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  ― 447 ―

Other Concessions

24.37. In the Committee's view it is the size of the estate, not its composition, that matters. An estate should not attract special treatment merely because it includes assets of a particular class, such as a house, a farm or superannuation benefits. Such treatment directed towards particular assest distorts resource allocation and discriminates between estates by reference to what may be the fortuitous composition of the estate at the time of death.

24.38. The 1974 amendment to Commonwealth estate duty legislation providing for a limited exemption for an interest in a matrimonial home passing to a surviving spouse runs counter to these principles. Under the new law an interest in a matrimonial home is wholly exempt from tax where the value does not exceed $35,000; and there are shading-out provisions affording some exemption up to a value of $85,000. Curious consequences arise: where, for example, the matrimonial home is valued at $50,000 in an estate of $100,000, the duty concession is worth $4,300; but where the matrimonial home is valued at $35,000 in an estate of $200,000, the concession is worth $16,500. The Committee recommends that the concession in respect of a matrimonial home be withdrawn.

24.39. A claim for special treatment is often made on behalf of the illiquid estate, for example a grazing property or family business. Problems arise where an estate contains a high proportion of assets that cannot be realised easily and cash has to be found to meet the tax liability. These problems will tend to be accentuated in those cases where a liability for payment of capital gains tax also arises on death under the Committee's proposals in relation to capital gains tax. As some protection against forced realisation, provision should be made in the law giving executors a right, where illiquid assets form a significant part of the estate, to spread the payment of at least that portion of duty relating to such assets. The spreading of payment of duty in this way, permitted in a number of overseas countries, would be subject to interest and be limited to a specific period, say up to five years. Alternatively, the law could provide that the Commissioner shall extend the time of payment in circumstances specifically defined. However, the Committee favours the former alternative.

24.40. A person ought not to be obliged to account for the minor gifts he makes. Nor should he be charged duty in respect of moneys paid for the maintenance, education or support of persons dependent on him. Hence there should be an annual exemption, possibly of the order of $3,000, and an exemption in respect of gifts made by a person for the maintenance, education or support of dependants. The application of gift and estate duties to gifts and bequests to charities is dealt with in Chapter 25.

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