Mr. Speaker, I rise this afternoon to speak on the matter of the transfer tax payable on estates. Members of this Honourable House will recall that in my opening budget presentation, I announced a simplification of this particular tax to move from a complicated five tier system.
Under the new system the first $100,000 of value of an estate would be exempt from the tax and the balance would be taxed at a rate of 7.5%. The old structure was not only complicated but resulted in many persons not seeking to probate estates because of the total cost involved which included legal fees on top of the taxes levied.
The change came into effect on June 1, 2005 and the main result will be a reduction in the tax payable on estates of all values, facilitating more expeditious settlements.
Subsequent to my announcement of the new system, a legal complication was brought to my attention. Members should note that the Transfer Tax Act provides for the payment of transfer tax on an estate, related to the death of an individual as of a particular date. In addition, section 12(2) of the Act, which sets out the rate of tax in respect of the “estate” duties, refers to section 5 which has a particular date of death as the basis for computation.
If we were to adhere strictly to the legal provisions, the estates of persons who died prior to June 1, 2005 would not benefit from the reduction in the tax. This legal complication, left as is, would defeat one of the major objectives of the change, which was the reduction of the backlog of unsettled estates currently in the system. It is not our desire to continue with these outstanding cases clogging up the system, thereby affecting the settlement of current cases.
Mr. Speaker, in order to address this legal obstacle, I will be offering an amnesty which will allow the estates of persons who died prior to June 1, 2005 to benefit from the new estate duty. This Amnesty will begin on July 1, 2005 and will remain in place for a period of 6 months ending on December 31, 2005. Where the outstanding estates are settled during this period the liability would be reduced to the level of the new rates now existing for individuals who died on or after June 1, 2005. Additionally, interest becomes payable on outstanding amounts after one year of the date of death at the rate of 6% which would be added and recoverable as tax.
Regarding the tax foregone, where taxpayers make use of the Amnesty, I will exercise my powers under Section 46 of the Transfer Tax Act by Notice to waive the tax which should have been payable. This will only apply where payment is made during the period July 1 to December 31, 2005.
However, I must point out that those estates that have not been settled within this timeframe will revert to the tax that was payable prior to the change, including all interest.
Mr. Speaker, one final note. No refunds for estates already settled will be allowed under this special arrangement to be put in place. Those cases that have already been settled are considered final and closed. As such, no requests for refunds will be entertained.

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