HK Cap. 111 — Estate Duty Ordinance

To amend and consolidate the law relating to estate duty. [26 February 1932] (Format changes— E.R. 5 of 2021 ) 1. Short title This Ordinance may be cited as the Estate Duty Ordinance . 2. Application This Ordinance shall apply in the case of every deceased person who dies on or after 1 January 1916 and before 11 February 2006; and it shall also apply in the case of every deceased person who died before 1 January 1916 if representation to his estate has not been applied for before 2 May 1921. (Amended 21 of 2005 s. 3 ; L.N. 210 of 2005 ) 3. Interpretation (1) In this Ordinance, unless the context otherwise requires— account ( 遺產呈報表 ) means an account of the particulars and value of the estate of a deceased person in such form as may be prescribed by the Secretary for Financial Services and the Treasury, and verified by affidavit; (Amended 27 of 1996 s. 2 ; L.N. 106 of 2002 ) affidavit for the Commissioner ( 遺產申報誓章 ) means an affidavit in such form as may be prescribed by the Secretary for Financial Services and the Treasury verifying the particulars and value of the estate of a deceased person; (Amended 27 of 1996 s. 2 ; L.N. 106 of 2002 ) applicable Part of Schedule 1 ( 附表1 適用部分 ) means— (a) in the case of persons dying before 27 February 1931, Part 1 of Schedule 1 ; (b) in the case of persons dying on or after the date shown in column 1 of the following table and before the date shown in column 2, the Part of Schedule 1 shown in column 3— (Amended 21 of 2005 s. 4 ) (c) (Repealed 21 of 2005 s. 4 ) Table Date of Death On or after And before Applicable Part of Schedule 1 27 February 1931 1 July 1936 Part 2 1 July 1936 1 April 1941 Part 3 1 April 1941 1 April 1948 Part 4 1 April 1948 1 February 1959 Part 5 1 February 1959 1 January 1963 Part 6 1 January 1963 1 April 1967 Part 7 1 April 1967 1 April 1970 Part 8 1 April 1970 1 April 1972 Part 9 1 April 1972 1 April 1974 Part 10 1 April 1974 11 June 1976 Part 11 11 June 1976 3 June 1977 Part 12 3 June 1977 11 July 1980 Part 13 11 July 1980 29 May 1981 Part 14 29 May 1981 4 June 1982 Part 15 4 June 1982 1 April 1987 Part 16 1 April 1987 1 April 1990 Part 17 1 April 1990 1 April 1993 Part 18 1 April 1993 1 April 1994 Part 19 1 April 1994 1 April 1995 Part 20 1 April 1995 1 April 1996 Part 21 1 April 1996 1 April 1997 Part 22 1 April 1997 1 April 1998 Part 23 1 April 1998 15 July 2005 Part 24 15 July 2005 11 February 2006 Part 25 ; (Replaced 27 of 1996 s. 2 . Amended 44 of 1997 s. 2 ; L.N. 152 of 1998 ; 19 of 1998 s. 2 ; 21 of 2005 s. 4 ; L.N. 210 of 2005 ) assets ( 資產 ) includes goodwill; associated operations ( 相聯行動 ) means any 2 or more operations of any kind being— (a) operations which affect the same property, or one of which affects some property and the other or others of which affect property which represents, whether directly or indirectly, that property or income arising from that property, or any property representing accumulations of any such income; or (b) any 2 operations of which one is effected with reference to the other, or with a view to enabling it to be effected or to facilitating its being effected, and any third operation having a like relation to either of those two, and any fourth operation having a like relation to any of those three, and so on, whether those operations are effected by the same person or by different persons, whether they are connected otherwise than as aforesaid or not, and whether they are contemporaneous or any of them precedes or follows any other; average rate ( 平均率 ) means, in relation to a company, a rate per cent per annum, the percentage being ascertained by— (a) computing the aggregate amount of the net profits of the company for the relevant accounting years, a deduction being made, where the company sustained a loss in any of those years, of the amount of the loss; (b) dividing that amount by the number of those years; and (c) comparing the result with the principal value of the assets of the company passing on the death of the deceased by virtue of section 35 after making the allowances to be made under section 39 ; Commissioner ( 署長 ) means such person as the Chief Executive may appoint as Commissioner for the purpose of this Ordinance; (Amended 21 of 1972 s. 2 ; 12 of 1999 s. 3 ) company ( 公司 ) includes any body corporate, wheresoever incorporated; debenture ( 債權證 ) means, in relation to a company, any obligation of the company in respect of any loan capital issued by the company otherwise than as consideration for a loan made to it in the ordinary course of banking business, or in respect of any debt incurred by the company— (a) for any money borrowed by the company, otherwise than by way of temporary loan made in the ordinary course of a banking business; (b) for any transfer of capital assets made to the company by any person, unless the obligation is one resulting from a dealing with a person who transferred such assets to the company in, and on terms consistent with, the ordinary course of a business carried on by him; (c) without consideration, or for consideration the value of which to the company at the time when the debt was incurred was substantially less than the value at that time of the debt, including any premium thereon; or (d) where the debt was of such a nature that it would in the ordinary course of business and apart from some special arrangement, have carried interest, if the debt did not carry interest or carried interest at a rate which was either unreasonably high or unreasonably low; disposition ( 產權處置 ) includes any trust, covenant, agreement or arrangement, whether made by a single operation or by associated operations, and also, in relation to shares in or debentures of a company, the extinguishment or any alteration of rights attaching thereto, whether effected by a single operation or by associated operations; distributed assets ( 經分派資產 ) means, in relation to a company, assets of the company to which section 35(3) applies which were disposed of or distributed by the company as mentioned in that subsection, and value of the distribution ( 分派價值 ) means, in relation to any distributed assets, the value thereof or, 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, the value thereof less the value of the consideration given; dividend ( 股息 ) includes a bonus chargeable to tax under the Inland Revenue Ordinance ( Cap. 112 ) and also any bonus which would be so chargeable if it had arisen in or been derived from Hong Kong; (Amended 31 of 1990 s. 10 ) estate duty ( 遺產稅 ) means duty chargeable under this Ordinance; executor ( 遺囑執行人 ) means the executor or administrator of a deceased person and includes, as regards any obligation under this Ordinance, any person who takes possession of or intermeddles with the property of a deceased person or any portion thereof; incumbrance ( 產權負擔 ) includes mortgage and terminable charge; interest in expectancy ( 預期權益 ) includes an estate in remainder or reversion and every future interest whether vested or contingent, but does not include a reversion expectant upon the determination of a lease; member ( 成員 ) means, in relation to a company, a holder in his own right of any share in or debenture of the company, and a person interested in any share in or debenture of the company held, whether by himself or another, otherwise than in the holder’s own right; officer ( 高級人員 ) means, in relation to a company, any person who exercises the functions of a director, manager, secretary or liquidator of the company; payment ( 繳付 、 付款 ) includes a transfer of property and a set-off or release of an obligation, and references to the amount of a payment include, in relation to property transferred or to an obligation set-off or release, references to the value thereof; periodical payment ( 按期付款 ) means a payment by way of dividend or interest, a payment by way of remuneration not being a single lump sum payment, and any other payment being one of a series of payments, whether inter-connected or not, whether of the same or of varying amounts, and whether payable at regular intervals or otherwise; power ( 權力 ) includes any right or power exercisable by virtue of the holding of shares in or debentures of a company, and any right or power to procure an issue of shares in or debentures of a company; property ( 財產 ) includes movable and immovable property and the proceeds of sale thereof respectively and any money or investment for the time being representing the proceeds of sale; property passing on the death ( 去世時轉移的財產 ) includes property passing either immediately on the death or after any interval, and either certainly or contingently, and either originally or by way of substitutive limitation, and on the death ( 去世時 ) includes “ at a period ascertainable only by reference to the death ” ( 在僅可依據該宗死亡才可以確定的一段期間 ); recognized stock market ( 認可證券市場 ) has the same meaning as in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance ( Cap. 571 ); (Added 5 of 2002 s. 407 ) settlement ( 授產安排 、 授產契 ) means any non-testamentary disposition in writing, whether made voluntarily or upon a good or valuable consideration other than a bona fide pecuniary consideration, whereby any definite and certain property is settled or agreed to be settled in any manner for any purpose whatsoever. (Amended 5 of 2002 s. 407 ) (Amended 5 of 2002 s. 407 ) [cf. 1894 c. 30 s. 22(1) U.K.; 1940 c. 29 ss. 44, 47(2) & 59 U.K.; 1944 c. 23 s. 36 U.K.] (2) For the purposes of this Ordinance— (a) a person shall be deemed competent to dispose of property if he has such an estate or interest therein or such general power as would, if he were sui juris, enable him to dispose of the property; and general power ( 一般權力 ) includes every power or authority enabling the donee or other holder thereof to appoint or dispose of property as he thinks fit, whether exercisable by instrument inter vivos or by will, or both, but exclusive of any power exercisable either in a fiduciary capacity under a disposition not made by himself or as mortgagee; (b) a disposition taking effect out of the interest of the deceased person shall be deemed to have been made by him, whether the concurrence of any other person was or was not required; (c) money which a person has a general power to charge on property shall be deemed to be property of which he has power to dispose; (d) the creation by a person or with his consent of a debt or other right enforceable against him personally or against property of which he was or might become competent to dispose, or to charge or burden for his own benefit, shall be deemed to have been a disposition made by that person, and in relation thereto the expression property ( 財產 ) shall include the debt or right created; [cf. 1940 c. 29 s. 45(1) U.K.] (e) the extinguishment at the expense of the deceased of a debt or other right shall be deemed to have been a disposition made by the deceased in favour of the person for whose benefit the debt or right was extinguished, and in relation thereto the expression property ( 財產 ) shall include the benefit conferred by the extinguishment of the debt or right. [cf. 1940 c. 29 s. 45(2) U.K.] [cf. 1894 c. 30 s. 22(2) U.K.] (3) 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.] (4) 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— (a) if the relevant payment or other matter has been applied in any manner for the benefit of that person, or has been dealt with by that or any other person in any manner calculated to cause it to inure for the benefit of that person at any time, whether in the form of income or not or if any property which was or would be available for the purpose by reason of the effect or successive effects of any one or more of associated operations relating to the relevant payment or other matter has been so applied or dealt with; (b) if any advantages received or to be received at any time by that person have been provided out of that payment or other matter, or out of any such property as aforesaid; (c) if that person became able in any manner to control the application of the relevant payment or other matter, or of any such property as aforesaid, otherwise than in a fiduciary capacity; (d) if the relevant payment or other matter, or any such property as aforesaid, has been applied in any manner so as to increase the value to that person of any property in which he was beneficially interested; or (e) as respects such profits as are mentioned in section 36 , if the receipt by, or accrual to, the company of those profits operated in any manner so as to increase the value to that person of any property in which that person was beneficially interested, so however that the amount of the income or profits which that person is to be treated as having received by virtue of this paragraph shall be limited to the amount of the increase in value of the property in question, 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.] (5) References in this Ordinance— (a) to a disposition’s being made by any person, to a power’s being exercised or exercisable by any person, or to any other act’s being done by any person, include references to its being made, or being exercised or exercisable, or being done, by him and another jointly or by another at his direction or by a company of which he had control, or powers equivalent to control, within the meaning of section 44(3) , whether with or without the consent of any other person having similar powers; references importing an omission on the part of any person in relation to any such matter as aforesaid shall be construed in like manner; and references in relation to any such matter, as aforesaid to its being made, or being exercised or exercisable, or being done or omitted, with the consent of any person include references to its being made, or being exercised or exercisable, being done or omitted, at his request or with or subject to his acquiescence; [cf. 1940 c. 29 s. 58(4) U.K.; 1954 c. 44 s. 29(6) U.K.] (b) to a person having any power or control or doing any act in a fiduciary capacity shall be construed as references to his having that power or control or doing that act in a fiduciary capacity imposed on him otherwise than by a disposition made by him and in such a capacity only; [cf. 1940 c. 29 s. 58(5) U.K.] (c) to an interest ceasing or being limited to cease on a death shall be construed as including references to its being subject to a limitation, in whatsoever form, having the effect of providing in the alternative for its cesser on the death or on the occurrence of some event, or the expiration of some period, before the death; [cf. 1940 c. 29 s. 58(6) U.K.] (d) to a transfer of property, (except in the definition of payment in subsection (1)) shall include a reference to a payment of money, and the expressions disposition ( 產權處置 ) and value ( 價值 ) respectively, in relation to money, shall include payment and amount. (Amended E.R. 5 of 2021 ) [cf. 1952 c. 33 s. 72(2) U.K.] (Replaced 1 of 1959 s. 2 ) 3A. Exercise of powers and duties (1) 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. (2) 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. (Added 21 of 1972 s. 3 ) 4. Appointment as commissioner for oaths (1) 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. (2) 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. (Added 32 of 1934 s. 2 ) 5. Estate duty In the case of every deceased person there shall, save as hereinafter expressly provided, be levied and paid upon the principal value, ascertained as hereinafter provided, of all property passing on the death of such person, a duty called estate duty at the amount or graduated rates, as may be applicable, mentioned in the applicable Part of Schedule 1 : (Amended 21 of 2005 s. 5 ) Provided that, where the principal value of an estate comprises a fraction of $100, such fraction shall, for the purpose of determining the amount of estate duty payable, be reckoned as $100: [cf. 1894 c. 30 s. 1 U.K.] Provided also that where an interest in expectancy in any property has, before 27 February 1931, been bona fide sold or mortgaged for full consideration in money or money’s worth, then no higher duty on that property shall be payable by the purchaser or mortgagee when the interest falls into possession than is in accordance with the rates mentioned in the Part 1 of Schedule 1 , and in the case of a mortgage any higher duty payable by the mortgagor shall rank as a charge subsequent to that of the mortgagee. [cf. 1919 c. 32 s. 29 U.K.; 1940 c. 48 s. 17 U.K.] (Amended 47 of 1962 s. 3 ; 27 of 1996 s. 3 ) 6. What property is deemed to pass on death (1) Property passing on the death of the deceased shall be deemed to include the property following— (a) property of which the deceased was at the time of his death competent to dispose; [cf. 1894 c. 30 s. 2(1) U.K.] (b) property in which the deceased or any other person had an interest ceasing on the death of the deceased, to the extent to which a benefit accrues or arises by the cesser of such interest, and such property shall be deemed to pass on the death of the deceased notwithstanding that that estate or interest has been surrendered, assured, divested or otherwise disposed of, whether for value or not, to or for the benefit of any person entitled to an estate or interest in remainder or reversion in such property, unless that surrender, assurance, divesting or disposition was bona fide made or effected 3 years before the death, or if it was made or effected for such purposes as are recognized by the Commissioner as public or charitable, one year before the death, and bona fide possession and enjoyment of the property was assumed thereunder immediately upon the surrender, assurance, divesting or disposition, and thenceforward retained to the entire exclusion of the person who had the estate or interest limited to cease as aforesaid, and of any benefit to him by contract or otherwise: Provided that where property affected by such a surrender, assurance, divesting or disposition 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 surrender, assurance, divesting or 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 such purposes as are recognized by the Commissioner as public or charitable, one year immediately preceding the death: Provided also that this paragraph shall not apply to any property the interest in which of the deceased or other person was only an interest as holder of an office or as recipient of the benefits of a charity or as a corporation sole; (Amended 1 of 1959 s. 3 ) [cf. 1900 c. 7 s. 11 U.K.; 1910 c. 8 s. 59 U.K.; 1940 c. 29 s. 43(2) U.K.; 1946 c. 64 s. 47 U.K.] (c) property taken as a donatio mortis causa made by the deceased or taken under a disposition made by him, purporting to operate as an immediate gift inter vivos, whether by way of transfer, delivery, declaration of trust, or otherwise, which shall not have been bona fide made 3 years before the death or in the case of a gift inter vivos made or effected for such purposes as may be recognized by the Commissioner as public or charitable, one year before the death, or taken under any gift, whenever made, of which property bona fide possession and enjoyment shall not have been assumed by the donee immediately upon the gift and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise: Provided that this paragraph shall not apply to gifts inter vivos which are made in consideration of marriage, or which are proved to the satisfaction of the Commissioner to have been part of the normal expenditure of the deceased, and to have been reasonable having regard to the amount of his income or to the circumstances, or which in the case of any donee do not exceed in the aggregate $200,000 in value or amount: (Amended 28 of 1979 s. 2 ; 29 of 1987 s. 3 ; 34 of 1994 s. 3 ) Provided also that where property taken under a disposition purporting to operate as an immediate gift inter vivos 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 such purposes as are recognized by the Commissioner as public or charitable, one year before the death: (Amended 29 of 1981 s. 3 ) Provided also that money or money’s worth paid or applied by the deceased in or towards satisfaction or discharge of a debt or incumbrance in the case of which section 13(2) would have had effect on his death if the debt or incumbrance had not been satisfied or discharged, or in reduction of a debt or incumbrance in the case of which that subsection has effect on his death, shall, unless so paid or applied 3 years before the death, be treated as property deemed to be included in the property passing on the death and estate duty shall, notwithstanding anything in section 10(a) , be payable in respect thereof accordingly; (Amended 1 of 1959 s. 3 ) [cf. 1881 c. 12 s. 38(2) U.K.; 1889 c. 7 s. 11 U.K.; 1894 c. 30 s. 2(1) U.K.; 1910 c. 8 s. 59 U.K.; 1939 c. 41 s. 31(2) U.K.; 1940 c. 29 s. 43(2) U.K.; 1946 c. 64 s. 47 U.K.] (d) property to which the deceased has been absolutely entitled, and which he has caused to be transferred to or vested in himself and any other person jointly, whether by disposition or otherwise (including also any purchase or investment effected by the deceased either by himself alone, or in concert, or by arrangement with any other person), so that the beneficial interest therein or in some part thereof passes or accrues by survivorship on his death to such other person; [cf. 1881 c. 12 s. 38(2) U.K.; 1889 c. 7 s. 11 U.K.; 1894 c. 30 s. 2(1) U.K.] (e) property passing under any past or future settlement made by the deceased by deed or any other instrument not taking effect as a will, whereby an interest in such property or the proceeds of sale thereof, for life or any other period determinable by reference to death is reserved, either expressly or by implication, to the settlor, or whereby the settlor may have reserved to himself the right by the exercise of any power to restore to himself, or to reclaim the absolute interest in such property or the proceeds of sale thereof; [cf. 1881 c. 12 s. 38(2) U.K.; 1889 c. 7 s. 11 U.K.; 1894 c. 30 s. 2(1) U.K.] (f) any annuity or other interest purchased or provided by the deceased either by himself alone or in concert or by arrangement with any other person, to the extent of the beneficial interest accruing or arising by survivorship or otherwise on the death of the deceased, except that the foregoing provisions of this paragraph shall have effect in relation to an annuity or other interest purchased or provided wholly or in part by any person who was at any time entitled to, or amongst whose resources there was at any time included, any property derived from the deceased, as if that annuity or other interest had been provided by the deceased, or, if it is proved to the satisfaction of the Commissioner that the application of all the property derived from the deceased would have been insufficient to provide the whole of that annuity or other interest, as if a similar annuity or interest of an amount reduced to an extent proportionate to the insufficiency proved had been provided by the deceased: Provided that for the purpose of determining whether there would have been any such insufficiency as aforesaid, and the extent thereof, there shall be excluded from the property derived from the deceased any part thereof as to which it is proved to the satisfaction of the Commissioner that the disposition of which it, or the property which it represented, was the subject matter was not made with reference to, or with a view to enabling or facilitating, the purchase or provision of the annuity or other interest, or the recoupment in any manner of the cost thereof. [cf. 1894 c. 30 s. 2(1) U.K.; 1939 c. 41 s. 30(1) & (3) U.K.] In this paragraph— property derived from the deceased ( 得自死者的財產 ) shall include any property which was the subject matter of a disposition, made by the deceased, either by himself alone or in concert or by arrangement with any other person, notwithstanding that the disposition was made for full consideration in money or money’s worth paid to the deceased for his own use or benefit, or which represented any of the subject matter of such disposition, whether directly or indirectly, and whether by virtue of one or more intermediate dispositions, and whether any such intermediate disposition was or was not for full or partial consideration: Provided that where the first-mentioned disposition was for full consideration in money or money’s worth paid to the deceased for his own use or benefit and it is proved to the satisfaction of the Commissioner that the disposition was not part of associated operations which included a disposition by the deceased, either by himself alone or in concert or by arrangement with any other person, otherwise than for full consideration in money or money’s worth paid to the deceased for his own use or benefit; or a disposition by any other person operating to reduce the value of the property of the deceased, then, in considering whether estate duty should be charged by virtue of this paragraph, paragraph (c) and section 13(2) , the said first-mentioned disposition shall be left out of the account as if this subparagraph did not apply in relation to it; and (Amended L.N. 100 of 1968 ) [cf. 1943 c. 28 s. 26 U.K.] subject matter ( 標的物 ) includes, in relation to any disposition, any annual or periodical payment made or payable under or by virtue of the disposition; (Amended 1 of 1959 s. 3 ) [cf. 1943 c. 28 s. 26 U.K.] (g) debts and sums of money due and owing from persons in Hong Kong to any deceased person at the time of his death on obligation or other specialty, to the same extent as if they were owing to the deceased upon simple contract, without regard to the place where the obligation or specialty shall be at the time of the death of the deceased; and (Amended 1 of 1959 s. 3 ; 31 of 1990 s. 10 ) [cf. 1862 c. 22 s. 39 U.K.] (h) an interest limited to cease on the death which has been disposed of or has determined, whether wholly or partly, whether by surrender, assurance, divesting, forfeiture or in any other manner, except by the expiration of a fixed period at the expiration of which the interest was limited to cease, and whether for value or not, after becoming an interest in possession and the disposition or determination, or any of them if there are more than one, is not excepted by the proviso hereto, then— (i) if, had there been no disposition or determination as aforesaid of that interest and no disposition of any interest expectant upon or subject to that interest, the property in which the interest subsisted would have passed on the death under section 5 , that property shall be deemed by virtue of this paragraph to be included as to the whole thereof in the property passing on the death; or (ii) if, had there been no disposition or determination as aforesaid of that interest and no disposition of any interest expectant upon or subject to that interest, the property in which the interest subsisted would have been deemed by virtue of paragraph (b) to be included to a particular extent in the property passing on the death, then, the property in which the interest subsisted shall be deemed by virtue of this paragraph to be included to that extent in the property passing on the death: Provided that where a disposition or determination of an interest limited to cease on the death was bona fide effected or suffered 3 years before the death, or, if it was effected or suffered for such purposes as are recognized by the Commissioner as public or charitable, one year before the death, the disposition or determination shall be excepted by this proviso— (a) if bona fide possession and enjoyment of the property in which the interest subsisted was assumed immediately thereafter by the person becoming entitled by virtue of or upon the disposition or determination and thenceforward retained to the entire exclusion of the person who immediately before the disposition or determination had the interest and of any benefit to him by contract or otherwise; or (b) in the case of a partial determination, if the conditions specified in subparagraph (a) were not satisfied by reason only of the retention or enjoyment by the deceased of possession of some part of the property, or of some benefit, by virtue of the provisions of the instrument under which he had the interest. (Added 1 of 1959 s. 3 ) [cf. 1940 c. 29 s. 43(1) & (2) U.K.; 1950 c. 15 s. 43 U.K.] (2) 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.] (3) 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.] (4) 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.] (5) 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.] (6) (a) Where by a disposition of any property an interest is conferred on any person other than the disponer for the life of such person or determinable on his death, and such person enters into possession of the interest and thenceforward retains possession thereof to the entire exclusion of the disponer or of any benefit to him by contract or otherwise, and the only benefit which the disponer retains in the said property is subject to such life or determinable interest, and no other interest is created by the said disposition, then, on the death of such person the property shall not be deemed for the purposes of this Ordinance to pass by reason only of its reverter to the disponer in his lifetime. (b) Where by a disposition of any property any such interest as above in this subsection mentioned is conferred on 2 or more persons, either severally or jointly, or in succession, this subsection shall apply in like manner as where the interest is conferred on one person. (c) Provided that paragraphs (a) and (b) shall not apply where such person or persons taking the said life or determinable interest had at any time prior to the disposition been himself or themselves competent to dispose of the said property. [cf. 1896 c. 28 s. 15 U.K.] (7) 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 ) Editorial Note: * Commencement date: 1 February 1959. # Commencement date: 26 February 1932. 7. Dispositions in favour of relatives (1) 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— (a) the disposition was made on the part of the deceased for full consideration in money or money’s worth paid to him for his own use or benefit; or (b) the deceased was concerned in a fiduciary capacity imposed on him otherwise than by a disposition made by him and in such a capacity only: 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.] (2) 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 . (3) 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.] (4) In this section, section 8 and section 45 — annuity ( 年金 ) includes any series of payments, whether inter-connected or not, whether of the same or of varying amounts, and whether payable at regular intervals or otherwise, and payments of dividends or interest on shares in or debentures of a company shall be treated for the purposes of the said provisions as a series of payments constituting an annuity limited to cease on a death if the payments are liable to cease on the death, or the amounts thereof are liable to be reduced on the death, by reason directly or indirectly of the extinguishment or any alteration of rights attaching to, or of the issue of, any shares in or debentures of a company; relative ( 親屬 ) means— (a) wife or husband; (b) father and mother; (c) child, uncle and aunt; (d) any issue of a person falling within either paragraph (a), (b) or (c) above and the other party to a marriage with any such person or issue; (Amended E.R. 5 of 2021 ) (e) concubine recognized as such by the law appropriate to the marriage; and (f) references to child ( 子女 ) and issue ( 後嗣 ) include references to any illegitimate child and to any adopted child. [cf. 1940 c. 29 s. 44(2) & (3) U.K.] (Added 1 of 1959 s. 4 ) 7A. Presumption of simultaneous death Where, after the commencement* of the Estate Duty (Amendment) Ordinance 1982 ( 28 of 1982 ), 2 or more persons die in circumstances rendering it uncertain that any one of them, or which of them, survived the other or others, the property chargeable with estate duty in respect of each death shall be ascertained as if they had died at the same time and all relevant property had devolved accordingly. (Replaced 28 of 1982 s. 3 . Amended 62 of 1984 s. 11 ) Editorial Note: * Commencement date: 4 June 1982. 8. Exemptions (1) 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) . (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— (a) the amount, if any, by which the aggregate of the payments which have been made on account of the annuity or other interest for the period from the date when the annuity or other interest began to accrue in favour of the deceased until his death, exceeds the aggregate of the income derived from the deceased by virtue of the disposition for the period from the date of the disposition until his death; and (b) simple interest on so much, if any, of the amount aforesaid, and for such period, as, in the opinion of the Commissioner, is in all the circumstances just, at the rate of 4 per cent per annum. (3) In subsection (2), the expression the aggregate of the income derived from the deceased by virtue of the disposition ( 憑藉該產權處置而得自死者的收入總和 ) means— (Amended E.R. 5 of 2021 ) (a) in relation to so much of the property which was the subject matter of the disposition as did not consist of a debt or incumbrance created by the deceased, such amount as, in the opinion of the Commissioner, is in all the circumstances equal to a reasonable return from the property; and (b) in relation to so much of the property which was the subject matter of the disposition as did consist of a debt or incumbrance created by the deceased, the aggregate amount of the interest paid or payable by the deceased in respect of that debt or incumbrance. (4) 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. (5) 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.] (6) 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.] (7) 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.] (Added 1 of 1959 s. 4 ) [cf. 1944 c. 23 s. 40 U.K.] 9. Accretions to gifts inter vivos (1) 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. (2) 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. (3) 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. (4) 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. (5) 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. (6) 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. (7) 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. (8) 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. (Added 1 of 1959 s. 4 ) [cf. 1957 c. 49 s. 38 U.K.] 10. Exceptions for transactions for money consideration, property situate outside Hong Kong, shares on local registers and certain land in the New Territories Estate duty shall not be payable in respect of— (a) property passing on the death of the deceased by reason only of a bona fide purchase from the person under whose disposition the property passes nor in respect of the determination of any annuity for lives where such purchase was made or such annuity granted for full consideration in money or money’s worth paid to the vendor or grantor for his own use or benefit. Where any such purchase was made, or annuity granted, for partial consideration in money or money’s worth paid to the vendor or grantor 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; (Amended L.N. 63 of 1970 ) (b) property situate outside Hong Kong; (Amended 31 of 1990 s. 10 ) (c) any share or other interest of a deceased member of a company registered in a branch register kept out of Hong Kong under the Companies Ordinance ( Cap. 622 ); (Amended 29 of 1970 s. 3 ; 6 of 1984 s. 259 ; 31 of 1990 s. 10 ; 28 of 2012 ss. 912 & 920) (d) property situate in the New Territories, other than New Kowloon, where the principal value of the estate does not exceed $2,000 or the minimum principal value for which an amount or a rate for the payment of estate duty has been provided under the applicable Part of Schedule 1 , whichever is the greater, and property situate elsewhere in Hong Kong, where the principal value of the estate does not exceed the minimum principal value for which an amount or a rate for the payment of estate duty has been provided under the applicable Part of Schedule 1 ; (Replaced 47 of 1962 s. 4 . Amended 31 of 1990 s. 10 ; 27 of 1996 s. 4 ; 21 of 2005 s. 6 ) (e) any temple for the worship of ancestors, situate in the New Territories, other than New Kowloon, registered in the name of the manager of a clan, family or t’ong, and so much of any clan, family or t’ong property similarly registered as is used for the maintenance of such temple; (Added 38 of 1935 s. 2 ) (f) any other temple in the New Territories, other than New Kowloon, certified by the Secretary for Home and Youth Affairs to be a Chinese temple as defined in section 2 of the Chinese Temples Ordinance ( Cap. 153 ), and so much of any property as is used for the maintenance of such temple; (Added 38 of 1935 s. 2 . Amended L.N. 94 of 1974 ; L.N. 370 of 1981 ; L.N. 14 of 1983 ; L.N. 262 of 1989 ; L.N. 144 of 2022 ) (g) property devised or bequeathed by the deceased or otherwise passing on the death of the deceased 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. 3 . Amended 74 of 1981 s. 3 ; 31 of 1990 ss. 4 & 10; 78 of 1999 s. 7 ) *(ga) any property consisting of the benefits under a policy of insurance effected on the life of the deceased, being— (i) any moneys, including any accrued dividends, payable on the death of the deceased under the terms or provisions of the policy, less any loans, advances, unpaid premiums, interest on loans or advances, administrative fees and other charges deductible from the moneys under such terms or provisions; and (ii) any interest in the policy passing on the death of the deceased; (Added L.N. 90 of 1999 and 44 of 1999 s. 9 ) (h) any property consisting of a pension, annuity, lump sum, gratuity or other like benefit (including any right or entitlement thereto) passing on the death of a deceased member of a recognized occupational retirement scheme (within the meaning of the Inland Revenue Ordinance ( Cap. 112 )), that is to be paid or afforded under the terms or provisions of that scheme; (Added 31 of 1990 s. 4 . Amended 76 of 1993 s. 12 ; 4 of 1998 s. 13 ) (i) any property consisting of the accrued benefits of a deceased member of a provident fund scheme registered under the Mandatory Provident Fund Schemes Ordinance ( Cap. 485 ) that are to be paid in accordance with section 15(4) of that Ordinance. (Added 4 of 1998 s. 13 ) [cf. 1894 c. 30 s. 3 U.K.] Editorial Note: * Paragraph (ga) shall only apply in relation to the estates of persons dying on or after 1 April 1999. 10A. Exception for matrimonial home (1) Estate duty shall not be payable in respect of property— (a) which was, immediately before the death of the deceased— (i) a residence owned by him and occupied solely by him exclusively for residential purposes; and (ii) the matrimonial home of the deceased and his spouse; and (b) which is devised or bequeathed by the deceased, or otherwise passes on his death, to or for the benefit of his spouse. (2) For the purposes of subsections (1) and (3)— (a) property shall be deemed to be a residence and deemed to be capable of being a matrimonial home if the property is the exclusive right to enjoy the residence together with the right to an undivided share in land on which the residence is situated; (b) a residence shall be deemed to be owned by the deceased if the property is owned by him or by him and his spouse; (c) a residence shall be deemed to be occupied solely by the deceased if it is occupied solely by him or by him and his spouse and family; (Amended 18 of 1986 s. 2 ) (d) property to which subsection (1)(a) applies shall, if the deceased— (i) died intestate as to that property; and (ii) is survived by his spouse, be deemed to have passed on his death to or for the benefit of his spouse. (Added 18 of 1986 s. 2 ) (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. (4) (Repealed 34 of 1994 s. 4 ) (Added 28 of 1982 s. 4 ) 11. Aggregation of property (1) 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.] (2) 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— (a) section 6(1)(f) ; or (b) section 35 , 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.] (3) 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.] *(4)-(5) (Repealed L.N. 90 of 1999 and 44 of 1999 s. 10 ) Editorial Note: * The repeal of subsections (4) and (5) shall only apply in relation to the estates of persons dying on or after 1 April 1999. 12. Payment of estate duty (1) Estate duty shall be payable as hereinafter mentioned. (2) 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 ) (3) 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. (4) 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 ) (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. (6) 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 ) (6A) 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 ) (a) in the case of any death occurring on or before 7 December 1941, no interest under subsection (6) is payable for the period from 8 December 1941 to 2 March 1946 and no part of that period is taken into consideration to compute the 6-month period referred to in subsection (6); (Amended E.R. 5 of 2021 ) (b) in the case of any death occurring after 7 December 1941 and before 2 March 1946, the latter date is substituted for the date of death for the purposes of subsection (6). (Added 27 of 1996 s. 5 ) (7) 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. (8) 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 ) (Amended 47 of 1962 s. 5 ) [cf. 1894 c. 30 s. 6 U.K.] 13. Value of property; allowance for debts and funeral expenses (1) In determining the value of an estate for the purpose of estate duty, allowance shall be made for reasonable fu