Cap. 111 《遺產稅條例》Estate Duty Ordinance

In this Ordinance, unless the context otherwise requires—

For the purposes of this Ordinance—

A person shall be deemed to have made a transfer of property to a company if the property came to be included in the resources of the company by the effect of a disposition made by him or with his consent or of any associated operations of which such a disposition formed one. [cf. 1940 c. 29 s. 58(2) U.K.]

A person shall be deemed to have received or had any payment, income, profit, enjoyment, assets, or interest, the receipt or having whereof by him is relevant for the purposes of this Ordinance, if any of the following conditions have been satisfied in relation thereto, that is to say—

and references in this Ordinance to the deceased’s receiving or having, or being or becoming entitled to receive or have, any such payment or other matter as aforesaid shall be construed accordingly. [cf. 1940 c. 29 s. 58(3) U.K.]

References in this Ordinance—

Where under this Ordinance any power is conferred or any duty is imposed on the Commissioner and it is not provided that the power or duty shall be exercised or performed by the Commissioner personally, such power may be exercised or such duty may be performed by a deputy commissioner of estate duty or an assistant commissioner of estate duty.

Except where this Ordinance provides that a power or duty shall be exercised or performed by the Commissioner personally, the Commissioner may, subject to such limitations as he may think fit, authorize in writing any public officer to exercise any power or perform any duty conferred or imposed upon him by this Ordinance.

The Chief Justice may, by a commission signed by him, appoint the Commissioner or any deputy commissioner to be a commissioner to administer oaths and take declarations and affirmations for the purposes of this Ordinance, and may revoke any such appointment.

Every person so appointed shall be styled a commissioner for oaths and shall have all the powers and discharge all the duties which now belong to the office of a commissioner to administer oaths.

Property passing on the death of the deceased shall be deemed to include the property following—

In the application of subsection (1)(h) to a case in which an incumbrance on the property in which the interest in question subsisted has been created by associated operations which included a disposition of that interest, references to that property shall be construed as references to that property free from the incumbrance except in a case in which the incumbrance was created for consideration in money or money’s worth which was applied for purposes calculated to maintain or increase the value of that property, and, in that case, shall be construed as references to that property subject to the incumbrance to the extent to which the consideration was so applied. (Added 1 of 1959 s. 3) [cf. 1940 c. 29 s. 43(3) U.K.]

Subsection (1)(h) shall have effect only in relation to a person dying after the commencement* of the Estate Duty (Amendment) Ordinance 1959 (1 of 1959), and paragraph (b) of that subsection shall not have effect in relation to such a person. (Added 1 of 1959 s. 3) [cf. 1940 c. 29 s. 43(6) U.K.]

Property passing on the death of the deceased shall not be deemed to include property held by the deceased as trustee for another person, under a disposition not made by the deceased or under a disposition made by the deceased more than 3 years before the death, or in the case of a disposition made for such purposes as are recognized by the Commissioner as public or charitable, one year before the death where possession and enjoyment of the property was bona fide assumed by the beneficiary immediately upon the creation of the trust and thenceforward retained to the entire exclusion of the deceased or of any benefit to him by contract or otherwise: Provided that where property taken under such a disposition as aforesaid is deemed to be property passing on the death of the deceased by reason only that the property was not, as from the date of the disposition, retained to the entire exclusion of the deceased or a person who had an estate or interest limited to cease on the death of the deceased, and of any benefit to him by contract or otherwise, the property shall not be deemed to pass on the death of the deceased if subsequently, by means of the surrender of the benefit reserved or otherwise, it is enjoyed to the entire exclusion of the deceased or such other person as aforesaid and of any benefit to him by contract or otherwise, for a period of 3 years immediately preceding the death or in the case of a disposition made for such purposes as are recognized by the Commissioner as public or charitable, one year immediately preceding the death. (Amended 1 of 1959 s. 3) [cf. 1894 c. 30 s. 2(3) U.K.; 1910 c. 8 s. 59 U.K.; 1946 c. 64 s. 47 U.K.]

Where property is settled by a person on himself for life, and after his death on any other person with an ultimate reversion of an absolute interest or absolute power of disposition to the settlor, the property shall not be deemed for the purpose of this Ordinance to pass to the settlor on the death of any such other person after the commencement^# of this Ordinance, by reason only that the settlor, being then in possession of the property as tenant for life, becomes, in consequence of such death, entitled to dispose of the whole property. [cf. 1896 c. 28 s. 14 U.K.]

Notwithstanding paragraphs (b), (c) and (h) of subsection (1) and notwithstanding subsection (4), property passing on the death of the deceased shall not be deemed to include property the subject of any surrender, assurance, divesting, disposition, forfeiture, disposal, donatio mortis causa, gift inter vivos or determination of an interest made, effected or suffered to or for the benefit in Hong Kong of any charitable institution or trust of a public character, or to the Government, for charitable purposes. (Added 29 of 1970 s. 2. Amended 74 of 1981 s. 2; 31 of 1990 ss. 3 & 10; 78 of 1999 s. 7)

For the purposes of section 6(1)(c), any disposition made by the deceased in favour of a relative of his shall be treated as a gift unless—

Provided that where the disposition was made on the part of the deceased for partial consideration in money or money’s worth paid to him for his own use or benefit, the value of the consideration shall be allowed as a deduction from the value of the property for the purpose of estate duty. [cf. 1950 c. 15 s. 46(1) U.K.]

Where the deceased made a disposition of property in favour of a relative of his, the creation or disposition in favour of the deceased of an annuity or other interest limited to cease on the death of the deceased or of any other person shall not be treated for the purposes of this section or of section 13(1) as consideration for the disposition made by the deceased, except as provided in section 8.

Where there have been associated operations effected with reference to the receiving by the deceased of any payment in respect of such an annuity or other interest as is mentioned in subsection (2), or effected with a view to enabling him to receive or to facilitating the receipt by him of any such payment, this section and section 45 shall have effect in relation to each of those associated operations as they have effect in relation to the creation or disposition in favour of the deceased of such an annuity or other interest. [cf. 1940 c. 29 s. 44(5) U.K.; 1950 c. 15 s. 46(2)(a) U.K.]

In this section, section 8 and section 45—

Subject to the provisions of this section, the relief specified herein shall be granted where, on the death of a person who has made a disposition of property in favour of a relative of his or a company, any estate duty becomes, or would but for this section become payable by virtue of section 7(2).

The sum on which estate duty would be payable apart from this section on the death in respect of the property which was the subject matter of the disposition or in respect of the property liable to a debt or incumbrance created by the deceased which was the subject matter of the disposition, as the case may be, shall first be computed and, subject to the limitations provided for by subsection (4), there shall then be allowed as a deduction from that sum—

The amount to be allowed as a deduction under subsection (2) shall, in the circumstances specified in the provisions of subsections (5), (6) and (7) be limited to the extent specified in those subsections respectively.

If the annuity payments specified in subsection (2)(a) had formed the consideration for a debt created by the deceased equal to the total amount of those payments, and if section 13(1) were applied to that debt, the full amount of that debt would not having regard to the operation of section 13(2) have been allowable under subsection (1) of that section, the said annuity payments shall, for the purpose of ascertaining the amount to be allowed as a deduction under this section, be reduced so as not to exceed the amount, if any, which would have been allowable in the circumstances aforesaid under subsection (1) of that section:Provided that in applying the said subsection (2) for the purposes of this subsection, property which is the subject matter of the disposition shall not be treated as property derived from the deceased. [cf. 1944 c. 23 3rd Sch. 1 U.K.]

Where under section 7 a deduction for partial consideration would have been allowable in respect of the annuity or other interest if subsection (2) of that section had not applied to the disposition and if any other consideration for the disposition had not been given, the amount to be allowed as a deduction under this section shall not exceed the amount of that deduction. [cf. 1950 c. 15 s. 46(2) U.K.]

Where the amount to be allowed as a deduction under this section is allowed as a deduction from the value of the property liable to a debt or incumbrance created by the deceased, it shall not exceed the amount, if any, which would be allowed under section 13(1) if sections 7 and 45 had not been passed. [cf. 1944 c. 23 3rd Sch. 3 U.K.]

Where any shares in or debentures of a company are comprised in a gift inter vivos and the donee is, as the holder of those shares or debentures, issued with shares in or debentures of the same or any other company, or granted any right to acquire any such shares or debentures, then, unless the issue or grant is made by way of exchange for the first mentioned shares or debentures, the shares or debentures so issued, or the right granted, shall be treated for the purposes of this Ordinance as having been comprised in the gift in addition to any other property so comprised.

In subsection (1), the reference to an issue being made or right being granted to the donee as the holder of shares or debentures shall be taken to include any case in which an issue or grant is made to him as having been the holder of those shares or debentures, or is made to him in pursuance of an offer or invitation made to him as being or having been the holder of those shares or debentures, or of an offer or invitation in connexion with which any preference is given to him as being or having been the holder thereof.

Where subsection (1) applies to determine, for purposes of estate duty, the property comprised in a gift inter vivos made by the deceased, the value of any consideration in money or money’s worth given by the donee for the issue or grant referred to in the said subsection (1) shall be allowed as a deduction in valuing the property comprised in the gift as property deemed to pass on the death by virtue of the gift; but if any part, not being a sum of money, of the said consideration consists of property comprised in the same or another gift from the donor and deemed for purposes of estate duty to pass on his death, no deduction shall be made in respect of it under this subsection.

For the purposes of subsection (3), there shall be left out of account so much, if any, of the consideration for any shares in or debentures of a company or for the grant of any right to be issued with any such shares or debentures, as consists in the capitalization of reserves of that company, or in the retention by that company, by way of set-off or otherwise, of any property distributable by it, or is otherwise provided directly or indirectly out of the assets or at the expense of that or any associated company; and for this purpose 2 companies shall be deemed to be associated if one has a controlling interest in the other, or if some person has a controlling interest in both.

In the case of a donee who dies before the donor, subsections (1) to (4) inclusive shall apply as if he had not died, and as if the acts of his personal representative were his acts, and property taken by any person under his testamentary dispositions or on his intestacy, or partial intestacy, were taken under a gift made by him at the time of his death.

For purposes of aggregation, any property which is by virtue of subsections (1) to (5) inclusive to be treated as comprised in a gift inter vivos made by the deceased shall be deemed to be property in which the deceased had an interest, except in so far as it is derived from property originally comprised in the gift in which the deceased never had an interest.

For the purposes of estate duty, any question whether, possession and enjoyment of any property comprised in a gift inter vivos was at a particular time assumed or had by any person to the exclusion of any other person shall, so far as the question depends on the identity of the property, be determined by reference to the property which would for the time being be treated, in relation to the death if it occurred at that time, as property comprised in the gift.

For the purposes of this section, the principal value of any property at a time before the death of the deceased shall be ascertained as it would be for the purposes of estate duty chargeable on his death if he had died immediately before that time.

Estate duty shall not be payable in respect of property—

For the purposes of subsections (1) and (3)—

Where more than one residence would, under subsection (1) and but for this subsection, be exempt from estate duty, only one residence shall be so exempt and the executor may, by notice in writing to the Commissioner, elect which residence shall be exempt; in default of which, the Commissioner shall make the election.

(Repealed 34 of 1994 s. 4)

For determining the rate of estate duty to be paid on any property passing on the death of the deceased, all property so passing in respect of which estate duty is payable shall be aggregated so as to form one estate, and the duty shall be paid at the proper graduated rate on the principal value thereof:Provided that any property so passing, in which the deceased never had an interest, shall not be aggregated with any other property but shall be an estate by itself, and the duty shall be paid at the proper graduated rate on the principal value thereof. (Amended 1 of 1959 s. 5) [cf. 1894 c. 30 s. 4 U.K.]

For the purposes of this section, the deceased shall be deemed to have had an interest in any property included, or deemed to be included, by virtue of—

in the property passing on his death. (Added 1 of 1959 s. 5) [cf. 1939 c. 41 s. 30(2) U.K.; 1940 c. 29 s. 52 U.K.]

The proviso to subsection (1) shall not have effect in relation to property consisting of a debt, or right, or benefit, passing on the death of the deceased, that is treated as property by virtue of section 3(2)(d) or (e). (Added 1 of 1959 s. 5) [cf. 1940 c. 29 s. 45(3) U.K.]

(Repealed L.N. 90 of 1999 and 44 of 1999 s. 10)

Estate duty shall be payable as hereinafter mentioned.

The executor of the deceased shall pay the estate duty in respect of all property, of which the deceased was competent to dispose at the date of his death, on delivering the affidavit for the Commissioner, and may pay in like manner the estate duty in respect of any other property passing on such death, which by virtue of any testamentary disposition of the deceased is under the control of the executor or, in the case of property not under his control, if the persons accountable for the estate duty in respect thereof request him to make such payment. (Amended 47 of 1962 s. 5)

Where the executor does not know the amount or value of any property which has passed on the death, he may state in the affidavit for the Commissioner that such property exists, but that he does not know the amount or value thereof and that he undertakes as soon as the amount and value are ascertained to bring in an account thereof and to pay both the estate duty for which he is or may be liable and any further estate duty payable by reason thereof for which he is or may be liable in respect of the other property mentioned in the affidavit.

Estate duty so far as not paid by the executor shall be paid on an account setting forth the particulars of the property and delivered to the Commissioner within 6 months after the death, by the person accountable for the estate duty or within such further time as the Commissioner may allow. Such duty shall be paid on delivering the account. (Amended 47 of 1962 s. 5)

Every estate shall include all income accrued upon the property included therein down to and outstanding at the date of the death of the deceased.

In addition to any estate duty payable, interest shall accrue and be payable on such duty while it remains unpaid at the rate of 4 per cent per annum from the date of the death of the deceased until the expiration of 6 months from the death and at the rate of 8 per cent per annum thereafter. (Replaced 47 of 1962 s. 5. Amended 27 of 1996 s. 5)

Unless the Commissioner in any particular case with the approval of the Secretary for Financial Services and the Treasury otherwise directs— (Amended L.N. 106 of 2002)

The estate duty which is to be collected upon an affidavit for the Commissioner or on an account, shall be due on the delivery thereof or on the expiration of 6 months from the death, whichever first happens.

A rateable part of the estate duty on an estate in proportion to the value of any leasehold property held solely by the deceased may at the option of the person delivering the account be paid by 8 equal yearly instalments, or 16 half-yearly instalments, and the first instalment shall be due at the expiration of 6 months from the death, and the interest on the unpaid portion of the duty shall be added to each instalment and paid accordingly; but the duty for the time being unpaid, with such interest to the date of payment, may be paid at any time, and in case the property is sold shall be paid on completion of the sale, and if not so paid shall be duty in arrear. (Added 1 of 1959 s. 14. Amended 47 of 1962 s. 5)

In determining the value of an estate for the purpose of estate duty, allowance shall be made for reasonable funeral expenses incurred in Hong Kong not exceeding— (Amended 31 of 1990 s. 10)

and for debts and incumbrances but an allowance shall not be made—

and any debt or incumbrance for which an allowance is made shall be deducted from the value of the property liable thereto. (Replaced 31 of 1977 s. 3)

Any allowance which but for this subsection would be made under subsection (1) for a debt incurred by the deceased as mentioned in paragraph (i) of that subsection, or for an incumbrance created by a disposition made by the deceased, as therein mentioned shall be subject to abatement to an extent proportionate to the value of any of the consideration given therefor which consisted of—

Provided that if, where the whole or a part of the consideration given consisted of such consideration as is mentioned in paragraph (b) of this subsection, it is proved to the satisfaction of the Commissioner that the value of the consideration given, or of that part thereof, as the case may be, exceeded that which could have been rendered available by application of all the property derived from the deceased, other than such, if any, of that property as is included in the consideration given or as to which the like facts are proved in relation to the giving of the consideration as are mentioned in the first proviso to section 6(1)(f) in relation to the purchase or provision of an annuity or other interest, no abatement shall be made in respect of the excess, and in this subsection the expressions property derived from the deceased (得自死者的財產) and subject matter (標的物) have the meanings respectively attributed to them in section 6(1)(f). (Added 1 of 1959 s. 6) [cf. 1939 c. 41 s. 31(1) U.K.; 1943 c. 28 s. 26 U.K.]

Where a debt or incumbrance has been incurred or created in whole or in part for the purpose of or in consideration for the purchase or acquisition or extinction, whether by operation of law or otherwise, of any interest in expectancy in any property passing or deemed to pass on the death of a deceased person, and any person whose interest in expectancy is so purchased, acquired, or extinguished becomes (under any disposition made by, or through devolution of law from, or under the intestacy of, the deceased) entitled to any interest in that property, then in determining the value of the estate of the deceased for the purpose of estate duty no allowance shall be made in respect of such debt or incumbrance, and any property charged with any such debt or incumbrance shall be deemed to pass freed from that debt or incumbrance: Provided that—(a)if part only of such debt or incumbrance was incurred or created for such purpose or as such consideration as aforesaid, this provision shall apply to that part of such debt or incumbrance only; and(b)if a person whose interest in expectancy in the property so purchased, acquired, or extinguished becomes entitled to an interest in part only of that property, this provision shall apply only to such part of the debt or incumbrance as bears the same proportion to the whole debt or incumbrance as the value of the part of the property to an interest in which he becomes entitled bears to the value of the whole of that property. [cf. 1910 c. 8 s. 57 U.K.]

No allowance shall be made for debts due from the deceased, other than debts contracted in Hong Kong to persons ordinarily resident therein, unless charged on property situate within Hong Kong. (Amended 31 of 1990 s. 10)

When an estate includes an interest in expectancy, estate duty in respect of that interest shall be paid, at the option of the person accountable for the estate duty, either with the duty in respect of the rest of the estate or when the interest falls into possession, and if the duty is not paid with the estate duty in respect of the rest of the estate, then—

The value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased shall—

The value of any property for the purpose of estate duty shall be ascertained by the Commissioner in such manner and by such means as he thinks fit, and, if he authorizes any person to inspect any property and to report to him the value thereof for the purposes of this Ordinance, the person having the custody or possession of that property shall permit the person so authorized to inspect it at such reasonable times as the Commissioner considers necessary. [cf. 1894 c. 30 s. 7(8) U.K.]

When the Commissioner requires a valuation to be made by a person named by him, the reasonable costs of such valuation shall be defrayed by the Commissioner. [cf. 1894 c. 30 s. 7(9) U.K.]

All duty, interest and penalties payable under this Ordinance shall be recoverable by the Commissioner by action in the District Court, notwithstanding that the amount is in excess of the sum mentioned in section 33 of the District Court Ordinance (Cap. 336): (Amended 68 of 1973 s. 5; 79 of 1981 s. 3) Provided that nothing in this section shall affect any other remedy for the recovery of duty, interest or penalties payable under this Ordinance. (Replaced 47 of 1962 s. 7)

In proceedings in the District Court under this section the production of a certificate signed by the Commissioner stating the name and last known postal address of the person sued and the particulars of the duty, interest or penalty claimed from him shall be sufficient evidence of the amount so claimed and sufficient authority for the District Court to give judgment for such amount. (Added 47 of 1962 s. 7. Amended 31 of 1976 s. 3)

In proceedings under this section for the recovery of any duty, interest or penalties the court shall not entertain any plea that the amount claimed is excessive, incorrect or under appeal. (Added 31 of 1976 s. 3)

In proceedings in the District Court under this section, the Commissioner may appear in person or may be represented either by a legal officer within the meaning of the Legal Officers Ordinance (Cap. 87) or by any other person authorized by him in writing. (Added 47 of 1962 s. 7)

In any proceedings for the recovery of any such duty, interest, fine, penalty or forfeiture in respect of any property passing on the death of any person on or after 1 January 1916, it shall not be necessary to issue concurrent writs, informations or other process. Service of the writ, information or other process shall, where practicable, be personal; but the order of a judge may be obtained, in special circumstances, to dispense with personal service and giving directions as to substituted service or as to notice of the proceedings and time for appearance whether by posting copies to addresses within or without the jurisdiction or otherwise as in the circumstances may seem just. [cf. Exchequer Rules 1860 r. 3 U.K.]

In any such proceedings the court shall have jurisdiction to appoint a receiver of the property and the rents and profits thereof and to order a sale of the property. The provisions of Order 30, rules 2 and 3 of the Rules of the High Court (Cap. 4 sub. leg. A) shall apply in the case of any order made under this subsection. (Amended 25 of 1998 s. 2) [cf. 1894 c. 30 s. 8(13) U.K.]

Subject to section 14A, every executor shall, to the best of his knowledge and belief, specify in appropriate accounts annexed to an affidavit for the Commissioner all the property in respect of which estate duty is payable upon the death of the deceased, and also (unless exempted in writing by the Commissioner) any property of which the deceased was a trustee for another person, and shall be accountable for the estate duty in respect of all property, of which the deceased was competent to dispose at his death, but shall not be liable for any duty in excess of the assets which he has received as executor or might but for his own neglect or default have received. (Amended 27 of 1972 s. 4) [cf. 1894 c. 30 s. 8(3) U.K.]

Where property passes on the death of the deceased and his executor is not accountable for the estate duty in respect of such property, every person to whom any property so passes for any beneficial interest in possession, and also to the extent of the property actually received or disposed of by him, every trustee, guardian, committee or other person in whom any interest in the property so passing or the management thereof is at any time vested, and every person in whom the same is vested in possession by alienation or other derivative title, shall be accountable for the estate duty on the property, and shall, within the time required by this Ordinance or such later time as the Commissioner allows, deliver to the Commissioner an appropriate account specifying the property in question to the best of his knowledge and belief: Provided that nothing in this section shall render a person accountable for duty who acts merely as agent for another person in the management of property. [cf. 1894 c. 30 s. 8(4) U.K.]

Notwithstanding subsections (6) and (7), where a beneficial interest in property vested in the deceased and another person jointly passes or accrues by survivorship on the death of the deceased—

shall be accountable for the estate duty in respect of such property and shall, within the time required by this Ordinance, or such later time as the Commissioner allows, deliver to the Commissioner an appropriate account specifying the property in question to the best of his (or their) knowledge and belief. (Added 29 of 1970 s. 4)

The Commissioner may summon before him any person accountable for estate duty or any person who is, in the opinion of the Commissioner, so accountable, and any person whom the Commissioner believes to have taken possession of or administered any part of the estate in respect of which estate duty is leviable on the death of the deceased, or of the income of any part of such estate, and any person whom the Commissioner believes to be indebted to the deceased, and any person whom the Commissioner believes to be capable of giving information as to such estate and may examine such person and may require any such person to produce any documents in his custody or power the inspection whereof may tend to secure the payment of any duty under this Ordinance or the proof or discovery of any fraud or omission in relation to any such duty. Any such person shall at all reasonable times permit any person thereunto authorized by the Commissioner to inspect all such documents as aforesaid and to make such notes, copies or extracts thereof or therefrom as he may deem necessary without fee or reward. The Commissioner may also require any such person to deliver to him and verify on oath a statement in writing of such particulars. (Amended 29 of 1970 s. 4) [cf. 1894 c. 30 s. 8(5) U.K.]

Subsection (8) shall apply to any company on a death on which it appears to the Commissioner that section 35 or 44 has effect in respect of that company, and to every person who is or was at any time an officer, or an auditor of that company, as it applies to a person whom the Commissioner believes to have taken possession of or administered any part of an estate in respect of which estate duty is leviable. (Added 1 of 1959 s. 7) [cf. 1940 c. 29 s. 57(1) U.K.]

Nothing in this section shall render a bona fide purchaser for valuable consideration without notice liable to or accountable for estate duty. [cf. 1894 c. 30 s. 8(18) U.K.]

All affidavits and accounts required under this section shall be delivered to the Commissioner, who shall make such inquiry respecting the contents of, or the particulars verified by, such affidavit or accounts and the value of the various properties included therein as he thinks necessary, and the person making or tendering any such affidavit shall attend at the office of the Commissioner, whenever required by him, and shall furnish and produce such explanations and documentary or other evidence as the Commissioner may require.

When the Commissioner has ascertained the amount of estate duty payable in respect of any accounts delivered to him in pursuance of this Ordinance he shall notify the accountable person of his decision by means of a certificate in the prescribed form. If such amount exceeds the amount of estate duty already paid in respect of the said accounts the accountable person shall forthwith pay the excess to the Commissioner.

In every case in which the Commissioner is satisfied that too much estate duty has been paid, the excess, together with any interest which has been paid in accordance with section 12(6), shall be repaid by the Commissioner. (Replaced 29 of 1970 s. 4)

Where the accountable person discovers that for any reason too little estate duty has been paid he shall forthwith deliver to the Commissioner a further account, verified by oath, and shall at the same time pay the difference between the estate duty chargeable according to the true value of the estate and the estate duty already paid.

Notwithstanding subsection (12) and section 12, if—

the Commissioner may, according to the best of his judgment, assess the amount of estate duty which is in his opinion payable and he shall thereupon notify the person who is in his opinion accountable and call upon him to pay such estate duty. (Replaced 29 of 1970 s. 4)

Notwithstanding subsection (12) and section 12, the amount of estate duty assessed under subsection (15) shall be paid within one month after the giving of notice by the Commissioner. (Added 29 of 1970 s. 4)

The Commissioner may remit the interest payable on estate duty where the amount of such interest is in his opinion so small as not to repay the expense and labour of calculation and account.

Every person or company who without lawful authority or reasonable cause fails to comply with any of the provisions of this section shall be liable to pay to the Commissioner, in addition to the estate duty (if any)—

according as the Commissioner elects. (Replaced 29 of 1970 s. 4)

If the Commissioner is satisfied—

the Commissioner may, subject to any conditions which he may specify, exempt the executor from section 14(6).

Where the Commissioner exempts any executor under subsection (1) he shall issue to the executor a certificate of exemption in such form as he may determine.

If, at any time after he has issued to an executor a certificate of exemption under subsection (2), the Commissioner has reasonable grounds for believing—

the Commissioner may withdraw the exemption granted to the executor under subsection (1) and cancel the certificate of exemption, whereupon this Ordinance shall apply as if the exemption had not been granted.

No probate or letters of administration shall be issued by the court until the Commissioner shall have certified in writing that the estate duty payable by the executor upon the estate in respect of which probate or letters of administration is sought has been paid or that he has allowed payment thereof to be postponed under subsections (2) and (3). (Amended 1 of 1959 s. 8)

When the affidavit for the Commissioner contains the statement and undertaking specified in section 12(3), the Commissioner may allow payment of the whole or any part of the estate duty to be postponed until after the issue of probate or letters of administration upon condition that a further and complete affidavit shall be filed and the proper estate duty paid thereon as soon as the full value of the estate has been ascertained and the Commissioner may require the person applying for such probate or letters of administration to enter into a bond with or without sureties in such an amount as he shall think fit to secure the filing of such affidavit as aforesaid and the payment of the proper estate duty thereon within such time as shall be named in such bond. Such bond may be in the prescribed form.

Where the Commissioner is satisfied that the estate duty leviable in respect of any property cannot without excessive sacrifice be raised at once, he may allow payment to be postponed for such period, to such extent and on payment of such interest not exceeding 8 per cent per annum or any higher interest yielded by the property, and on such terms as the Commissioner may think fit. [cf. 1894 c. 30 s. 8(9) U.K.]

Where the Commissioner allows payment to be postponed under subsection (2), he may reduce or remit any interest payable.

In every case where any account is delivered after the lapse of 12 months from the death, the estate duty shall, without prejudice to the exercise of the Commissioner’s discretion under section 27, be charged at twice the rates or amount set out in the applicable Part of Schedule 1, unless the person accountable for the estate duty satisfies the Commissioner that there is a reasonable excuse for the delay in the delivery of the account. (Replaced 47 of 1962 s. 8. Amended 27 of 1996 s. 7; 21 of 2005 s. 9)

In any case in which, before the delivery of the account, a grant of probate or letters of administration or its equivalent had been obtained from a competent court outside Hong Kong, the period referred to in subsection (1) is 18 months from the date of death instead of 1 year. (Added 27 of 1996 s. 7)

Unless the Commissioner in any particular case with the approval of the Secretary for Financial Services and the Treasury otherwise directs— (Amended L.N. 106 of 2002)

For the purposes of this section, no account shall be deemed to have been delivered until the duty which reasonably appears to be payable in respect thereof has been paid, unless the Commissioner shall have allowed payment of the estate duty in respect of the said account to be postponed.

For the purposes of this section, interest shall be charged only on the duty which would have been payable if the duty had been charged at the rate set out in the applicable Part of Schedule 1. (Added 47 of 1962 s. 8. Amended 27 of 1996 s. 7)

Every executor, within one year after obtaining probate or letters of administration to the estate of a deceased person and before selling or otherwise disposing of any shares in any company, registered under or incorporated by any Ordinance of Hong Kong, of which shares the deceased person was at the date of his death the beneficial owner under a transfer in blank and not the registered owner, shall cause such shares to be transferred on the registers of the appropriate companies into the name of the deceased, who shall then be deemed to have been so registered at the time of his death. (Amended 31 of 1990 s. 10)

Every such company, notwithstanding anything in any enactment or in its constitution, memorandum, articles or regulations to the contrary, shall effect registration on payment of the usual registration charges (if any) and in default shall be liable on summary conviction to a fine at level 3. (Amended L.N. 338 of 1995)

Every executor who without reasonable excuse omits to obtain the registration of any such shares as aforesaid within the time limit aforesaid shall be liable to pay to the Commissioner in addition to the estate duty (if any) a penalty at level 3, or, at the option of the Commissioner, a penalty equal to the amount of the estate duty (if any) at the amount or rate set out in the applicable Part of Schedule 1. (Amended L.N. 338 of 1995; 27 of 1996 s. 8; 21 of 2005 s. 10)

Subject to subsection (2)—

Provided that the property shall not be chargeable as against a bona fide purchaser thereof for valuable consideration without notice. (Replaced 1 of 1959 s. 15)

Notice of any charge on any leasehold property constituted by subsection (1) may be given by the Commissioner registering in the Land Registry against the property affected thereby a Memorial signed by him specifying the subsection under which the charge is constituted, the name, description, and date of death of the deceased in respect of whose estate the claim to estate duty arises, and particulars of the property charged. (Added 1 of 1959 s. 15. Amended 8 of 1993 s. 2)

A notice in writing of any charge under subsection (1) or (2) may be entered in the Land Registry as an instrument affecting land. (Added 1 of 1959 s. 15. Amended 8 of 1993 s. 2)

If the rateable part of the estate duty in respect of any property is paid by the executor, it shall where occasion requires be repaid to him by the trustees or owners of the property.

A person authorized or required to pay the estate duty in respect of any property shall, for the purpose of paying the estate duty or raising the amount of the estate duty when already paid, have power, whether the property is or is not vested in him, to raise the amount of such estate duty and any interest and expenses properly paid or incurred by him in respect thereof by the sale or mortgage or a terminable charge on that property or any part thereof.

A person having a limited interest in any property who pays the estate duty in respect of that property shall be entitled to the like charge as if the estate duty in respect of that property had been raised by means of a mortgage to him.

Any money arising from the sale of property comprised in a settlement or held upon trust to lay out upon the trusts of a settlement may be expended in paying any estate duty in respect of property comprised in the settlement and held upon the same trusts.

[cf. 1894 c. 30 s. 9 U.K.]

In the case of property which does not pass to the executor as such, an amount equal to the proper rateable part of the estate duty may be recovered by the person, who being authorized or required to pay the estate duty in respect of any property has paid such duty, from the person entitled to any sum charged on such property (whether as capital or as an annuity or otherwise) under a disposition not containing any express provision to the contrary.

Any dispute as to the proportion of estate duty to be borne by any property or person may be determined upon application by way of summons in the Court of First Instance, and where the amount claimed does not exceed the sum mentioned in section 33 of the District Court Ordinance (Cap. 336) such application shall be made to the District Court. (Amended 35 of 1950 s. 4; 35 of 1966 s. 6; 68 of 1973 s. 5; 79 of 1981 s. 3; 25 of 1998 s. 2)

Any party from whom a rateable part of estate duty can be recovered under this section shall be bound by the accounts and valuations as settled between the person entitled to recover the same and the Commissioner.

[cf. 1894 c. 30 s. 14 U.K.]

This section applies to the estate of any person who dies on or after 15 July 2005 and before 11 February 2006.

Where the amount of estate duty paid before 11 February 2006 in respect of the estate of a deceased person exceeds the amount set out in Part 25 of Schedule 1, the Commissioner shall, as soon as practicable, cause to be refunded the excess amount.

Where the amount of a penalty paid under section 14(17) or 42(2) before 11 February 2006 in respect of the estate of a deceased person exceeds the amount of penalty calculated on the basis of Part 25 of Schedule 1, the Commissioner shall, as soon as practicable, cause to be refunded the excess amount.

Where an amount of interest paid under section 12(6) before 11 February 2006 in respect of the estate of a deceased person exceeds the amount of interest calculated on the basis of Part 25 of Schedule 1, the Commissioner shall, as soon as practicable, cause to be refunded the excess amount.

For the avoidance of doubt, an excess amount refunded under subsection (2), (3) or (4) does not carry interest.

A liability that arose before 11 February 2006 to pay, in respect of the estate of a deceased person, any amount of estate duty that exceeds the amount set out in Part 25 of Schedule 1 shall, as from that date, be deemed to be a liability to pay the amount set out in that Part.

A liability that arose before 11 February 2006 to pay, in respect of the estate of a deceased person, any penalty under section 14(17) or 42(2) or interest under section 12(6) calculated on the basis of any amount that exceeds the amount set out in Part 25 of Schedule 1 shall, as from that date, be deemed to be a liability to pay a penalty or interest calculated on the basis of the amount set out in that Part.

Any person who is aggrieved by a decision of the Commissioner under section 14(12) or by an assessment of the Commissioner under section 14(15) as to the amount of estate duty payable and whether he is aggrieved on the ground of—

may, subject to subsection (1A), on payment of or giving security for as hereinafter mentioned, the duty claimed by the Commissioner or such portion of it as is then payable by him, appeal to the Court of First Instance within 3 months from the date of notification of the decision or assessment and his accountability or the amount of duty payable shall be determined by the Court of First Instance and if the duty is less than that paid to the Commissioner or if no duty is payable the excess shall be repaid. (Replaced 29 of 1970 s. 5. Amended 25 of 1998 s. 2)

The Commissioner may, where satisfied that a person proposes to appeal under subsection (1), allow payment of the duty claimed by him to be postponed for such period, to such extent and on payment of such interest (if any) not exceeding 8 per centum per annum and on such terms as the Commissioner may think fit. (Added 29 of 1970 s. 5)

Where the value of the property as alleged by the Commissioner in respect of which the dispute arises does not exceed $200,000 the appeal under this section shall be to the District Court. (Added 29 of 1970 s. 5. Amended 79 of 1981 s. 2)

The amount mentioned in subsection (1B) may be amended by resolution of the Legislative Council. (Added 79 of 1981 s. 2)

No appeal shall be allowed from any order, direction, determination or decision of the Court of First Instance or the District Court under any appeal under this section except with the leave of the Court of First Instance or the District Court, as the case may be, or of the Court of Appeal. (Added 29 of 1970 s. 5. Amended 25 of 1998 s. 2)

The costs of the appeal shall be in the discretion of the court, and the court, where it appears to the court just, may order the Commissioner to pay on any excess of duty repaid by him interest at such rate per cent per annum and for such period as appears to the court just.

Provided that the Court of First Instance or the District Court, as the case may be, if satisfied that it would impose hardship to require the appellant as a condition of the appeal to pay the whole or, as the case may be, any part of the duty claimed by the Commissioner or of such portion of it as is then payable by him, may allow an appeal to be brought on payment of no duty or of such part only of the duty as to the court seems reasonable and on security to the satisfaction of the court being given for the duty or so much of the duty as is not paid, but in such case the court may order interest at such rate per cent per annum as appears to the court just to be paid on the unpaid duty so far as it becomes payable under the decision of the court. (Amended 29 of 1970 s. 5; 25 of 1998 s. 2)

A schedule under the hand of the Commissioner of all the property passing on the death of a deceased person upon which estate duty has been paid or is payable on the death, and of all the property of a deceased person which, being trust property, is exempt from duty on the death shall be annexed to the probate or letters of administration, and any person who, without lawful authority or reasonable excuse, in any way deals with any estate of the deceased or any property held by the deceased in trust, which is not set out in such schedule, shall be liable to a penalty at level 3, or to a penalty equal to 3 times the amount of the estate duty at the rate set out in the applicable Part of Schedule 1 to this Ordinance payable upon the estate so dealt with, at the election of the Commissioner: (Amended L.N. 338 of 1995; 27 of 1996 s. 10)Provided that the disclosure of any trust relating to property in any such schedule shall not constitute notice of the trust as against any purchaser or mortgagee for valuable consideration.

The reference in subsection (1) to the rate set out in the applicable Part of Schedule 1 shall, in relation to the estate of a person who dies on or after 15 July 2005 and before 11 February 2006, be construed as a reference to the rate set out in Part 24 of Schedule 1. (Added 21 of 2005 s. 13. Amended L.N. 210 of 2005)

Whenever a further affidavit is delivered, the probate or letters of administration in respect of which such affidavit is delivered shall be lodged with the Commissioner who shall insert in the schedule particulars of the additional property set out in the said affidavit.

Where the Commissioner has granted exemption to an executor under section 14A(1)—

Subject to subsection (3A), every person who, being neither the executor appointed by the will of the deceased nor (in the case of an intestacy) the person entitled in priority to the administration of the estate of the deceased, without lawful authority or excuse or without first delivering to the Commissioner accounts of the estate of the deceased as required by section 14, takes possession of or in any way administers any part of the estate of a deceased person, or any part of the income of any part of such estate, shall be liable to a penalty at level 3 and shall also be liable to a further penalty equal to 3 times the amount of the estate duty at the rate set out in the applicable Part of Schedule 1 payable upon the whole estate of the deceased. (Amended 21 of 1972 s. 7; L.N. 338 of 1995; 27 of 1996 s. 11)

Subject to subsection (3A), every person who, being the executor appointed by the will of the deceased or (in the case of an intestacy) the person entitled in priority to the administration of the estate of the deceased, takes possession of or in any way administers any part of the estate of a deceased person or any part of the income of any part of such estate, within 6 months of the death of the deceased, and fails within the said period of 6 months to deliver to the Commissioner accounts of the estate of the deceased as required by section 14, shall be liable to a penalty at level 3, and shall also be liable to a further penalty equal to 3 times the amount of the estate duty at the rate set out in the applicable Part of Schedule 1 payable upon the whole estate of the deceased. (Amended 21 of 1972 s. 7; L.N. 338 of 1995; 27 of 1996 s. 11)

Subject to subsection (3A), every person who, being the executor appointed by the will of the deceased or (in the case of an intestacy) the person entitled in priority to the administration of the estate of the deceased, takes possession of or in any way administers any part of the estate of a deceased person, or any part income of any part of such estate, after the expiration of 6 months from the death of the deceased, without first delivering to the Commissioner accounts of the estate of the deceased as required by section 14, shall be liable to a penalty at level 3 and shall also be liable to a further penalty equal to 3 times the amount of estate duty at the rate set out in the applicable Part of Schedule 1 payable on the whole estate of the deceased. (Amended 21 of 1972 s. 7; L.N. 338 of 1995; 27 of 1996 s. 11)

Subsections (1), (2) and (3) shall not apply in any case where the Commissioner has granted exemption to an executor under section 14A(1). (Added 21 of 1972 s. 7)

A reference in subsection (1), (2) or (3) to the rate set out in the applicable Part of Schedule 1 shall, in relation to the estate of a person who dies on or after 15 July 2005 and before 11 February 2006, be construed as a reference to the rate set out in Part 24 of Schedule 1. (Added 21 of 2005 s. 14. Amended L.N. 210 of 2005)

The Commissioner shall have power to allow in writing the use of any specified part of the estate of a deceased person, or of any specified part of the income of any such estate, for the purpose of the burial of the deceased or for the purpose of the maintenance of the former dependants of the deceased notwithstanding the non-delivery of the accounts required by section 14, or for the purpose of preparing such accounts, and such authorized use of the estate or income as the case may be shall not render the person in question liable to any of the penalties provided by this section.

The recovery of any penalty provided in this section shall be without prejudice to the liability of the accountable person to the payment of estate duty on the estate of the deceased. (Amended 27 of 1996 s. 11)

The amount of the estate duty and any penalty provided in this section is not in any case to exceed 4 times the rate set out in the applicable Part of Schedule 1. (Added 27 of 1996 s. 11)

For the purposes of this section, no account shall be deemed to have been delivered until the duty which reasonably appears to be payable in respect thereof has been paid, unless the Commissioner shall have allowed payment of the estate duty in respect of the said account to be postponed.

Where a deceased person had at the date of his death any interest, whether as partner, depositor or creditor, in any bank or business undertaking within Hong Kong, the bank or business undertaking, or, in the case of a bank or business undertaking which is not a body corporate, the person having the management thereof, shall, within one month from the date of first receiving information of either his interest or the death of such deceased person, whichever shall be the later, notify the Commissioner of such death and of the extent of the interest of the deceased in the bank or business undertaking, and in default of such notification as aforesaid a penalty at level 2 shall be recoverable from the bank or business undertaking, or the owner thereof in the case or an unincorporated body. (Amended 31 of 1990 s. 10; L.N. 338 of 1995)

Where any business undertaking is carried on in a firm name the penalty prescribed by this section shall also be deemed to be due from the firm and may be recovered in an action against the firm in the firm name.

In any proceedings for the recovery of the penalty prescribed by this section, the onus of proving that he has not rendered himself liable to the penalty shall be on the person, company or firm from whom it is sought to recover it.

If the registered owner of any share on a share register which is by law required to be kept within Hong Kong dies, such shares shall for the purposes of this Ordinance be deemed to be part of the estate of the deceased, unless the executor of the deceased proves to the satisfaction of the Commissioner that such share did not form part of the estate of the deceased at his death. (Amended 29 of 1970 s. 7; 31 of 1990 s. 10)

An appeal to the Court of First Instance as under section 22 shall lie from any decision of the Commissioner under subsection (1). (Amended 25 of 1998 s. 2)

If estate duty has already been paid in respect of any settled property since the date of the settlement, upon the death of one of the parties to a marriage, no estate duty shall be payable on the death of the other party to the marriage unless such person was at the time of his or her death or had been at any time during the continuance of the settlement competent to dispose of such property.

[cf. 1894 c. 30 s. 5(2) U.K.; 1914 c. 10 s. 14 U.K.]

In the case of settled property, where the interest of any person under the settlement fails or determines by reason of his death before it becomes an interest in possession, and subsequent limitations under the settlement continue to subsist, the property shall not be deemed to pass on his death.

[cf. 1894 c. 30 s. 5(3) U.K.]

The companies to which sections 35, 41, 44 and 45 respectively apply are any company which, at any relevant time, is deemed to have been under the control of not more than 5 persons not being a company which, at any such time, is deemed to have been either a subsidiary company or a company in which the public were substantially interested. [cf. 1922 c. 17 s. 21(6) U.K.; 1936 c. 34 s. 19 U.K.; 1940 c. 29 s. 58(1) U.K.]

A company shall be deemed to be under the control of not more than 5 persons—

In determining for the purposes of subsection (2) whether a company is deemed to be under the control of not more than 5 persons, persons in any one of the following classes shall be treated as a single person with other persons of that same class, namely—

For the purposes of subsection (3), a person shall be deemed to be the nominee of another person if, whether directly or indirectly, he possesses on behalf of that other person, or may be required to exercise on the direction of or on behalf of that other person, any right or power which is material in determining whether a company is, or is not to be deemed to have been under the control of not more than 5 persons.

A company shall be deemed to be—

For the purpose of this section and in relation to any body corporate incorporated outside Hong Kong— (Amended 31 of 1990 s. 10)

In this section—

Where a person has made to a company to which this section applies a transfer of any property, other than an interest limited to cease on his death or property which he transferred in a fiduciary capacity, and any benefits accruing to the deceased from the company accrued to him in the 3 years ending with his death, the assets of the company shall be deemed for the purposes of estate duty to be included in the property passing on his death to an extent determined, in accordance with subsection (2), by reference to the proportion that the aggregate amount of the benefits accruing to the deceased from the company bore to the net profits of the company.

The extent to which the assets of the company are to be deemed to be included as aforesaid shall be the proportion ascertained by comparing the aggregate amount of the benefits accruing to the deceased from the company in the last 3 accounting years with the aggregate amount of the net profits of the company for the said years:Provided that—(a)where, in any of the said accounting years, the company sustained a loss, the amount of that loss shall be deducted in ascertaining the said aggregate net profits of the company;(b)where the company came into existence in the last but one, or in the last, of the said accounting years, the references in this subsection to the said accounting years shall be construed as references to the last 2 or the last, of those years, as the case may be.

The assets of the company which are deemed to be included in the property passing on the death of the deceased by virtue of this section shall include any assets thereof which have been disposed of or distributed by the company at any time between the beginning of the first of the accounting years aforesaid and the death of the deceased, either—

including assets which have been so disposed of or distributed in a winding-up, whether continuing at or completed before the death:

Provided that this subsection shall not apply to assets disposed of or distributed by way of payments of dividends of amounts not exceeding in the aggregate, as respects payments made in any accounting year or in the period between the end of the last accounting year and the death of the deceased, the amount of the profits of the company for that year or period.

The provisions contained in Schedule 2 shall have effect for the purpose of supplementing and interpreting this section, section 34 and sections 36 to 45 inclusive. (Amended 47 of 1962 s. 11; 24 of 1967 s. 3; 37 of 1970 s. 3; 27 of 1972 s. 4; 24 of 1974 s. 3; 31 of 1976 s. 4; 31 of 1977 s. 4; 33 of 1980 s. 3; 29 of 1981 s. 6; 28 of 1982 s. 5; 29 of 1987 s. 4; 31 of 1990 s. 6; 29 of 1993 s. 3; 34 of 1994 s. 6; 41 of 1995 s. 3; 27 of 1996 s. 14; E.R. 5 of 2021)

Subject to the provisions of subsection (3), if the deceased has made, whether for value or not, a surrender of his title to receive any such profit or payment or enjoyment as is mentioned in section 36, or of any such power as is therein mentioned, section 36 shall have effect as if the surrender had not been made.

The deceased shall be deemed to have made such a surrender as aforesaid if a right which he had to receive any such profit or payment or enjoyment as aforesaid, or if any such power as aforesaid, has been extinguished or suspended by the effect solely or partly of any disposition made by him or with his consent of shares in or debentures of a company or of any other property or right, or of the exercise or the leaving unexercised by him or with his consent of any power or right, or of the extinguishment or suspension by him or with his consent of any power or right, otherwise than in a fiduciary capacity, or if apart from such a disposition or other act or omission he would have become entitled to receive any such profit or payment or enjoyment as aforesaid but by the effect solely or partly thereof he did not become entitled to receive it.

This section shall not apply to a surrender bona fide made before the beginning of the 3 years ending with the death of the deceased, or, if it was made for such purposes as are recognized by the Commissioner as public or charitable, one year before the beginning of the year ending with his death, if the deceased was at all times during those 3 years, or during that year, as the case may be, entirely excluded from receiving, or being entitled to receive, or having any capacity by an exercise of any power exercisable by him or with his consent to receive, any periodical payment by virtue of the surrender or of any associated operations of which the surrender was one.

The profits of the company for any accounting year, or for the period between the end of the last accounting year and the death of the deceased, hereinafter referred to as the assessable profits, shall be determined by ascertaining the profits of the company from all sources, in accordance with the provisions of the Inland Revenue Ordinance (Cap. 112) relating to the ascertainment of assessable profits as if that Ordinance applied to profits not arising in or not derived from Hong Kong, in the same way as it does to profits arising in or derived from Hong Kong, subject to the modification that such assessable profits shall be computed by reference to the actual profits for that year or period, and not by reference to the profits for any other period: (Amended 31 of 1990 s. 10)Provided that—(a)there shall be excluded from the ascertainment of such assessable profits any profits which were not bona fide acquired in the ordinary course of business nor the produce of income yielding assets; and(b)in determining such assessable profits no account shall be taken of sections 19, 19C and 26 of the Inland Revenue Ordinance (Cap. 112). (Replaced 7 of 1975 s. 43)

The net profits of the company for the purpose of this Ordinance for any accounting year shall be determined by adding to the assessable profits for that year computed in accordance with subsection (1) the amount of any interest on debentures in the company deduction for which has already been made under the Inland Revenue Ordinance (Cap. 112) in assessing the assessable profits of the company.

The provisions of subsection (1) shall, for a like purpose and with any necessary adaptations, apply to the determination of any loss sustained by a company, as it applies to the determination of the assessable profits of a company. [cf. 1944 c. 23 s. 37 U.K.]

In determining the value of the estate for the purpose of estate duty the provisions of section 13(1) as to making allowance for debts and incumbrances shall not have effect as respects any debt or incumbrance to which assets of the company passing on the death by virtue of section 35 were liable, but the Commissioner shall make an allowance from the principal value of those assets for all liabilities of the company (computed as regards liabilities which have not matured at the date of death, by reference to the value thereof, at that date, and, as regards contingent liabilities, by reference to such estimation as appears to the Commissioner to be reasonable) other than—

In estimating for the purpose of subsection (1), the principal value of the assets deemed to pass on the death by virtue of section 35, the Commissioner shall fix the price thereof on the basis of a sale of the business of the company as a going concern, and the proportion of that value upon which estate duty is payable by virtue of section 5 as modified by section 10(b), shall be ascertained by comparing—

Where the assets passing on the death by virtue of section 35 include any distributed assets, if partial consideration, other than the extinguishment, or an alteration of rights attaching to shares in or debentures of a company to which that section applies, was given for the distribution in money or money’s worth received by the company for its own use and benefit, a further allowance shall be made, in addition to the allowances specified in subsection (1), of an amount equal to the value of the consideration given.

For the purpose of the estimation of the principal value of any distributed assets, section 13(5)(a) shall have effect with the substitution for the reference therein to the time of the death of the deceased of a reference to the time of the distribution, and effect shall be given to the proviso to paragraph (b) of the said subsection as at the time of the distribution only, due regard being had to the expectation of life of the deceased at that time.

If it is shown to the satisfaction of the Commissioner that—

the value of all such property as is mentioned in section 35(1) of which the deceased made a transfer to the company, together with an amount equal to any excess of interest at the average rate on the value thereof from the date or respective dates of transfer to the death of the deceased over the aggregate amount of the benefits received by the deceased by virtue of the transfer is less than the value on which estate duty would be chargeable on the death under section 35 if all benefits accruing to him from the company other than benefits received by him by virtue of the transfer were disregarded,

then, an amount equal to the deficiency shall be deducted from the proportion of the value of the company’s assets that corresponds to the benefits received by him by virtue of the transfer. [cf. 1940 c. 29 s. 51(1) U.K.]

References in subsection (1) to benefits received by the deceased by virtue of a transfer shall be construed as references to benefits accruing to him from the company which he received or had as consideration for the transfer, or in consequence of his having received as consideration therefor shares or debentures or other property which produced any of those benefits. [cf. 1940 c. 29 s. 51(1) U.K.]

Where the following conditions are satisfied, that is to say, that the deceased has, within 3 years before his death, disposed of any shares in or debentures of the company for consideration in money or money’s worth paid to him for his own use or benefit, and that any benefits accrued to the deceased from the company by virtue of those shares or debentures or by virtue of a power’s having been exercisable by him or with his consent in relation to those shares or debentures, then—

Provided that— (i)if estate duty on the death is payable upon such shares or debentures on their value or any part thereof, or would be so payable but for an exemption from estate duty, that value, aggregated if necessary, shall be taken into account as aforesaid, and in such a case references in this subsection to the value of the consideration shall not apply; and (ii)in assessing the value of such shares or debentures for the purposes of this subsection if they have since the deceased disposed of them, been substantially increased in value by reason of a transfer of property to any company by any person, or by reason of the extinguishment of, or any alteration of the rights attaching to, shares in or debentures of any company, their principal value shall be reduced to such an extent as in the opinion of the Commissioner is necessary to offset the increase attributable to the transfer, extinguishment or alteration. [cf. 1950 c. 15 s. 47 U.K.; 1952 c. 33 s. 72 U.K.]

Where the following conditions are satisfied, that is to say, that any benefits accrued to the deceased from the company by virtue of any interest that he at any time had in shares or in debentures of the company, or by virtue of a power’s having at any time been exercisable by him or with his consent in relation to shares in or debentures of the company, and apart from this subsection estate duty would be payable on the death both on the value of those shares or debentures by virtue of any provision of this Ordinance other than section 35 and on the proportion of the value of the company’s assets that corresponds to the benefits that so accrued to him by virtue of that section, then—

Where the conditions set out in subsection (4) would be satisfied but for the fact that, by reason of an exemption from estate duty, not being an exemption on the ground that the deceased or other person having an interest in the shares or debentures ceasing on the death of the deceased had only an interest as the holder of an office, nor being, in the case of a person dying on or after the commencement* of the Estate Duty (Amendment) (No. 2) Ordinance 1979 (44 of 1979), an exemption conferred by section 10(b), that duty is not payable on the value of the shares or debentures, paragraphs (a) and (b) of that subsection shall apply as if that exemption did not operate and as if the duty had been payable on the value of the shares and debentures accordingly: (Amended 44 of 1979 s. 2; E.R. 5 of 2021)

Provided that where— (a)the exemption in question depends on a payment of any duty on an earlier death, or does not depend on such a payment but depends wholly or partly on any dispositions having been made; and (b)since the date of that death or disposition, as the case may be, the shares or debentures have been substantially increased in value by reason of a transfer of property to any company by any person or by reason of the extinguishment of, or any alteration of the rights attaching to, shares in or debentures of any company,

then, unless the exemption takes the form of a deduction from the value of the shares or debentures of a fixed amount which is independent of the value of the shares or debentures, the references in paragraphs (a) and (b) of subsection (4) to the value of the shares or debentures therein mentioned shall have effect as if they were references to the value thereof reduced to the extent to which, in the opinion of the Commissioner, that value is attributable to that transfer, extinguishment or alteration. [cf. 1944 c. 23 s. 38 U.K.]

Where, by reason of an exemption from estate duty, that duty is payable on part only of the value of the shares or debentures, subsection (4) shall, with the necessary adaptations, be applied to the part of the value of the shares or debentures on which duty is payable and subsection (5) shall be applied to the part of the value of the shares or debentures affected by the exemption; and, where there are 2 or more exemptions from estate duty each of which operates on part only of the value of the shares or debentures and the exemptions are such that subsection (5) would operate differently in relation to them, then, whether or not there is any part of the value of the shares or debentures on which estate duty is payable, subsection (5) shall, with the necessary adaptations, be applied separately in relation to the parts of the value of the shares or debentures affected by each exemption. [cf. 1944 c. 23 s. 38 U.K.]

References in this section to the proportion of the value of the company’s assets that corresponds to any particular benefits shall be construed as references to so much of the value on which estate duty is chargeable on the death by virtue of section 35 as is chargeable by reason of the bringing of those benefits into the computation made under subsection (2) of that section. [cf. 1940 c. 29 s. 51(3) U.K.]

So much of any profit or periodical payment or enjoyment of a kind mentioned in section 36 as is shown to the satisfaction of the Commissioner to have represented, or to have been such that it would if received have represented, reasonable remuneration to the deceased for any services rendered by him as the holder of an office under the company shall, notwithstanding anything in that section, not be treated for the purposes of sections 34 to 45 inclusive, as a benefit accruing to the deceased from the company; and any liability of the company in respect of the remuneration of any person as the holder of an office under the company shall be treated for the purposes of the aforesaid sections as incurred for the purposes of the business of the company wholly and exclusively to the extent to which it is shown to the satisfaction of the Commissioner that the amount thereof was reasonable, and that extent only. [cf. 1940 c. 29 s. 51(4) U.K.]

If a company to which section 35 applies was concerned in a transaction falling within the scope of that section, or in any one or more of associated operations of which that transaction formed one, the provisions of section 10(a), and of section 40(3), shall have no effect as respects that transaction or operation. [cf. 1940 c. 29 s. 56(1) U.K.; 1950 c. 15 s. 47(b)(ii) U.K.]

Where a disposition has been made or an interest determined or surrendered to which either the proviso to section 6(1)(h), or section 37(3), applies and, that disposition, determination or surrender, or one or more associated operations of which that disposition or determination or surrender formed one, concerned—

then the conditions as to the entire exclusion of the person referred to in paragraph (b) shall not be treated for the purpose of the aforesaid provisions as having been satisfied if it can be shown that at the time of the said disposition, determination or surrender, or at any time thereafter, the said person had any benefit by virtue of that disposition, determination or surrender. [cf. 1940 c. 29 s. 56(2) U.K.; 1950 c. 15 s. 43(1) U.K.]

A company to which section 35 applies shall be under obligation to inform the Commissioner, within one month from the date of the death of the deceased, of the death, of the fact that the deceased made a transfer of property to the company, and of the fact that benefits accrued to the deceased from the company, and every person who was an officer of the company at that date, or, if the company has been wound up and dissolved before that date, who was an officer of the company at any time, shall be under the like obligation as respects such of the facts aforesaid as are within his knowledge, unless he knows, or has reasonable cause for believing, that the information in question has already been given to the Commissioner by the company or some other person.

If such company or any such person as aforesaid who is under obligation by virtue of subsection (1) to give any information to the Commissioner makes default in the performance of that obligation, every such defaulter shall be liable to a penalty at level 6 and shall also be liable to a further penalty equal to 3 times the amount of the estate duty at the amount or rate set out in the applicable Part of Schedule 1 payable upon the whole estate of the deceased. (Amended L.N. 338 of 1995; 27 of 1996 s. 15; 21 of 2005 s. 16)

The following persons shall be accountable for the duty payable on the death of the deceased by virtue of section 35, that is to say—

Provided that a person shall not— (i)by virtue of paragraph (b), be accountable in respect of any assets for any duty in excess of the value of those assets; or (ii)by virtue of paragraph (c), be accountable in respect of any assets for more than a part of the duty bearing to the whole thereof the same proportion that the value of the distribution of those assets bears to the principal value of the assets of the company passing on the death by virtue of section 35 after making the allowances to be made under section 39.

Where a company incorporated outside Hong Kong is accountable for any duty by virtue of subsection (1) or of this subsection, every person who is a member of that company at the death shall also be accountable for a rateable part of that duty in proportion to the value of his interest in that company. (Amended 31 of 1990 s. 10)

A person accountable for any duty by virtue of this section shall, for the purpose of raising and paying the duty, have all the powers conferred on accountable parties by this Ordinance.

On a winding-up of the company section 265(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (which determines what debts shall have priority over other debts in a winding-up) shall have effect as if there were included in paragraph (d) of that subsection a reference to any duty payable in respect of assets of the company passing on a death by virtue of section 35 of this Ordinance, and section 79 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) shall have effect accordingly. (Amended 6 of 1984 s. 259; 28 of 2012 ss. 912 & 920)

The duty payable on the death of the deceased by virtue of section 35 shall be a first charge by way of floating security on the assets which the company had at the death or has at any time thereafter, and any part of the duty for which by virtue of subsection (1)(c) any person is accountable in respect of any distributed assets shall be a first charge also on those assets:Provided that nothing in this subsection shall operate to make any property chargeable as against a bona fide purchaser thereof for valuable consideration without notice.

Where any duty has been—

that person, or, as the case may be, the person who was entitled to those assets subject to the charge, may, without prejudice to any right of contribution or indemnity which he may have apart from this subsection, recover the amount of duty so paid or raised as aforesaid from any person who is accountable therefor otherwise than by virtue of subsection (1)(c).

No part of the duty paid by the company shall be recoverable by it from any person on the ground only that he is entitled to any interest in, or to any sum charged on, the assets which the company had at the death of the deceased.

The following provisions shall not have effect in relation to the duty payable by virtue of section 35, that is to say—

and section 18(1) shall have effect in relation to the estate as if the property passing by virtue of section 35 had been property passing to the executor as such.

Where for the purposes of estate duty there pass shares in or debentures of a company to which by virtue of section 34 this section applies, then if the deceased had the control of the company at any time during the 3 years ending with his death, the principal value of the shares or debentures, in lieu of being estimated in accordance with the provisions of section 13(5)(a), shall be estimated by reference to the net value of the assets of the company in accordance with the provisions of subsection (2) of this section: Provided that any liability of the company arising, or which may arise, after the death for corporation profits tax shall be taken into account as if it were an actual but contingent liability at the date of the death, in so far as the liability or its amount is referable to profits accruing before the death, whether then realized or not; and in estimating any such liability for taxation charged on profits arising after the death the Commissioner shall take into account the extent, if any, to which the last-mentioned profits are likely to be insufficient to meet the liability. [cf. 1940 c. 29 s. 55 U.K.; 1954 c. 44 ss. 29(1)(a) & 30(3) U.K.]

The principal value of the shares and debentures mentioned in subsection (1) shall be estimated as follows—

For the purposes of this section, a person shall be deemed—

This section shall not apply to the valuation of shares or debentures of a class which have been dealt with on a recognized stock market in the ordinary course of business on that market and such dealings have been recorded during the year ending with the death of the deceased, and, in making an apportionment under subsection (2)(c) in the case of a company having shares or debentures of such a class, the part of the value of the assets of the company to be apportioned to shares or debentures of that class shall be determined by reference to the prices recorded of such dealings. (Amended 31 of 1990 s. 7; 5 of 2002 s. 407) [cf. 1940 c. 29 s. 55(4) U.K.]

Control of a company which a person had in a fiduciary capacity shall be disregarded for the purposes of this section but in the cases dealt with in subsection (7), this section shall apply as if the deceased had, within 3 years of his death, had control of the company otherwise than in a fiduciary capacity, but only as to the valuation of the shares in or debentures of the company as respects which one of the conditions contained in paragraph (a) or (b) or the proviso hereto is satisfied, namely—

Provided that, in the case of shares or debentures falling to be valued on the death by virtue of a gift inter vivos made by the deceased, or by virtue of a disposition or determination, in relation to which subsection (1)(h) and subsection (2) of section 6 have effect, of an interest limited to cease on the death, the above conditions shall not apply, and the conditions shall be that immediately after the death or at any previous time since the gift, or since the disposition or determination, as the case may be, the donee, or the person becoming entitled by virtue of or upon the disposition or determination, has or had control or powers equivalent to control of the company, either alone or in conjunction with his relatives. [cf. 1940 c. 29 s. 55(5) U.K.; 1954 c. 44 ss. 29(1) & (5) & 31(2) U.K.]

In determining for the purpose of subsection (5), whether a person at any time has or had control of a company either alone or in conjunction with his relatives, or a beneficial interest in possession in any shares in or debentures of a company—

The cases referred to in subsection (5) as being dealt with in this subsection are as follows—

Where any shares or debentures which fall to be valued in accordance with this section have also fallen to be so valued on a previous death within 5 years, then for the purposes of section 31 those shares and debentures shall, in relation to those deaths, be treated in the same way as an interest in land or in a business not carried on by a company, if on both deaths their value is wholly or partly attributable to the value of land of the company or any subsidiary of it or to the value of assets used by the company or any subsidiary of it in a business not consisting mainly in the holding of or dealing in investments other than land: Provided that the amount on which the reduction under the said section 31 is to be calculated shall be limited, where necessary, to the duty on the part so attributable of the value, on which duty is payable, of the shares or debentures, and references to that part of the value shall, in the proviso to the said section 31, be substituted for the references to the whole value, whether in relation to the first or the second death. [cf. 1954 c. 44 s. 30(4) U.K.]

In determining for the purposes of subsection (8) what part of the value of any shares in or debentures of a company is attributable to the value of particular assets— (Amended E.R. 5 of 2021)

Where a company alters its share capital by sub-dividing any shares into shares of smaller amount, or by consolidating and dividing any shares into shares of large amount, subsection (8) shall apply to shares derived by those means from shares of the same class which have fallen to be valued in accordance with this section on a death occurring before the alteration of share capital, as if those shares and the equivalent amount of the shares from which they were so derived were the same shares; and if a company has issued to holders of any shares other shares as fully paid bonus shares, that subsection shall apply both to the shares in respect of which the issue was made and to the shares so issued as if they were derived from the former by sub-division. [cf. 1954 c. 44 s. 30(5) U.K.]

In this section—

If a company to which by virtue of section 34, this section applies, was concerned in a transaction in relation to which it is claimed that the provisions of paragraph (a) of or the proviso to section 7(1) have effect, those provisions shall have effect in relation thereto if and only if, and to the extent only to which, the Commissioner is satisfied that those provisions would have had effect in the following circumstances, namely, if the assets of the company had been held by it on trust for the members thereof and any other person to whom it is under any liability incurred otherwise than for the purposes of the business of the company wholly and exclusively, in accordance with the rights attaching to the shares in and debentures of the company and the terms on which any such liability was incurred, and if the company had acted in the capacity of a trustee only with power to carry on the business of the company and to employ the assets of the company therein. [cf. 1950 c. 15 s. 46(1) U.K.]

Any gifts made in favour of a relative of the deceased by a company of which the deceased at the time of the gift had control within the meaning of section 44(3) shall be treated for the purposes of section 6(1)(c) as a gift made by the deceased, and the property taken under the gift shall be treated as included by virtue of that paragraph in the property passing on the death of the deceased, if and to the extent to which the Commissioner is satisfied that it would fall to be so treated in the circumstances mentioned in subsection (1).

If the deceased has made in favour of a company to which, by virtue of section 34, this section applies, a disposition which, if it had been made in favour of a relative of his, would have fallen within section 7(1), this section shall have effect in like manner as if the disposition had been made in favour of a relative of his, unless it is shown to the satisfaction of the Commissioner that no relative of the deceased was, at the time of the disposition or subsequently during the life of the deceased, a member of the company and for the purposes of this subsection a person who is, or is deemed by virtue of this provision to be, a member of a company to which this section applies and which is a member of another such company shall be deemed to be a member of that other company. [cf. 1940 c. 29 s. 44(4) U.K.]