would be charged only on that. When he died, and it passed to the absolute possessor, who was a stranger, the legacy duty would be calculated at the proper scale and would be paid, and consequently estate duty would be chargeable. The present position is, assuming that the ruling of the British courts would be upheld here, that in the case of a man who left to his brother, and then to his brother's children, the entire legacy duty would be charged on the death of the first testator. The estate duty would be duly paid. The legacy duty would be charged not on the value of the brother's life interest, but on the capital value of the property passing, because the entire legacy duty would be, as it were, paid in advance.
In that case, as the British court has held, legacy duty would not be payable on the brother's death, and estate duty would not be payable at all. In the case where the property would pass first to the brother, and then to a stranger, the British court did not upset the practice, because this legacy duty would be charged in the first instance on the brother's life interest, and on his death, on its passing to the stranger, the legacy duty would again be charged on the capital sum, and estate duty paid. So far as property situated inside the Saorstát is concerned, in both cases estate duty would be payable, but this decision which arises out of the peculiar way in which the British Act of 1894 was drafted, creates an anomaly, and causes the general rule that estate duty is payable when the property passes at death to be evaded or broken. The resolution proposed will simply restore the practice that, as I say, has existed from 1914 onwards, and will put movable property outside the Saorstát in the same position in regard to liability for estate duty as property situated within the Saorstát.
