The Commissioner of Taxation has forwarded the following memorandum for advice:

Under section 8 of the Estate Duty Assessment Act 1914, estate duty is levied and paid upon the value as assessed under the Act of the estates of persons dying after the commencement of the Act.

Sub-section (5) exempts from duty so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for religious scientific charitable or public educational purposes.

By her will, A.B. deceased left all her property 'upon trust to pay the same to the Treasurer for the time being of the State of Victoria to be paid by him into the consolidated revenue of such State.'

The executors claim that as the sole beneficiary is a State, the estate is not dutiable. As the devise and bequest is not for any of the specific purposes mentioned in section 8 (5), it is considered the claim should be disallowed, but before advising the executors to this effect, I should be glad of your confirmatory opinion.

Section 8 (1) of the Estate Duty Assessment Act 1914 provides that, subject to the Act, estate duty shall be levied and paid upon the value, as assessed under the Act, of the estates of persons dying after the commencement of the Act.

The taxation imposed by the Act is imposed upon the estate before it reaches the hands of the beneficiaries. The bequest to the State becomes the property of the State only after it has suffered a diminution to the amount of the tax, and it is only upon this condition that the legislature assents to a bequest of it {vide United States v. Perkins 163 U.S. 625).

To this general rule laid down in the Act sub-section (5) of section 8 makes an exception, viz. that duty is not payable on so much of the estate as passes for religious, scientific, charitable, or public educational purposes.

The bequest to the State does not fall within this exception.

In my opinion, the claim of the executors should be disallowed.

[Vol. 13, p. 490]