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GAZETTE
APRIL 1989
Taxing the voluntary
disposition
inter vivos
In the halcyon days of Estate Duty a voluntary disposition by
a healthy disponer, who looked a good prospect to survive
five years f r om the date of the disposition, presented f ew
fiscal problems for either the practitioner or his client. St amp
Duty at 1% on the market value of the property transferred
was the norm, wi th the occasional 'belt and braces' approach
by some practitioners of insuring against the contingent
Estate Duty liability should the disponer die wi th in the five
year period.
Nowadays, as we know, the
game has changed dramatically
and the fiscal exposure is much
greater. Furthermore, the prac-
titioner is in general acting for a
more exacting client, who wants to
know precisely what tax liability
will follow his act of bounty. This
article attempts to outline the
scope of the problem facing the
practitioner in these circum-
stances.
1. Chronologically,
Stamp Duty
is
the first fiscal charge.
The relevant legislation is
Section 74 Finance (1909-10)
Act, 1910.
Sub Section 1 states that
any conveyance or transfer
which operates as a voluntary
disposition
inter vivos
is
charged to Stamp Duty as if it
was a conveyance or transfer
on sale, with the substitution in
each case of the value of the
property conveyed or trans-
ferred for the amount or value
of the consideration for the
sale.
Sub Section 5 states that
any conveyance or transfer
shall, for the purposes of the
section, be deemed to be a
conveyance
or
transfer
operating as a voluntary dis-
position
inter vivos,
where the
Revenue Commissioners are of
opinion that by reason of the
inadequacy of the sum paid as
consideration, the conveyance
or transfer confers a sub-
stantial benefit on the person
to whom the property is
conveyed or transferred.
The words
'voluntary
disposition' have been defined
judicially. In
Att. Gen. -v- Smyth
[1905] 2 I.R. Palles C. B. said
"the meaning of 'voluntary
disposition' is definitely and
by
J O HN F. QU I N L AN
B.L., Dip.E.L., A.I.T.I.,
Tax Consultant
conclusively settled by the
decision of the Court of Appeal
in England in
Att. Gen. -v-
Jacobs-Smith
[1895] 2 Q.B.
This decision involves this, that
'voluntary disposition' means a
disposition which operates by
way of gift."
Lord Blanesburgh in
A. G. for
Ontario -v- Perry
[1934] A. C.
477 states "a gift does not
cease to be a gift although
there is some consideration for
it received by the donor: a gift,
it has been said, may be
something which is not 'a pure
and simple gift'."
It appears therefore that if a
disposition can be shown to
contain some element of
bounty it is a voluntary dis-
position and can be said to
operate by way of gift. In other
words, any disposition of
property which is
not
a
disposition for
full
considera-
tion in money or money's
worth is a voluntary dis-
position.
Stamp Duty is charged on
the market value of the
property the subject of such
voluntary disposition at the
rates applicable to the
"conveyance or transfer on
sale" head of charge. This head
of charge is divided in two
parts; the first part deals with
the transfer of stocks or
marketable securities and the
second part deals with a
transfer of any other property.
This second part concerns in
the main the transfer of
immovable property. It also
covers the transfer of movable
property (apart from stocks or
marketable securities dealt
with in the first part) in any
case where such movable pro-
perty is transferred by way of
an instrument, that is, any
written document.
Stamp Duty is not the only
fiscal consequence of the
voluntary disposition or, to use
the colloquial expression, 'the
gift'. The gift may give rise to
both Capital Acquisitions Tax
and Capital Gains Tax con-
currently. These tax liabilities
are quite likely to be much
greater than the initial Stamp
Duty charge and concern both
Transferor and Transferee.
2. Capital Acquisitions Tax:
Under Section 5 Capital Ac-
quisitions Tax Act 1976, a gift
A 4
John F. Quinlan.
177