Dáil Éireann debate -
Thursday, 10 Mar 1966

Vol. 221 No. 9

Committee on Finance. - Financial Resolution No. 11.—Death Duties.

Minister for Finance (Mr. J. Lynch)

I move:

That section 2 of the Finance Act, 1894, shall be amended so as to apply to certain gratuitous benefits under superannuation schemes or arrangements.

It may be necessary for me to explain this Resolution. Deputies will remember that during the debate on the Finance Bill last year there was comment about death benefits arising in certain circumstances not being liable to estate duty, on the basis that if the death benefit is not enforceable on the part of the recipient, as in the case of some death benefits, for example, in the Civil Service, therefore it is not liable to be charged for estate duty purposes. There was some adverse comment on this and this Resolution is to cure that situation. It will bring in a rather wider field than civil servants, that is, the field in which there are death benefits as a result of any superannuation scheme or arrangement even though the beneficiary would not have the right of enforcement.

Mr. Cosgrave

Do we take it that the effect of this Resolution is to bring in for death duty purposes gratuities under superannuation schemes? They will now be liable for death duty?

Mr. J. Lynch

That is right.

Mr. Cosgrave

Can the Minister say what is the estimated revenue from this?

Mr. J. Lynch

I do not know what the estimated revenue is. It will be trifling—negative, in fact.

Mr. Cosgrave

Surely this is a bad idea, since the whole aim has been to encourage superannuation schemes? This is a follow up of what was done last year when for the first time superannuation schemes were brought in under death duties.

Mr. J. Lynch

That is a misconception. Superannuation schemes were always liable to estate duties. Contributory schemes were absolutely liable to estate duty. There was a doubt as to whether non-contributory schemes were liable, but if they were not, they were liable to succession duty which, in most cases, was more onerous than estate duty, with the result that those liable to death duty as a result of a superannuation scheme opted to pay estate duty rather than the succession duty which was more onerous. Last year I brought in a provision relieving any benefit arising out of a superannuation scheme of up to £5,000 from assessment. That was done last year and at that stage it was commented upon that certain superannuation schemes were not enforceable. I assumed that I was meeting the wishes of the House generally by bringing in this excluded benefit in this Bill.

Mr. Cosgrave

Is this tied up with the aggregation of the insurance policies for free estate that was included last year?

Mr. J. Lynch

It is, yes.

Mr. Norton

Do I take it that this is including people, mainly civil servants, who were not included last year?

Mr. J. Lynch

That is one purpose, in order to remove the suggestion that civil servants were in any way responsible for excluding themselves.

Mr. Norton

As one who criticised this last year, I am glad the Minister has now rectified the position and that everyone is on the same basis, and that it is not fish for one and flesh for another.

Mr. Ryan

What we are doing is extending the penal levies which were imposed last year.

Mr. J. Lynch

That is not the purpose for which it is intended, even though it might do that incidentally. I should like to repeat that death benefits were always liable to estate duty. Benefits arising out of contributory schemes were always liable to estate duty, and benefits arising from non-contributory schemes were regarded as being liable to estate duty, but if not, as liable to succession duty which was more onerous. Last year I provided that the benefits arising from non-contributory schemes were, in fact, liable to estate duty to remove the doubt that existed before. I excluded benefits up to £5,000 in value from being aggregated, and at that stage it was seen that there were certain benefits outside the scope of the net. This is a new charge on ex gratia payments.

Mr. Ryan

In other words, last year we let some people sink and some people float, and this year we are sinking them all.

Mr. J. Lynch

No. That is like stop beating the wife.

Mr. Norton

Have you stopped?

Question put and agreed to.