Finance Act, 1938

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PART II.

Income Tax in Relation to Administration of Estates.

Interpretation and definitions for Part II.

8.—(1) For the purposes of this Part of this Act—

(a) a person shall be deemed to have an absolute interest in the residue of the estate of a deceased person, or in a part thereof, if and so long as the capital of the residue or of that part thereof (as the case may be) would, if the residue had been ascertained, be properly payable to him, or to another in his right, for his benefit, or is properly so payable, whether directly by the personal representatives or indirectly through a trustee or other person;

(b) a person shall be deemed to have a limited interest in the residue of the estate of a deceased person, or in a part thereof, during any period (other than a period during which he has an absolute interest in the residue or in that part thereof, as the case may be) where the income of the residue or of that part thereof (as the case may be) for that period would, if the residue had been ascertained at the commencement of that period, be properly payable to him, or to another in his right, for his benefit, whether directly or indirectly as aforesaid;

(c) real estate included (either by a specific or a general description) in a residuary gift made by the will of a testator shall be deemed to be a part of the residue of his estate and not to be the subject of a specific disposition.

(2) In this Part of this Act—

(a) the expression “personal representatives” means, in relation to the estate of a deceased person, his executors as defined by paragraph (d) of sub-section (1) of section 22 of the Finance Act, 1894 , and includes persons having in relation to the deceased under the law of another country any functions corresponding to the functions for administration purposes under the law of Ireland of executors as so defined, and references to personal representatives as such shall be construed as references to the executors in their capacity as having such functions as aforesaid;

(b) the expression “specific disposition” means a specific devise or bequest made by a testator, and includes any disposition having, whether by virtue of any enactment or otherwise, under the law of Ireland' or of another country an effect similar to that of a specific devise or bequest under the law of Ireland;

(c) the expression “charges on residue” means, in relation to the estate of a deceased person, the following liabilities properly payable thereout and interest payable in respect of those liabilities, that is to say,—

(i) funeral, testamentary, and administration expenses and debts,

(ii) general legacies (including in the case of an intestacy the sum of five hundred pounds to which the widow of the intestate is entitled under the Intestates Estates Act, 1890), demonstrative legacies, and annuities, and

(iii) any other liabilities of his personal representatives as such,

but, in the case of any such liabilities which, as between persons interested under a specific disposition or in such a legacy as aforesaid or in an annuity and persons interested in the residue of the estate, fall exclusively or primarily upon the property that is the subject of the specific disposition or upon the legacy or annuity, includes only such part (if any) of those liabilities as fall ultimately upon the residue;

(d) references to the “aggregate income of the estate” of a deceased person for any year of assessment shall be construed as references to the aggregate income from all sources for that year of the personal representatives of the deceased as such, treated as consisting of—

(i) any such income which is chargeable to Irish income tax by deduction or otherwise, such income being computed at the amount on which that tax falls to be borne for that year, and

(ii) any such income which would have been so chargeable if it had arisen in Ireland to a person resident and ordinarily resident therein, such income being computed at the full amount thereof actually arising during that year, less such deductions as would have been allowable if it had been charged to Irish income tax, but excluding any income from property devolving on the personal representatives otherwise than as assets for payment of the debts of the deceased;

(e) the expressions “Irish estate” and “foreign estate” mean respectively, as regards any year of assessment—

(i) an estate the income whereof comprises only income which either has borne Irish income tax by deduction or in respect of which the personal representatives are directly assessable to Irish income tax, other than an estate any part of the income of which is income in respect of which the personal representatives are entitled to claim exemption from Irish income tax by reference to the fact that they are not resident or not ordinarily resident in Ireland, and

(ii) an estate other than an Irish estate;

(f) references to sums paid include references to assets that are transferred or that are appropriated by a personal representative to himself, and to debts that are set off or released;

(g) references to sums payable include references to assets as to which an obligation to transfer or a right of a personal representative to appropriate to himself is subsisting on the completion of the administration and to debts as to which an obligation to release or set off, or a right of a personal representative so to do in his own favour, is then subsisting;

(h) references to amount in relation to such assets as aforesaid shall be construed as references to the value thereof at the date on which they were transferred or appropriated, or at the completion of the administration, as the case may require, and, in relation to such debts, as references to the amount thereof.

(3) In a case in which different parts of the estate of a deceased person are the subjects respectively of different residuary dispositions, this Part of this Act shall have effect in relation to each of those parts, with the substitution for references to the estate of references to that part of the estate, and the substitution for references to the personal representatives of the deceased as such of references to the said personal representatives in their capacity as having the functions referred to in paragraph (a) of sub-section (2) of this section in relation to that part of the estate.