No CrossRef data available.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Published online by Cambridge University Press: 24 January 2025
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.
1 (1950) 81 C.L.R.359.
2 (1965) 112 C.L.R.432.
3 (1969) 119 C.L.R.72.
4 (1973) 1 A.L.R. 539.
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.IOC; 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)).
7 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) 278-280Google Scholar.
8 For references to the State Acts and provisions see n.5 supra.
9 In Executors of the Will of Mackenzie, Forsyth v. Commissioner of Stamp Duties (N.S.W.) (1966) 114 C.L.R. 194 which was decided under s.102(2)(h) of the Stamp Duties Act 1920-1959 (N.S.W.),an outstanding premium and interest thereon were deducted by the executors and this was not challenged by the Commissioner or commented upon by the Court.
10 Ibid. In Forsyth's case, some support for the decision reached was found in In re Hodge's Policy [1957] Ch. 339 affirmed [1958] Ch. 239 where it was held that an unrepaid loan which had been made by the insurer to the deceased was not to be subtracted in a calculation of “money received under a policy of assurance” for the purpose of s.11(1 ) of the Customs and Inland Revenue Act 1889 (Eng.).
11 Support for the suggestion is to be found in dicta of'Taylor"J. in Forsyth's case: “The parties were, of course, free to make an arrangement which had the effect of altering the obligations of the company under the policy but, in my view, they did not do so and, in substance, the position remained the same as if a loan on the security of the policy had been obtained from a third party”: (1966) 114 C.L.R. 194, 211.
12 See the text of that provision infra p. 256.
13 Since the formula “under a policy” is contained in the State prov1s1ons (supra n.5), the discussion in this section of the article is relevant to those provisions too.
14 (1950) 81 C.L.R. 359.
15 The will in fact appointed her as his sole executrix and beneficiary.
16 (1965) 112 C.L.R. 432.
17 Id. 437.
18 (1969) 119 C.L.R.72.
19 E.g. 17 C.T.B.R. (N.S.) Case 4, 28, 29; Hamra v. Federal Commissioner of Taxation 1973) 1 A.L.R.539.
20 For ease of reference, they will be referred to as “the relatives”and as “the widow etc.”.
21 The primary “catching” provisions in the State Acts (supra n.5) are not so limited and so have not given rise to this difficulty. Some of the State Acts proceed to confer exemption or concession where relatives are entitled to the proceeds. S.5(2)(d) of the Tasmanian Act and s.8(3)(a) of the Victorian Act exclude from the primary catching provision money payable under a policy effected by the deceased on his own life for the benefit of his spouse and/or children. S.lOC of the Queensland Act excludes the monies payable under a policy where it is proved to the satisfaction of the Commissioner that the assured's wife is the person beneficially entitled upon his death and that she bonafide paid out of her own proper monies all the premiums
22 (1950) 81 C.L.R. 359.
23 It is clear from the references in the paragraph to “widow” and “widower” that the date of ,death rather than the date of the policy is the relevant date at which the existence of the relationship is to be tested.
24 (1965) 112 e.I:.R:432.
25 (1969) 119 CL.R.n.72.
26 (1965) 112 C.L.R. 432, 438-439
27 The judgment of Latham C.J. contains the classical and oft-quoted explanation of the supposed policy of the paragraph: “In my opinion par. (f) of s.8(4)is effectual to impose duty in respect of moneys paid under a policy of insurance in a case where a policy serves the same purpose as a will, namely the giving of a benefit to certain relatives of a deceased person upon the death of the' person who has paid (in whole or in part) for the policy. That person might have kept the policy in his own name and have left the policy money specifically to one of his relatives mentioned in par. (f). In such a case duty would have been payable under s.8(3)(b) and not under s.8(4)(f). Such a person might have made no specific provision in his will relating to such a policy, but have left it to be dealt with as part of his estate under provisions not specifically referring to it. In such a case it would be treated as part of his estate and would be dutiable under s.8(3)(b) and not under s.8(4)(f)—whoever his beneficiaries might be. If, however, he took out a policy and paid the premiums in whole or in part but procured the policy to be put in the name of, e.g., his wife, in such a
28 (1969) 119 C.L.R. 72.
29 His Honour cited Commissioner for Probate Duties v. Mitchell (1960) 105 C.L.R. 126.
30 (1973) 1 A.LR. 539.
31 Id. 543.
32 Actually in Hill the argument referred to the policy alone.
33 (1969) 119 C.L.R. 72, 82 per Kitto J.
34 Id. 76 (Italics added).
35 Id. 18 (Italics added).
36 Id. 19 (Italics added).
37 Less a s.8(4A) deduction since the policies had been in force at the time when s.8(4)(f) commenced to operate.
38 17 C.T.B.R.(N.S.) 28, 30.
39 Ibid.
40 Infra p. 256.
41 In Thurn, none of the points numbered (1), (2) and (3) (referred to infra pp . 258-259) could have been made against the estate.
42 (1973) 1 A.L.R. 539.
43 In fact only one half-yearly premium had fallen due between the issue of the policies and the assignment and only one further half-yearly premium fell due between the assignment and the assured's death.
44 Id. 544.
45 A business partner of the life assured is an exception which comes to mind.
46 Hill's case.
47 Hamra's case.
48 Williams'scase.
49 Thurn's case.
50 17 C.T.B.R. (N.S.) Case 4.
51 (1959) 102 C.L.R. 29.
52 Where the proponent is two persons jointly, there is authority for saying that the policy is enforceable by the survivor, even though the premiums have been furnished by the deceased alone: Coulls v. Bagot's Executor and Trustee Co. Ltd. (1967) 119 C.L.R. 460.
53 The legal effect of an assignment otherwise than under the Act will fall to be determined in accordance with the general law and statutes affecting assignments of choses in action.
54 There is no inconsistency between this section and death or estate duty legislation which brings the proceeds of such a policy to charge as part of the deceased's notional estate (e.g. s.8(4)(f)), the word “estate” being used in different senses in the two classes of legislation: Re Estate of Black; Thomas v. 9 Commissioner of Stamp Duties (1965) 66 S.R. (N.S.W.) 348; and Re Estate of Mackenzie, Forsyth v. Commissioner of Stamp Duties (1965) 66 S.R. (N.S.W.) 359; on appeal at (1966) 114 C.L.R. 194, following Crisp J. in In re Perry (1963) 5.F.L.R. 116.
55 Where, as under much State legislation, what is caught is “money payable to any person” the present question cannot arise since the proceeds must be paid to someone: they cannot be kept by the insurer.
56 Robertson v. Federal Commissioner of Taxation (1952) 86 C.L.R. 463.
57 (1957) 98 C.L.R. 151.
58 Id. 161.
59 Ibid.
60 17 C.T.B.R. (N.S.) Case 66.
61 (1957) 98 C.L.R. 151, 161 per Dixon C.J.
62 “Considerable discussion has taken place as to the possibility of the word 'applicable' bearing the meaning of'may be applied' or the meaning of 'must be applied'. The view which we take of the clause is hardly expressed by a choice between those two alternatives. We think that the whole clause requires that the disposal of the income in the year in question must be by payment to, accumulation for or application for the benefit of, the child. If you have a case of payment to the child authorized by the trust deed, that of course satisfies the provision. If you have the case of an accumulation for a child that in turn satisfies the provision; if you have neither of these things and a case where the money must be applied for that child, that in turn satisfies the provision. But they are alternatives together covering the ground which the legislature has selected as the test of the special liability. The alternatives together state an entire condition which must be fulfilled in one way or another before the provision is applied to expose the settlor, who has created the trust, to the consequence of having imposed upon his trustee the tax which stated in sub-s.(2).” Ibid.
63 These provisions are however also deficient in that they deal only with a full reimbursement. They should be extended to cover partial reimbursements. Further, they leave untouched payment of purchase money other than one amounting to a reimbursement.
64 Any premiums so paid by the deceased within the period of three years before his death will be caught by s.8(4)(a).
65 As in the Commonwealth and N.S.W. Acts.
66 As in Victoria and Western Australia.
67 Cf. N.S.W.: s.102(2)(h); Vic.: s.8(1)(d), (e); (3)(b) (“Paid or provided”);Qld.: s.lOC (''paid out of [his/her] own proper moneys”); S.A.: s.8(1)(i), (k) (“kept up” and “paid by” are used); W.A.: s.10(2)(e), (1), (m) (“kept up” and “paid by” are used); Tas.: s.5(2)(j).
68 This situation is dealt with expressly under the Tasmanian Act, s.5(2)(i) of which includes the words, “where the whole of the premiums were paid by the deceased person, or by the trustee of a settlement made by the deceased person, or by the trustee of a fund to which the deceased person had made contributions for the purpose of obtaining from the fund a benefit for himself or any other person, or, where part of the premiums were paid by some other person, such proportion of that money as the premiums paid by the deceased person or trustee bear to the total premiums paid in respect of that policy ... ”
69 [1944] A.C. 372.
70 The notion of “keeping up” a policy is found in the S.A. and W.A. Acts.
71 Decided prior to the enactment by the Stamp Duties (Amendment) Act 1972 (N.S.W.) of provisions dealing expressly with superannuation.
72 [1966] 2 N.S.W.R. 309.
73 ID.317.
74 (1971) 125 C.L.R. 511 affirming Lloyd-Jones v. Commissioner of Stamp Duties (N.S.W.) [1971] 1 N.S.W.L.R. 106.
75 Because the proceeds were payable under a Group Endowment Scheme Policy taken out by the trustees over many lives including that of the deceased it was even questioned whether the money was payable “under a policy of assurance on the life of the deceased”.
76 [1966] 2 N.S.W.R. 309, 317.
77 Ford, Principles of the Law of Death Duty (1971) 194Google Scholar.