May 20, 1941

NAT

Grote Stirling

National Government

Mr. STIRLING:

Yesterday the leader of the opposition raised a question in respect of an estate being mulcted once, twice, or three times in rapid succession, in the event of deaths. I am not sure whether the minister gave a final answer. He will be aware of instances in other countries-I am thinking of one or two cases in the United Kingdom which have come to my knowledge-when two and even three deaths in less than two years have played havoc with the property distributed under the terms of a will.

Mr. ILSLEY': No provision is made in these resolutions, nor do I think there is any in the bill to afford relief against several impositions of succession duties at short intervals, or what are called quick successions. The matter could perhaps be considered before the bill is introduced, but as at present prepared there is no such clause. In that regard I believe it is similar to many other succession duties acts.

Under the Consolidated Revenue and Audit Act there is power to remit penalties and duties and amounts due the crown. That power is used very sparingly. It is exercised only in well-recognized classes of cases. It is very rarely indeed that an exception is made to the rules laid down, but that power does exist in the crown and could be utilized if it were considered proper to do so in order to relieve a particular case.

Topic:   SUCCESSION DUTY ACT
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NAT

Grote Stirling

National Government

Mr. STIRLING:

It seems to me that it would be well worth serious consideration. As the minister says, the need would not arise often, but it would be wise to make provision for it in the act.

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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. COLDWELL:

I take a somewhat opposite view. I think the proposals now before us are modest compared with succession duties

Succession Duty Act

elsewhere, and in no event would any great hardship be imposed upon an estate under this particular resolution even if there were three or four deaths in quick succession. Even if the imposition were much heavier, in my opinion death duties are long overdue in this country. They provide a method of distributing wealth which under modern circumstances is very badly needed. This legislation is to be commended, and I do not think we should give the government power to vary it on any grounds.

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NAT
NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

I have in mind a case that occurred in a city in Ontario. I shall not mention the place, because many would know the estate to which I refer. The father, the head of the house, died. At the time of his death he was operating a large plant which employed five or six hundred men. Most of his estate was left to his son. Shortly afterwards, apparently not too long afterwards, the son also passed away and another succession duty had to be paid. This resulted in the closing of the plant and the throwing out of employment of a number of men. Surely my hon. friend to my left would not be in accord with anything like that. This may be an extreme case, but perhaps the regulations should be such as to prevent such a plant being closed up because of two or three taxes being imposed in quick succession.

Will funeral expenses cover a lot in the cemetery and a tombstone?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The commissioner informs me that it is intended that a suitable monument would be included in the funeral expenses. I do not believe the term "funeral expenses" is defined in the bill. When the bill itself is before us I think it will be found that some of these things are provided for.

I am obliged to the hon. gentleman for bringing to my attention this case of quick succession, and also to the hon. member for Rosetown-Biggar (Mr. Coldwell) for expressing his views. It shows the difficulty that a moderate, sane government faces when attempting to meet all views. I should think the reasonable course to follow is to make no provision at all in the bill. In another year's time we shall know what our experience is. Under the Consolidated Revenue and Audit Act there is power to grant by order in council relief in such cases if it is considered desirable so to do. I am not saying that it is desirable, and it might be that years would go by before such a case would arise. At such time relief can be granted by order in council, or we can come to the house and state the case and propose an amendment.

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NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

In the case I mentioned the succession duties were somewhere around $100,000 upon the decease of the head of the family. The son took over the plant, but he died within a short time and the two succession duties ruined the estate so far as the plant was concerned.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The question that arises is whether power should be given by the bill to the governor in council, apart from the powers it already possesses, to deal with such cases and if so, with what limitations, or whether the whole matter should be dealt with legislatively. I understand that in some acts it is provided that a portion, perhaps half the succession duty, is payable should certain conditions exist. I am not prepared to insert such a clause in this measure. It may be different from the other acts; it may be different in its incidence, and it may be that that would be improper for this act while it is proper for others.

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NAT

Harry Rutherford Jackman

National Government

Mr. JACKMAN:

In many cases, particularly where the estate is small, the husband will leave his whole estate to his wife and nothing to the children. The wife may die in a few years, as happens quite often when she is about the same age as the husband. Then the estate is subject to double succession duties, which would be in addition to the provincial duties. This makes the tax very high in the aggregate. Those of moderate means who do not consult solicitors or notaries when drawing their wills do not realize that they can leave a life interest to their widow and have the property pass on to the children upon her death. This is of some consequence to people in moderate circumstances who quite often draw their own holograph wills, and the result is that in a few years the estate is subject to two or more succession duties. This point should be considered if the minister will not consider some amelioration of the tax itself.

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LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

In considering hardships

that may arise in connection with quick succession matters, I suggest to the minister that one form of relief which ought to be considered in dealing with estates such as the one mentioned by the hon. member for Davenport (Mr. MacNicol) is to give the commissioner authority to receive the succession duty on the second estate in instalments over a period of years with interest at, say, three per cent. This would enable a going concern to carry on. Such a firm would be required to pledge its assets primarily to the department to ensure payment over a period of years. I think this would cure the difficulty. Like the hon. member for Rosetown-Biggar, I am opposed to any exemption on

Succession Duty Act

the second or even the third estate when quick succession occurs. In the case instanced by the hon. member for Davenport, the man apparently was able to employ 500 men, and the hon. member said that the succession duties were very large. On the theory ot having an eye to what is left, there would even in that case be plenty left for those who take an unearned increment which falls into their lap by devolution. My suggestion is that by giving power to amortize over a period the succession duty to be paid we would do away with the hardship and protect the country so far as insistence on payment of death duties is concerned.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I will bear in mind what my hon. friend has said. A bill will be placed before the house, of course, when the resolutions are through, and I think it contains a provision which meets substantially the views my hon. friend has just expressed. If not, I will see that the matter is given full consideration.

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NAT

Douglas King Hazen

National Government

Mr. HAZEN:

Will the word "debts" include the cost of taking out probate or administration? It is not really a debt due by the deceased, but one incurred afterwards by his

estate.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

All these questions can be

answered better on the bill, which is much longer than the resolutions. To answer them now would make it necessary for me to refer to the draft bill. I should say that the hon. gentleman is quite right, that provision must be made for deduction of the probate expenses, and I shall be very much surprised if it is not provided for in the bill. At any rate I will keep the point in mind so that it can be considered when the bill is before us.

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NAT

Gordon Graydon

National Government

Mr. GRAYDON:

In Ontario they allow

the surrogate court fees plus, I believe, up to 8100 for ordinary solicitor's fees in connection with an estate. It depends of course on the size of the estate.

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LIB
NAT

Howard Charles Green

National Government

Mr. GREEN:

Will the minister take into

consideration allowing as a debt any succession duty that is paid to the province in which the deceased was domiciled? I think every province has a succession duty, and if some such provision is not made it will mean that there will be taxation on the money that is actually paid out to the province in succession duties.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

That is introducing a very

important departure in our fiscal legislation. I may say right here that we are going on the assumption that succession duties due to the province would not be regarded as a debt.

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Resolution agreed to. i. That, for the purposes of taxation, the successors or beneficiaries shall be divided into four classes, as follows: (a) Class A.-The widow of the deceased, any child under eighteen years of age at the date of the death of the deceased, and any child who at that date was dependent upon the deceased for support on account of mental or physical infirmity; (b) Class B.-The grandfather, grandmother, father, mother, husband, son-in-law, or daughter-in-law of the deceased or a child of the deceased eighteen years of age and over at the date of the death of the deceased, and who, at that date, was not dependent upon the deceased for support on account of mental or physical infirmity; (c) Class C.-A lineal ancestor of the deceased (except the grandfather, grandmother, father or mother) a brother or sister of the deceased or any descendant of a brother or sister, or a brother or sister of the father or mother of the deceased or any descendant of any such brother or sister; (d) Class D.-Any person in any other degree of consanguinity to the deceased than as previously mentioned, or a stranger in blood to the deceased.


NAT

Gordon Knapman Fraser

National Government

Mr. FRASER (Peterborough West):

Referring to the words "any child" in paragraph (a), what relationship would the child be to the deceased? Does it mean a daughter or a son?

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LIB

May 20, 1941