CHAPTER 43:02
ESTATE DUTY

ARRANGEMENT OF SECTIONS

   SECTION

   1.   Short title

   2.   Interpretation

COMMISSIONERS

   3.   Constitution of Board of Commissioners

CHARGE OF ESTATE DUTY

   4.   Charge of estate duty

   5.   What property is included in an estate

   6.   Interest on estate duty

EXEMPTION FROM ESTATE DUTY

   7.   Power to remit estate duty where death is caused by operations of war

   8.   Remission of estate duty in case of property passing more than once owing to deaths caused by operations of war

   9.   Reduction of rate for quick successions

AGGREGATION OF ESTATE

   10.   (1) Aggregation of deceased’s property to determine rate of duty

       (2) Marginal relief

PRINCIPLES FOR DETERMINING VALUE OF ESTATE

   11.   Principles for determining value of estate

   12.   Allowance for debts

LIABILITIES OF EXECUTORS OR BENEFICIARIES

   13.   Executor to ascertain value of estate, and to make affidavit

   14.   Duty to be paid on delivery of estate duty affidavit

   15.   Liability of executor for duty

   16.   Liability of beneficiaries and trustees

   17.   Estate duty when deemed to be in arrear

   18.   Power to permit postponement of payment

   19.   Power for person liable to raise duty by sale or mortgage

   20.   Estate duty to be borne by beneficiaries rateably

   21.   Executors and persons having possession of estate to produce documents and attend for examination if required

VALUATION AND ASSESSMENT BY COMMISSIONERS

   22.   Valuation by Commissioners

   23.   Assessment by Commissioners

   24.   Refund of overpaid duty

APPEALS AGAINST ASSESSMENTS, ETC., OF COMMISSIONERS

   25.   Appeals against assessments, etc.

RECOVERY OF ESTATE DUTY

   26.   Recovery of estate duty by civil suit

   27.   Summary recovery of estate duty

   28.   Stay of execution pending appeal

   29.   Estate duty a charge on deceased’s estate

CERTIFICATES OF DISCHARGE AND COMPOSITIONS

   30.   Certificate of discharge from estate duty

   31.   Power to accept composition for estate duty

FIXED DUTY ON SMALL ESTATES

   32.   Option to pay fixed duties on estates not exceeding £500

MISCELLANEOUS PROVISIONS

   33.   No grant of representation to be made without certificate of Commissioners

   34.   Duty of court administering estate to direct payment of duty

   35.   Service of notices

   36.   Proof of Commissioner’s acts

   37.   Affidavit to be free of stamp duty

   38.   Exception as to property in the United Kingdom and Commonwealth countries

   39.   Arrangements for relief from double estate duty

   40.   Power to make Regulations

   41.   General penalty

       Schedule

6 of 1946
15 of 1950
37 of 1950
17 of 1952
26 of 1952
18 of 1956
37 of 1967
1 of 1969
23 of 1969
15 of 1997
18 of 1997
1 of 2016
G.N. 22/1963
219/1964(N)

An Act to provide for duties on estates of deceased persons

[19TH FEBRUARY 1946]

1.   Short title

   This Act may be cited as the Estate Duty Act.

2.   Interpretation

   In this Act, unless the context otherwise requires—

   “Commissioners” means the Estate Duty Commissioners;

   “deceased person” and “the deceased” means a person dying after the commencement of this Act;

   “estate duty” means estate duty under this Act;

   “estate duty affidavit” means an affidavit made or required under this Act and shall include any inventory or account of property with or without a valuation thereof with reference to which such an affidavit is made or required;

   “executor” means the executor or administrator of a deceased person and includes, as regards any obligations under this Act, any person who takes possession of or intermeddles with the property of a deceased person;

   “incumbrances” includes mortgages and terminable charges;

   “property” includes immovable and real property and movable and personal property and the proceeds of sale thereof respectively and any money or investment for the time being representing the proceeds of sale, and an undivided share in any property held jointly or in common with any other person;

   “representation” means probate, letters of administration, confirmation, or other instrument appointing a person the executor, administrator, or other representative of the deceased or to administer any of his assets.

COMMISSIONERS

3.   Constitution of Board of Commissioners

   (1) There is hereby established a Board of Commissioners who shall administer this Act and collect estate duty.

   (2) The Board shall consist of the following members—

   (a)   the Attorney General who shall be Chairman of the Board;

   (b)   the Secretary to the Treasury;

   (c)   the Registrar General who shall be Secretary and executive officer of the Board;

   (d)   such other members as the Minister may, by notice published in the Gazette, appoint.

   (3) Two members of the Board shall constitute a quorum.

   (4) The Commissioners may sue and be sued by the name of “The Estate Duty Commissioners”.

   (5) The Secretary shall, subject to the directions of the Commissioners assess the estate duty and be responsible for the collection of the duty on behalf of the Estate Duty Commissioners.

   (6) Any act, matter or thing done by the Secretary shall be deemed to be within the scope of his authority unless the contrary is proved.

CHARGE OF ESTATE DUTY

4.   Charge of estate duty

   In the case of every person dying after the commencement of this Act, there shall, save as hereinafter mentioned, be levied and paid to the Government upon the principal value of all property belonging to the deceased at his death (in this Act referred to as the “estate of the deceased") a duty, called “estate duty", at the graduated rates set forth in the Schedule.

5.   What property is included in an estate

   (1) The estate of the deceased shall include—

   (a)   property which vests in the executor of the deceased;

   (b)   property of which the deceased was at his death competent to dispose;

   (c)   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; but exclusive of property the interest in which of the deceased or other person was only an interest as holder of an office, or recipient of the benefits of a charity, or as a corporation sole;

   (d)   money payable to the deceased’s estate under any policy of insurance;

   (e)   property taken as a donatio mortis causa made by the deceased;

   (f)   property which belonged to the deceased or of which the deceased was competent to dispose at any time within three years before his death, and of which the deceased had disposed in any manner other than for full consideration in money or money’s worth:

   Provided that this provision shall not apply to gifts which are made in consideration of marriage, or which are proved to the satisfaction of the Commissioners 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 £100 in value or amount;

   (g)   personal property not within the limits of Malawi but only in cases where the deceased was domiciled in Malawi at the date of his death; and

   (h)   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.

   (2) The estate of the deceased shall not be deemed to include—

   (a)   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 three years before his death;

   (b)   any gratuity paid by the Government to the personal representatives, heirs or dependants of a deceased public officer after his death under—

      (i)   section 16 of the European Officers’ Pensions Ordinance; or

      (ii)   the Malawi Public Service Regulations.

   (3) For the purposes of this Act a person shall be deemed competent to dispose of property if he has such an estate or interest therein or such general power, whether exercisable by instrument inter vivos or by will, or both, as would, if he were sui juris enable him to dispose of the property for his own benefit.

6.   Interest on estate duty

   (1) Simple interest at the rate of three pounds ten shillings per centum per annum or such other rate as the Minister may, from time to time, by notice published in the Gazette, prescribe shall be payable upon all estate duty from the date of the death of the deceased, and shall be payable and recoverable in the same manner as if it formed part of the estate duty.

   (2) The Commissioners may, if they think fit, remit the interest on any estate duty where the amount appears to them to be so small as not to repay the expense and trouble of calculation and collection.

EXEMPTIONS FROM ESTATE DUTY

7.   Power to remit estate duty where death is caused by operations of war

   Where—

   (a)   any person has, on or after the 3rd September, 1939, died from wounds inflicted, accident occurring, or disease contracted, within three years before death, while on active service against an enemy, whether on sea, land or in the air, or on service which, in the opinion of the Commissioners, is of a warlike nature or involves the same risks as active service, and was, when the wounds were inflicted, the accident occurred or the disease was contracted, subject to any naval, military or air force law; or

   (b)   any person, other than a person referred to in paragraph (a) of this section, has, on or after the 3rd September, 1939, died from injuries received within three years of his death and which were, in the opinion of the Commissioners, caused by the operation of war,

   the Commissioners may, if they think fit, remit, or, in the case of estate duty already paid, repay, in any one case, an amount not exceeding one half of the estate duty leviable under this Act in respect of the estate of the deceased to the widow or widower of the deceased, as the case may be, or to the lineal descendants or lineal ancestors, or to the brothers or sisters of the deceased or the lineal descendants of such brothers or sisters.

8.   Remission of estate duty in case of property passing more than once owing to deaths caused by operations of war

   (1) Where the Commissioners are satisfied that estate duty leviable under this Act has become payable on the estate of any deceased person to which section 7 applies and that subsequently such estate duty has again become payable on the same property or any part thereof forming part of the estate of some other deceased person to which section 7 applies, the whole of such estate duty payable on such subsequent death in respect of such property shall be remitted, or, in case such estate duty has been paid, repaid, and the property shall not be aggregated with any other property forming part of the estate of the deceased on such subsequent death for the purpose of determining the rate of such estate duty.

   (2) This section shall apply whether or not on any such death any property passes to the widow or widower, lineal descendants, lineal ancestors, brothers or sisters, or the lineal descendants of such brothers or sisters, of the deceased.

9.   Reduction of rate for quick successions

   Where the Commissioners are satisfied that estate duty has become payable on any property consisting of land or a business (not being a business carried on by a company) or any interest in land or such a business, and that subsequently estate duty has again become payable on the same property or any part thereof by reason of the death of the person to whom the property passed on the first death, the amount of estate duty payable on that property by reason of the second death shall be reduced as follows—

   where the second death occurs within one year of the first death, by fifty per centum;

   where the second death occurs within two years of the first death, by forty per centum;

   where the second death occurs within three years of the first death, by thirty per centum;

   where the second death occurs within four years of the first death, by twenty per centum;

   Where the second death occurs within five years of the first death, by ten per centum:

   Provided that where the value, on which the duty is payable, of the property on the second death exceeds the value, on which the duty was payable, of the property on the first death, the latter value shall be substituted for the former for the purpose of calculating the amount of duty on which the reduction under this section is to be calculated.

AGGREGATION OF ESTATE

10.   Aggregation of deceased’s property to determine rate of duty

   (1) For determining the rate of estate duty to be paid on the estate of the deceased, all property forming the estate shall be aggregated so as to form one estate, and the duty shall be levied at the proper graduated rate on the principal value thereof.

Marginal relief

   (2) But the amount of estate duty payable on an estate at the rate applicable thereto under the scale of rates of duty shall, where necessary, be reduced so as not to exceed the highest amount of estate duty which would be payable at the next lower rate, with the addition of the amount by which the value of the estate exceeds the value on which the highest amount of duty would be so payable at the lower rate.

PRINCIPLES FOR DETERMINING VALUE OF ESTATE

11.   Principles for determining value of estate

   (1) The principal value of any property for the purposes of estate duty shall be the price estimated by the Commissioners to be the price which it would fetch if sold in the open market at the time of the death of the deceased, and no reduction shall be made in the estimate on account of the assumption that the whole property would be placed on the market at one and the same time.

   (2) But when it is proved to the Commissioners that the value of the property has been depreciated by reason of the death of the deceased, the Commissioners in fixing the price shall take such depreciation into account.

12.   Allowance for debts

   (1) In determining the principal value of an estate for the purpose of estate duty, allowance shall be made for reasonable funeral expenses and for debts and incumbrances; but an allowance shall not be made—

   (a)   for debts incurred by the deceased unless such debts were incurred bona fide for full consideration in money or money’s worth wholly for the deceased’s own use and benefit; or

   (b)   for any debt in respect whereof there is a right to reimbursement from any other estate or person, unless such reimbursement cannot be obtained; or

   (c)   more than once for the same debt or incumbrance charged upon different portions of the estate;

   and any debt or incumbrance for which an allowance is made shall be deducted from the value of the land or other subjects of property liable thereto:

   Provided that an allowance shall not be made for incumbrances created by a disposition made by the deceased within three years before his death unless such incumbrances were created bona fide for full consideration in money or money’s worth wholly for the deceased’s own use and benefit or in consideration of his marriage and take effect out of his interest.

   (2) An allowance shall not be made for debts due from the deceased to persons resident outside Malawi unless contracted to be paid in Malawi or charged on property situated within Malawi, or unless and to the extent to which it is shown to the satisfaction of the Commissioners that the personal property of the deceased situated in the country in which the person to whom such debts are due resides is insufficient for their payment.

LIABILITIES OF EXECUTORS OR BENEFICIARIES

13.   Executor to ascertain value of estate, and to make affidavit

   (1) It shall be the duty of the executor of the deceased as soon as possible after the death to ascertain the particulars and principal value of the estate of the deceased, and to make and deliver to the Commissioners an estate duty affidavit giving such particulars and value so far as known to him, and from time to time to make and deliver to the Commissioners any further estate duty affidavit which may be necessary to supplement any omission from or mistake in any previous estate duty affidavit:

   Provided that the Commissioners may, if they think fit, accept a statement as a correction of an estate duty affidavit, without requiring that statement to be verified on oath.

   (2) Any executor who wilfully fails to perform any duty imposed on him by this section or who fails to make and deliver an estate duty affidavit within fourteen days after service of a notice from the Commissioners requiring him so to do shall be guilty of an offence against this Act.

14.   Duty to be paid on delivery of estate duty affidavit

   (1) Estate duty shall in the first instance be calculated at the appropriate rate according to the value of the estate of the deceased as set forth in the original estate duty affidavit and shall be payable by the executor on delivery of that affidavit.

   (2) On the delivery of every subsequent estate duty affidavit the executor shall pay any estate duty payable on any property disclosed by that affidavit, and also any additional estate duty payable on any property disclosed by any previous affidavit.

15.   Liability of executor for duty

   The executor of the deceased shall be liable for all estate duty payable in respect of the estate of the deceased but his liability shall not exceed the assets which he has received as executor or might but for his own neglect or default have received.

16.   Liability of beneficiaries and trustees

   Every beneficiary of the estate of the deceased up to the amount of his interest in the estate, 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 estate of the deceased or the management thereof is at any time vested, and every person who takes possession of or administers any part of the estate of the deceased, and every person in whom the same is vested by alienation or other derivative title shall each be liable for all the estate duty payable on the estate of the deceased:

   Provided that nothing in this section shall render a person accountable for duty who acts merely as agent or bailiff for another person in the management of property.

17.   Estate duty when deemed to be in arrear

   Except as hereinafter mentioned, the whole estate duty payable on the estate of the deceased shall be due and payable at the end of six months from the death of the deceased or on the delivery of the original estate duty affidavit, whichever first occurs, and any estate duty which is not so paid shall be deemed to be duty in arrear and recoverable accordingly.

18.   Power to permit postponement of payment

   Where the Commissioners are satisfied that any estate duty cannot without excessive sacrifice be raised at once, they may allow payment to be postponed for such period, to such extent, and on payment of such interest, and on such terms as the Commissioners think fit.

19.   Power for person liable to raise duty by sale or mortgage

   Any person liable for and required to pay estate duty on any part of the estate of the deceased shall have power, whether the estate is or is not vested in him, to raise the amount of such duty and expenses incurred by him in connexion therewith by sale or mortgage of that part of the estate of the deceased.

20.   Estate duty to be borne by beneficiaries rateably

   (1) Subject to this Act and any will of the deceased, estate duty shall be borne by the beneficiaries of the estate in proportion to the value of their respective interests, and the executor in distributing the estate of the deceased shall make such payments, deductions, and adjustments as may be necessary for that purpose.

   (2) 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, up to the amount of his interest therein, entitled to any such property or to any interest therein, or who takes possession or administers such property, or in whom such property is vested by alienation or other derivative title, other than a purchaser for valuable consideration without notice.

   (3) Any dispute as to the proportion of the estate duty to be borne by any property or person may be determined upon application to the High Court in manner directed by Rules of Court made under this Act.

   (4) Any person from whom a rateable part of the 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 Commissioners.

21.   Executors and persons having possession of estate to produce documents and attend for examination if required

   (1) Every executor or other person who is liable for payment of any estate duty or has any part of the estate of the deceased or any documents relating thereto in his possession, power, or control shall, whenever required by the Commissioners—

   (a)   make and deliver to the Commissioners an affidavit giving, to the best of his knowledge and belief, answers to any questions as to the estate of the deceased which may be put to him by the Commissioners;

   (b)   disclose by such an affidavit and produce to and allow the Commissioners to inspect and take copies of any such documents as aforesaid; and

   (c)   attend before the Commissioners and be examined by them on oath (which any Commissioner is hereby authorized to administer) as to any matter in connexion with the estate of the deceased.

   (2) Any executor or other person who fails to comply with the requirements of the Commissioners under this section within fourteen days after service of a notice from the Commissioners of their requirements shall be guilty of an offence against this Act.

VALUATION AND ASSESSMENT BY COMMISSIONERS

22.   Valuation by Commissioners

   (1) Subject to this Act, the Commissioners shall ascertain the principal value of the estate of the deceased in such manner and by such means as they think fit, and may, if they think fit, as respects any property, accept the value estimated by the executor or the valuation of any person approved by the Commissioners as a valuer for the purposes of this Act, or so approved for the purpose of making that valuation.

   (2) Where the Commissioners require a valuation to be made by a person named by them, the reasonable cost of such valuation shall be defrayed by the Commissioners.

   (3) Any person authorized by the Commissioners to value any property for the purpose of this Act shall at all reasonable times have power to enter and inspect the property.

23.   Assessment by Commissioners

   (1) Subject to the right of appeal conferred by this Act, the assessment by the Commissioners that any estate duty is payable in respect of any property shall be conclusive evidence that that duty is payable in respect of that property.

   (2) But the Commissioners may at any time revoke or reduce an assessment where it is shown to their satisfaction to be erroneous or excessive, and may make a further assessment in respect of the same property where, by reason of the value of other property of the deceased not being accurately known, the duty has not been assessed at the proper rate, or where a further assessment is justified by facts not known to the Commissioners at the date of the original assessment.

24.   Refund of overpaid duty

   Where it is shown to the satisfaction of the Commissioners that too much estate duty has been paid, the excess shall be repaid by them.

This section of the article is only available for our subscribers. Please click here to subscribe to a subscription plan to view this part of the article.