Example 1

Assume that the estate of John Smith, on his death, is made up as follows:

House: value on death  60,000 
Shares: value on death  120,000 
Moneys on deposit or in hand  30,000 
less Capital gains tax on death  20,000 
Net value of the estate  190,000 

Assume that Smith, during his life, gave $50,000 to his wife and made no other non-exempt gifts. Assume that Smith leaves the whole of his estate to his wife. Duty will be assessed on $180,000, i.e. $190,000 less the remaining $10,000 of the wife's exemption (paragraph 24.34), all but $10,000 of the exemption having been used before death. Duty, on the basis of the scale in paragraph 24.B2, will be $30,000. Assume that Mrs Smith dies 3 years later, leaving an estate with a net value of $230,000. The house and share portfolio bequeathed to Mrs Smith may form part of the estate or may have been sold. This will not affect the quick-succession relief. The full relief will be available in that Mrs Smith has died within 5 years of her husband's death and because the estate (net value $230,000) may be assumed to include an amount equivalent to the value of the inherited assets ($190,000). Assume that the scale in paragraph 24.B2 has not been changed and that the whole estate is left to the adult children of Mr and Mrs Smith:

Duty on $230,000  48,000 
less Relief  30,000 
Duty payable on Mrs Smith's estate  18,000 

24.B8. In example 1, it was assumed that no change in the rate scale occurred between the deaths of Mr and Mrs Smith. As indicated in paragraph 24.51, where there has been a change in the width of slices in the rate scale to take account of inflation, the Committee favours measures to bring about an equivalence in value between tax paid on an inheritance and tax against which relief is available. These measures should relate a gift or an estate to slices and parts of slices in the rate scale so that, if the scale has thus varied, so too will the quantum of the gift or estate. The following examples of quick-succession relief illustrate the principle.