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Friday, 14 September 1928


Mr LATHAM (Kooyong) (AttorneyGeneral) . - Some questions have been raised by honorable members on paragraph d, which extends the definition of property. The reason for including a provision for dealing with joint tenancies is this: A joint tenancy is the most easy and obvious method of avoiding the making of a will, and, therefore, of preventing the application of this taxation act to property which, in fact, passes upon death. The honorable member for Boothby (Mr. Duncan-Hughes) said that property, upon the death of one of two joint tenants, was vested in the survivor, who then became the holder of the entire interest in the property; whereas, previously he was interested as a joint tenant, and had the rights of a joint tenant, including the right to obtain a partition of the property by taking appropriate proceedings. Property may pass, therefore, upon the death of a single joint tenant, to the surviving joint tenant, or joint tenants, just in the same way as it passes by will. It is thus easy to avoid the application of the Estate Duty Assessment Act by a series of joint tenancies. For instance, a property may be vested in A and B as joint tenants; A dies and B becomes the owner of the whole property, He then creates a joint tenancy between himself and 0. Then B and 0 are joint tenants. B dies, and 0 is the owner of the whole property. Then 0 brings in D, and so it may go on indefinitely through a succession of deaths, and at no time is estate duty paid. It is surely reasonable to provide against such a case if it is possible to do so. It is quite true that, in some cases, it might happen that duties would be collected under the act at comparatively short intervals; but that, unfortunately, can also occur in cases in which wills are made in the ordinary way. It very often happens that a husband dies, and his wife pays probate or other death duty on the estate which has been left to her. Then the wife herself dies, and again duty has to be paid. That is an unfortunate incident of the proximity of deaths, and it is very difficult for any taxation system involving death duties to avoid occasional hardships of that kind. Accordingly, I put it to honorable members that the general principle of taxing property obtained by the survivor of a joint tenancy is sound. Most ordinary purposes can be served .quite well by a tenancy in common, when there is a separate interest in the undivided property, and when no right of survivorship obtains. Where a joint tenancy is resorted to, there is no reason for extending special consideration to joint tenants, when they might equally well be tenants in common, and when the effect of a joint tenancy is to prevent the imposition of proper taxation. Honorable members have stated that the clause, as drawn, would produce the effect that, when there are two joint tenants, duty would be payable on the whole interest in the estate upon the death of one of the tenants. I do not think that Parliament wishes any such thing to be done. The honorable member for Batman suggested that taxation should be levied only on the real, increased interest which is obtained by the survivor upon the death of the other joint tenant. That is a point to which consideration may fairly bc given, remembering that the act already contains a provision dealing with settlements made within a certain period before death, to prevent them from being used as means of evading duty. Although it is not so intended, this provision might, on a strict reading of the words, apply to every case in which a person had, at any time during his life, owned a property, and subsequently happened to become interested in it again as a joint tenant. It would be unjust to compel such a person to pay duty on the full value of the property. After hearing what honorable members have said, I have prepared a redraft of this section taken from the Victorian Administration and Probate Act, 1915. This section has been in the act for a long time and is couched in these terms -

All property of any kind whatsoever which a person having been absolutely entitled thereto has voluntarily caused or may cause, to be transferred to or vested in himself and any other person jointly whether by disposition or otherwise (including any purchase or investment effected by the person who was absolutely entitled to the property) either by himself alone or in concert or by arrangement with any other person so that a beneficial interest therein or in some part thereof passes or accrues by survivorship on his death to such other person, shall on the death of such person be deemed to the extent of such beneficial interest to form part of his estate for the purpose of estimating the duty payable under this Act and shall be chargeable with duty thereon accordingly.

That section was placed in the Victorian Act in 1903, and, as far as I know, has worked fairly. I call the attention of the Committee to these points: It is limited to a case in which a person has himself brought about a joint tenancy, so that by survivorship the beneficial interest accrues to' another person. Therefore, an individual who years ago owned land, and happens to become entitled to it by transfer or joint tenancy, is excluded from taxation. Further, the taxation is limited to the extent of the beneficial interest that passes to the survivor. The substance of this section will meet the objections which might be raised to the clause in its present form. Accordingly I move -

That proposed new paragraph (d) be omitted and the following inserted in lieu thereof : - "(d) Which a person having been absolutely entitled to, has voluntarily caused to be transferred to or vested in himself and any other person jointly whether by disposition or otherwise (including any purchase or investment effected by the person who was absolutely entitled to the property) either by himself alone or in concert or by arrangement with any other person so that a beneficial interest therein or in some part thereof passes or accrues by survivorship on his death to such other person, to the extent of such beneficial interest; or"

This section deals not only with a person transferring property to himself and another but also with a purchaser who arranges that a property shall be transferred to himself and another as joint tenants. That may be done by purchase or investment, and to meet such a situation the words we have adopted appear in the Victorian Act. The section as amended will effect the double purpose of limiting the taxable part of the property to the interest which passes, instead of making the whole property taxable, and of excluding a person who years ago was the owner of a property and many years later finds himself a joint tenant of it.







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