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16 Tax Memo 1 (1958)

handle is hein.journals/taxmmo16 and id is 1 raw text is: TAX MEMO No. 16 March, 1958 THE NEW ESTATE TAX BILL Bill 248, an Act Respecting the Taxa- tion of Estates, is the long awaited answer to the expected revision of the federal death tax legislation. It represents not only an entirely new draft of the statute but more important it embodies an entirely new con- cept of death taxation. In view of the marked change it will introduce the authori- ties are to be commended for giving profes- sional groups and others an opportunity to examine and make representations on the new legislation before its enactment. The Foundation will give the Bill full study through committees of its members and will draw to the attention of the govern- ment whatever faults are found. The present Tax Memo, however, is devoted simply to giving a general description of its terms in which the points of difference between the proposed and the present legislation are emphasized. The main difference, of course, lies in substituting an estate duty for succession duty. This means that the basis of taxation is shifted from the value of bequests to bene- ficiaries to the value of the estate as a whole -that is, to the value of all property passing on death. Generally speaking, the change makes for greater simplicity. Under an estate tax, there is no need to take into account the value of individual bequests nor the relationship of the beneficiaries to the deceased - for with an estate duty no account whatsoever is taken of the ultimate disposition of the estate - and there is only one rate schedule (as compared with the five sets of rates in the Dominion Succession Duty Act). In addition, some problems encountered under a succession duty do not exist with an estate tax. For example, only in special circumstances is it necessary to try to assess-or guess-the value of con- tingent interests and interests in expectancy. The scope of the tax under the Bill is wider. More items are brought into charge, and several loopholes in the present Act are closed. On the other hand, the rates are lower and there are generous deductions where the deceased leaves a widow and children. Generally speaking, the scales appear to tip in favour of the taxpayer. Under the Bill the total value of the estate passing is called the Aggregate Net Value. From this are deducted certain speci- fied amounts, and the result is the Aggre- gate Taxable Value. The scheme of the Bill is clear, and is a great improvement over that of the Succession Duty Act. The body of the Bill is divided into three parts: Part I deals with the computation of aggregate net and taxable values, the computation of tax and the procedure of returns, assess- ment, payment and appeals; Part II pro- vides for the levying of estate duty on persons domiciled outside Canada; and Part III deals with general matters, mainly of administration and collection. Additional copies of this Memo may be obtained on request. CANADIAN TAX FOUNDATION

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