DEATH DUTIES

Press, Volume LXXXIX, Issue 27090, 13 July 1953, Page 10

DEATH DUTIES

EFFECT ON FARMERS’ 5 ESTATES RECENT LEGISLATION t- CRITICISED p it “Farmers are now becoming in--s creasingly aware \of the fact that to ie improve their land and stock, thereby increasing production, is only increases ing the danger of disinheritance to their wives and families, whereas the .0 more they allow the land and stock »- to deteriorate the easier it will be y for the family to carry on,” said Mr Arthur Wheeler, a farmer, of Marton, e speaking to a public meeting of memjr bers of Federated Farmers and the ,g Women’s Division of Federated Farm,e ers in Christchurch on Friday. it Until last year, he said, on the death if of a farmer the difference between the •e standard value and market value of y his stock was fictitiously treated as income in the year of his death and il added to his ordinary income and

y taxed accordingly. The Governmen t and even the Taxation Departmen a had realised that this constituted y form of disinheritance contrary t public policy, and had introduce! e legislation last year that was intende, n to remedy the situation in the case o t death. e “In point of fact, the legislation doe t not achieve even the purpose in i tended,’’ he continued. “It must b _ remembered that owing to the ris s in values—a rise due to world condi e tions which the farmer is powerles _ to control —every farmers’ estate Y though it comprises the same land an e same quantity of stock as in 1948, wi]

today have to find a very , much larger sum in cash for estate arid succession , duties than in 1948, notwithstanding ‘ the 20 per cent, reduction enacted last ‘ year. Consequently very many estates , will be forced to sell part if not all of the property and stock—in many . cases properties are not able to be , subdivided—to pay death duties. And . immediately a sale is necessary the 1 basic livestock is treated as income. “Further, if the trustee does make 1 use of the recent legislation and car- : ries on the estate at original standard 1 values, so avoiding the heavy initial income tax on the write-up, he auto- ’ matically increases the estate and sue- 1 cession duties which he has to pay < and automatically passes on the tax burden to the beneficiaries at the time when stock is ultimately sold. Income tax and social security tax will have to be paid anyway, sooner or later, and meantime the trustees will have to pay higher death duty. Furthermore, profits earned to the date of death are free of social security tax, whereas on later realisation of the stock social security charge will be < payable in addition. “It can be seen that the hew legisla- < tion may well constitute a very un- : attractive trap,” said Mr Wheeler. :