Proceeds of Life Assurance Policies and the Estate Duty Assessment Act 1914–1974 (Cth)
| DOI | 10.1177/0067205X7500600202 |
| Author | K. E. Lindgren |
| Date | 01 June 1975 |
| Published date | 01 June 1975 |
| Subject Matter | Article |
PROCEEDS OF LIFE ASSURANCE POLICIES AND
THE ESTATE DUTY ASSESSMENT
ACT
1914-1974
(Cth)
BY
K. E.
LINDGREN*
Section 8(4)(f)
of
the Estate Duty Assessment
Act
1914-1974
(Cth) subjects to the charge for federal estate duty certain
categories
of
proceeds
of
life assurance policies.
It
has proved to
be the most litigated provision in the Act. In this article Professor
Lindgren examines the anomalies and uncertainty which characterize
the section. He suggests that the comparable provisions in the death
duty legislation
of
the States are to be preferred and concludes that
the federal provision should be amended along certain lines.
Introduction
Section
8(4)(f)
of the Estate Duty Assessment Act 1914-1974 (Cth)
has proved to be the most litigated provision of that Act.
So
long as
the Commonwealth retains legislation providing for the imposition and
assessment of estate duty, it would do well to amend the provision and
it might use the comparable provision of virtually any one of the
Australian States
as
a model. Section
8(
4)
(f)
provides that:
Property-
...
(f)
being money payable to, or to any person in trust for, the
widow, widower, children, grandchildren, parents, brothers,
sisters, nephews or nieces of the deceased under a policy of
assurance on the life of the deceased where the whole of the
premiums has been paid by or on behalf of the deceased, or,
where part only of the premiums has been paid by or on
behalf of the deceased, such portion of any money so payable
as
bears to the whole of that money the same proportion
as
the part of the premiums paid by or on behalf of the deceased
bears to the total premiums paid,
shall for the purposes of this Act be deemed to be part of the
estate of the person so deceased.
The provision has now been passed upon in the following cases:
Williams v. Federal Commissioner
of
Taxation;1 Thurn
v.
Commissioner
of
Taxation;2 Hill v. Commissioner
of
Taxation;3 17 C.T.B.R.
(N.S.)
Case
4;
and Hamra
v.
Federal Commissioner
of
Taxation.4 The purpose
of the present article
is
to examine the judicial interpretation of section
8 (
4)
(f)
and in the course of doing
so
to note some points of comparison
*B.A.
(N.S.W.), LL.B. (Hons.)
(Lond.);
M.A. (Newcastle); Ph.D. (New-
castle); Professor of Legal Studies, University
of
Newcastle (N.S.W.).
1 (1950)
81
C.L.R. 359.
2 (1965) 112 C.L.R. 432.
a (1969) 119 C.L.R. 72.
4 (1973) 1 A.L.R. 539.
249
250 Federal
Law
Review (VOLUME 6
and contrast with comparable provisions in the death duty legislation of
the various Australian States.5
1.
The
place
of
section 8(4)(f) in the federal estate duty scheme.
The Estate Duty Assessment Act 1914-1974
(Cth),
like similar
legislation in the States, provides for the levying of duty upon the value
of the estates of persons irrespective of where they
die
domiciled and
then proceeds to distinguish between persons who die domiciled in the
taxing jurisdiction and those who die domiciled elsewhere. The federal
Act does this
by
providing that for the purposes of the Act, the estate
of a deceased person comprises his real and personal property in
Australia and in addition, where he dies domiciled in Australia, his
personal property situated elsewhere: section 8 (
3).
Section 8 (
4)
pro-
vides that various classes of property shall, for the purposes of the Act,
be deemed to be part of the estate of a deceased person and such classes
of property are commonly referred to
as
"notional" estate by way of
contrast with a deceased's "actual" estate which
is
covered by section
8(3).
Proceeds of a life assurance policy may be part of the deceased's
actual estate in which event there will be no scope for the operation of
any of the notional estate provisions.6 Such proceeds
will
be part of a
deceased's actual estate
if,
for example,
as
is
commonly the case, the
proceeds are, by the terms of the policy, made payable to "the life
assured, his executors or administrators".
In
the event that the proceeds
of a policy are not part of the deceased's actual estate they may be
caught
as
belonging to one or more of the six categories of notional
estate defined in section 8 (
4).
For example they may be
"property-
(
d)
being the beneficial interest held by the deceased person, immedi-
ately prior to his death, in a joint tenancy or joint ownership with other
persons"; or
"(e)
being a beneficial interest in property which the
deceased person had at the time of
his
decease, which beneficial interest
by virtue of a settlement or agreement made by him, passed or accrued
on or after
his
decease to, or devolved on or after
his
decease upon,
any other person".7 In the present article only paragraph
(f)
and the
counterpart provisions in State Acts dealing expressly with life policies
will be referred to.8
5
The
State Acts and their life assurance provisions are
as
follows: N.S.W.:
Stamp Duties Act 1920-1974,
s.102(2)(h);
Vic.: Probate Duty Act 1962,
s.8(1)(d),
(e);
(3)(a),
(b);
Qld.: Succession and Probate Duties Act 1892-1973,
s.10C; W.A.: Death Duty Assessment Act 1973-1974,
s.10(2)(e),
(1),
(m);
Tas.:
Deceased Persons' Estate Duties Act 1931, s.5
(2)(j);
S.A.: Succession Duties Act
1929-1970,
s.8(1)(j),
(k).
6 Perpetual Executors and Trustees Association
of
Australia Ltd.
v.
Federal
Commissioner
of
Taxation (1954)
88
C.L.R. 434 (Thomas's case
(No.1)).
1
For
a treatment
of
how the various categories of notional estate in the N.S.W.
Stamp Duties
Act
1920-1974 other than that dealing expressly with the proceeds
of
life assurance policies (s.102(2)
(h)
of that Act) may catch the proceeds
of
life assurance policies, see Hill, Stamp, Death, Estate and
Gift
Duties (1970)
278-280.
8
For
references to the State Acts and provisions see n.5 supra.
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