income tax – Clever Splitter http://cleversplitter.com/ Wed, 16 Feb 2022 05:32:35 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://cleversplitter.com/wp-content/uploads/2021/07/icon-2021-07-28T170948.334-150x150.png income tax – Clever Splitter http://cleversplitter.com/ 32 32 National Health Authority seeks Aadhaar data to identify health insurance recipients https://cleversplitter.com/national-health-authority-seeks-aadhaar-data-to-identify-health-insurance-recipients/ Tue, 15 Feb 2022 06:19:15 +0000 https://cleversplitter.com/national-health-authority-seeks-aadhaar-data-to-identify-health-insurance-recipients/ The National Health Authority (NHA) requested Aadhaar and other details of the beneficiaries under the National Food Safety Act (NFSA), in a letter sent to the director of the Department of Food and Health. public distribution (DoFPD) on January 5. The Socio-Economic Caste Census (SECC) requires it to be mapped with Aadhaar and NFSA data […]]]>

The National Health Authority (NHA) requested Aadhaar and other details of the beneficiaries under the National Food Safety Act (NFSA), in a letter sent to the director of the Department of Food and Health. public distribution (DoFPD) on January 5. The Socio-Economic Caste Census (SECC) requires it to be mapped with Aadhaar and NFSA data to identify beneficiaries under AB-PMJAY (State Health Insurance Scheme), the CEO of the NHA, RS Sharma, in letter.

Subsequently, the DoFPD Director urged states and union territories to share this data with the NHA using API integration. However, several state governments were reluctant to do so, due to confusion over whether Aadhaar data can be shared freely within government departments, according to minutes of a meeting between the NHA and the Unique. Identificatory Authority of India (UIDAI) held on 4th January. National Computing Center, Ministry of Computing and DoPFD also attended the meeting. The NHA has refuse any reservations among States on this issue, stating that “the process of sharing databases has already started in several States/UTs”.

In October last year, UIDAI authorized central government departments to share masked Aadhaar information among themselves for similar identification of beneficiaries under different schemes. Privacy advocates have expressed concerns, saying this could lead to the creation of family databases and, therefore, the reuse of collected data for other purposes.

Questions about sharing hidden Aadhaar data

NFSA ration card data from 18 states is already being shared with the NHA to identify recipients over the past 18 months, DoPFD officials said at the meeting. In an attempt to convince the remaining states to share the data, NHA Deputy Director General Vipul Aggarwal requested the following clarifications regarding the sharing of masked Aadhaar data:

Which authority should collect consent? UIDAI said it would prefer that the ministry/department that first collected the data asks for consent from the beneficiaries. However, noting that the DoFPD had expressed difficulty in obtaining such consent, the UIDAI added that the NHA could also do so.

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At what stage must consent be obtained? The UIDAI stated that consent must be collected at the time of delivery of services, goods, etc.

How should consent be collected? On the mechanism for taking consent, Aggarwal asked why consent could not be presumed in the event of a recipient not responding to a text message for the same, as the Income Tax Department does. The UIDAI did not answer his question directly and simply referred to its October memo which stated that consent could be collected via a physical “no objection certificate” or in electronic form via an e-mail. mail, message or similar form placed on the website of the user ministry/department.

Problems with cross-departmental sharing of Aadhaar data

The October memo from the UIDAI cited court judgments that recognized different ministries and departments as a single unit, namely the “central government”, as grounds for allowing inter-ministerial sharing of the last four digits of an Aadhaar number and certain demographic data. This raised the following concerns:

Allows to take the consent in a preventive way: “This circular will allow ministries to reuse data collected for a particular purpose because they already hold it. It’s fishy,” said Srikanth Lakshmanan, a tech activist. He also raised concerns about the appendix to the form being allowed to be put on a website for the collection of consent by a department for future purposes. “It’s a bit problematic because you’re allowing this agency to use your data for a future thing that you know nothing about, like you’re signing a blank check,” Lakshmanan said.

Privacy issues: Sharing masked Aadhaar data in addition to demographics didn’t make sense, Lakshmanan said, because it’s almost like sharing the entire data set. “It’s a pretty unique data set even if you don’t have all 12 digits,” he said. Lakshman also noted that the timing of the memo was “interesting” as it was released just before the joint parliamentary committee report on the data protection bill was tabled in parliament. He suggested that the intention seemed to be to allow and incentivize government ministries/departments to share data freely before the data protection law came into force. He also pointed out that the Aadhaar law has purpose limitations built into its framework.

Creation of the state family database: According to researcher Srinivas Kodalli, the move could be an attempt to create a family database as part of the state family database (SFDB). SFDB is a data integration and exchange platform which is meant to be an all-in-one database used in different state government departments to maintain records of different types. Tamil Nadu and Haryana are some of the states currently working on such a database.

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Inheritance tax: how to help the children of a house without handing everything over to HMRC | Personal finance | Finance https://cleversplitter.com/inheritance-tax-how-to-help-the-children-of-a-house-without-handing-everything-over-to-hmrc-personal-finance-finance/ Thu, 10 Feb 2022 09:26:00 +0000 https://cleversplitter.com/inheritance-tax-how-to-help-the-children-of-a-house-without-handing-everything-over-to-hmrc-personal-finance-finance/ When it comes to moving up the property ladder, more than a third of people (33%) rely on Mom and Dad’s Bank – or even Grandma and Grandpa’s Bank. So how can grandparents and parents avoid handing over all their money to HMRC? HMRC is set to collect £6.9billion in inheritance tax in 2023 to […]]]>

When it comes to moving up the property ladder, more than a third of people (33%) rely on Mom and Dad’s Bank – or even Grandma and Grandpa’s Bank. So how can grandparents and parents avoid handing over all their money to HMRC?

HMRC is set to collect £6.9billion in inheritance tax in 2023 to 2024, a significant portion of which is due to donations gone wrong.

Every year Britons are allowed to give away £3,000 without incurring a hefty inheritance tax bill.

According to a legal and general survey, the average payment to young family members to help them move up the property ladder is £19,000.

This would mean Britons face a hefty inheritance tax (IHT) bill of 40% on the amount over £3,000, if they had already exceeded the inheritance tax threshold which is normally £325,000 £.

READ MORE: Free bus pass: Millions of carers could miss out on free

Another way for generous grandparents and parents to avoid giving all their money to the taxman is to take advantage of the wedding gift allowance.

Emi Page, partner at law firm Winckworth Sherwood, explained: “A parent can offer their child up to £8,000 – a gift of £5,000 made in consideration of the marriage plus the use of their annual exemption from £3,000.

“Or possibly up to £11,000 if they can carry over an unused full annual exemption from the previous tax year.”

However, experts advise the older generation not to forget their own needs and make sure there are enough left over to enjoy their retirement.

Another way some may seek to pay less inheritance tax is to put the family home in the name of a child, but there are some complications with this method.

Tim Latham, Certified Financial Planner at Equilibrium Financial Planning, told Express.co.uk: “The problem with putting your house in your children’s name is the rules around gifts with reservation.

“These rules mean that if you continue to benefit from the property after the gift, for example still living in a house, the gift would not qualify and inheritance tax would still be due on the value of the property.

“For the house to be considered a gift for estate tax purposes, you must pay your children market rent after you gift your house to them.”

For anyone considering going down this road, Mr Latham advises Britons to beware and seek professional advice.

He added: ‘Your children may have to pay income tax on the rent you pay them, and there may also be capital gains tax payable between the date of the gift and the date of death. .

“Depending on the financial situation of your children, there is also a risk that you will lose your home in the event of divorce or bankruptcy.

“It’s important to think about what you want your money to achieve, who and how you want to help.”

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TFSA and RRIF: What is the difference between beneficiaries, successor holders and successor annuitants? https://cleversplitter.com/tfsa-and-rrif-what-is-the-difference-between-beneficiaries-successor-holders-and-successor-annuitants/ Wed, 19 Jan 2022 20:34:50 +0000 https://cleversplitter.com/tfsa-and-rrif-what-is-the-difference-between-beneficiaries-successor-holders-and-successor-annuitants/ However, there is an exception to this rule: the exempt contribution. Suppose you name your spouse or common-law partner as the beneficiary of your TFSA account. They may be able to use your TFSA assets to contribute an amount not limited by their available contribution room. In this case, they would “transfer” the assets from […]]]>

However, there is an exception to this rule: the exempt contribution. Suppose you name your spouse or common-law partner as the beneficiary of your TFSA account. They may be able to use your TFSA assets to contribute an amount not limited by their available contribution room. In this case, they would “transfer” the assets from your TFSA to their TFSA.

There is a short window after the death of a TFSA holder to make an exempt contribution. If you want to make sure your surviving spouse or common-law partner can keep your TFSA intact, it’s much simpler to name a successor holder. However, this provision allows a spouse or common-law partner to use your TFSA assets to make a TFSA contribution in excess of their available contribution room.

Registered Retirement Income Funds

On your RRIF, you can list a beneficiary or a successor holder. To name a beneficiary, the beneficiary can be anyone or even your estate, as in the case of a TFSA. But with the designation of a successor holder, the successor annuitant designation for RRIFs is limited to your spouse or common-law partner, also similar to a TFSA.

Note that a beneficiary designation on your RRSP is not “carried over” when you convert your RRSP to a RRIF. Instead, you must make a new designation, whether it is a beneficiary or a successor annuitant. The designation of successor annuitant can only be chosen for RRIFs, not for RRSPs.

Differences between a beneficiary and a successor annuitant for a RRIF

Designating a successor annuitant allows your spouse or common-law partner to take over your RRIF upon your death, without the need to transfer the funds. As with a successor holder of a TFSA, the successor annuitant of a RRIF would effectively assume ownership of the RRIF account without any tax consequences to the estate.

The successor annuitant then has the following options:

  • continue to receive RRIF payments,
  • transfer the assets to their own RRIF,
  • or if they prefer to delay income, they can transfer the assets to their RRSP (if they are 71 or younger).

If they decide to transfer the RRIF assets to their RRSP, their RRSP contribution room will not be affected. (That is, they don’t have to worry about whether they have enough RRSP contribution room.)

If you designate your spouse or common-law partner as beneficiary of your RRIF (to be clear: not as successor annuitant), the assets of your RRIF will be transferred to your spouse and your RRIF account will then be closed. However, your estate will not have to include the value of the RRIF on your final tax return or pay income tax. This is also true if you designate a financially dependent minor child or grandchild as your beneficiary. In this case, the beneficiaries will receive the RRIF assets until the date of death.

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Forbes India – A Case for Inheritance Tax, by Nikhil Kamath https://cleversplitter.com/forbes-india-a-case-for-inheritance-tax-by-nikhil-kamath/ Thu, 13 Jan 2022 09:12:48 +0000 https://cleversplitter.com/forbes-india-a-case-for-inheritance-tax-by-nikhil-kamath/ A major cause of high social inequality is the top percentile of the wealthy, who acquire their wealth primarily through inheritanceImage: Shutterstock On the cold morning of February 1985, then Finance Minister Vishwanath Pratap Singh said in his budget speech: “Inheritance law failed to achieve the dual purpose of reducing the unequal distribution of wealth […]]]>

A major cause of high social inequality is the top percentile of the wealthy, who acquire their wealth primarily through inheritance
Image: Shutterstock


On the cold morning of February 1985, then Finance Minister Vishwanath Pratap Singh said in his budget speech: “Inheritance law failed to achieve the dual purpose of reducing the unequal distribution of wealth and to help States fund their development programs. While the inheritance tax yield is only about ₹20 crore, the cost of administration is relatively high. In the third week of March, the inheritance tax was abolished. For more than 30 years before that, inheritance tax was in vogue in India. If you made a lot of money because an old uncle kicked the bucket and left you his wealth, you had to pay inheritance tax on it. This is no longer the case. So what is this tax and what does it involve?

Inheritance tax or inheritance tax is a form of taxation levied on property acquired as part of an inheritance. When a person’s property and assets are transferred to their legal heirs, the latter must pay inheritance tax to inherit the property or assets. Although this is the norm in many countries, India repealed the law in 1985 due to implementation issues. It was riddled with loopholes that allowed unscrupulous people to play with the system and slip through the cracks.

There was a brief attempt to revive taxation, just four years after it was abolished. The Property Rights (Inheritance) Bill 1989 sought to tax property passed on after death. It was widely believed that this act was more practical and achievable than his previous avatar. Even the tax rate, a maximum of 10%, was considered moderate; but Parliament was dissolved and the Bill slipped into obscurity, never to be heard again.

make the case

At first glance, inheritance rights rest on a solid foundation of case law, morality and cold, hard logic. It levels the rules of the game for the ultra-rich heirs and the less fortunate. It is also based on the principles of utilitarian economics, which postulates that an optimal social state can be achieved by redistributing initial endowments. The disparity caused by inherited wealth has been the root of much of the economic inequality we are so used to seeing around us. Inheritance taxation promises to weaken it, if not completely destroy it. Countries like England, France, Germany, the United States and Greece have taxed inherited wealth up to 40%.

The world is realizing the benefits of this type of taxation due to the growing awareness of the extreme disparity that exists. Such high levels of inequality have contributed to a plethora of global crises, not excluding the subprime mortgage crisis of 2008. Andrew G Berg and Jonathan D Ostry, both IMF economists, have demonstrated through their research that if a economy exhibits high levels of inequality, it is unlikely to maintain a high growth trajectory in the future. One of the main causes of this inequality is the top percentile of the wealthy, who acquire their wealth primarily through inheritance. In rapidly developing economies like India, this chasm is even more pronounced.

Need of the Hour: A Resurrection

This level of selective prosperity can be attributed to flawed tax policies conducted over several decades, where the taxation of wealth does not contribute a fair share to the public treasury. There are a few very compelling reasons why inheritance tax should make a comeback in India.

First, it will allow for a more efficient dispersion of wealth. In India, wealthy families from different backgrounds have one thing in common: inherited wealth. This is not only unhealthy from an economic point of view, but also limits social mobility. Proper implementation of inheritance rights can remedy this malaise to a large extent.

Second, this approach to public finance also aligns with the egalitarian ideals enshrined in the Constitution of India. The right to equality is one of the main guarantees of the Constitution, and a fair taxation of wealth is an important step in this direction.

Third, most of India’s tax revenue comes from indirect taxes, which have further intensified on the economically weaker sections. More direct taxes are the need of the hour, and inheritance tax is an important part of that. This can generate a significant amount of revenue for the treasury.

Fourth, through this additional tax revenue, the Indian government would have the freedom to reduce the basic income tax of the economically weaker sections of the country. This could help combat the high barrier to entry to start more businesses.

Up and in front

It has often been asked whether the taxation of the richest could take off differently by reducing investments, capital expenditures and savings which could have a direct impact on the economy. It all depends on the effectiveness of the implementation. In a thriving, forward-looking economy like the United States, the 1975 Taxation Review Committee stated that estate taxation can “support the progressivity of the tax structure through the indirect means of a progressive levy on the wealth once per generation”, which will remove the “undesirable social consequences” of inherited wealth. As India’s wealthy grow at a dizzying rate, this kind of progressive tax structure can go a long way toward ensuring the redistribution of wealth, moving closer to a fairer economic balance, and encouraging more business.

The writer is co-founder, True Beacon and Zerodha

Click here to see Forbes India’s full coverage of the Covid-19 situation and its impact on life, business and economy

Discover our end of season subscription discounts with an absolutely free Moneycontrol pro subscription. Use code EOSO2021. Click here for more details.

(This story appears in the January 14, 2022 issue of Forbes India. To visit our archive, click here.)

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Inheritance Tax Warning As Brits Face Shocking Interest Rate Bill – “Very Unfair!” “| Personal Finances | Finance https://cleversplitter.com/inheritance-tax-warning-as-brits-face-shocking-interest-rate-bill-very-unfair-personal-finances-finance/ Sun, 19 Dec 2021 04:01:00 +0000 https://cleversplitter.com/inheritance-tax-warning-as-brits-face-shocking-interest-rate-bill-very-unfair-personal-finances-finance/ 40 percent inheritance tax is chargeable, and for some people, the smart decision is to pay this in installments. However, people should be aware that interest is charged by HM Revenue and Customs (HMRC) if a person does not pay the IHT bill by a certain date. The executor has six months from the end […]]]>


40 percent inheritance tax is chargeable, and for some people, the smart decision is to pay this in installments. However, people should be aware that interest is charged by HM Revenue and Customs (HMRC) if a person does not pay the IHT bill by a certain date. The executor has six months from the end of the month in which the person died to pay the inheritance tax due, after which interest is charged on the amount of tax due.

However, a senior expert expressed frustration with the policy, especially since the administration of estates is often tied in knots for the British.

Express.co.uk spoke with Michael Culver, President of Solicitors for the Elderly and Founder of Culver Law Ltd.

He said: “When you think of inheritance tax, I always think it’s a huge issue that people have to pay interest within six months of the end of the month of death.

“It’s really, really frustrating, especially during COVID-19, that they haven’t had any extenuating circumstances to prolong this at all.

READ MORE: State pension: Some retirees now have to pay NHS processing fees

“But in the majority of cases, where maybe the house is the primary asset, you can’t pay the IHT until you are able to sell the property.”

Regardless of the personal circumstances, however, Mr Culver said the interest would show up within a “very tight timeline.”

He continued, “It’s very unfair – indeed, one of the most unfair things about inheritance tax.

“Interest comes in so quickly for inheritance tax. Whereas, for income tax, you have until January 31 after the end of the tax year concerned before having to file your tax return and before tax is applied before.

“They give a lot more time in a person’s life when they usually have their affairs in order and might have an accountant to help them.

“Whereas in death there is less time, and as executor, a lot of you have to figure out what someone had.

“There are problems with the probate registry and delays, which means a person can’t even put the house up for sale, let alone find a way to pay for it.

“However, the tax authorities are already knocking on your door to charge you interest. “

Mr Culver says the six-month grace period for paying inheritance tax has been set at that level for a long time.

It appears that incomes have not budged to change that, even with a sad increase in deaths from COVID-19.

This, he warned, is likely to increase the backlog of probate services even now, compounding the problem.

He concluded, “You might have eight or nine months before you can even market the property, and then it might take another six months to sell.

“At this point, you’re past the year mark, so you might have another inheritance tax payment due with more interest accrued.

“This is why it is so important to try to get your own house in order as soon as you can. “


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Inheritance Tax Advice – Business Live https://cleversplitter.com/inheritance-tax-advice-business-live/ Wed, 24 Nov 2021 12:45:20 +0000 https://cleversplitter.com/inheritance-tax-advice-business-live/ Following my two recent columns on inheritance tax, I have a few other helpful tips from your questions that you might find helpful. I used to park for free on the street, at the hospital; there was no tax on my insurance premiums; the NHS provided me with care when I needed it. I could […]]]>


Following my two recent columns on inheritance tax, I have a few other helpful tips from your questions that you might find helpful.

I used to park for free on the street, at the hospital; there was no tax on my insurance premiums; the NHS provided me with care when I needed it. I could go on.

Meanwhile, I can send a split second ‘letter’ (email) and cut huge paper costs and time, create a business transaction in an hour that would have taken days with faxes, letters. and stamps. I can attend meetings all over the world instantly with my shorts and flip flops on, as long as I have a nice shirt. My little phone is over 500 times the size of my first computer, and my broadband connects over 1,000 times faster than my first computer.

If everything is so much easier, then why are my costs constantly increasing and taxes going up?

More Peter McGahan Chronicles

Thus, after having been taxed at the highest point in our lifetime, the ever popular inheritance tax takes its share of 40%. Your pension: People under 75 in the event of death are allowed to transfer all of their pension benefits to a defined contribution plan directly to their beneficiaries without having to pay tax. Then there is a tax applicable at the marginal rate of the beneficiary’s income tax.

It is therefore wise during your lifetime (up to age 75) to use your taxable income and your savings within your taxable heritage to provide you with income and capital and allow this pot to build up.

Life Insurance: I’ve written about this before, but a little advice: if you want to keep all of your investments smooth and always under control, you can insure against it.

Normally, when you purchase insurance for a large tax sum, the premiums can be high, but this is when you set it up with joint first-to-die life insurance. A joint life insurance policy on the second death is less expensive and it is the plan normally needed to protect against the cost of inheritance tax.

You calculate the potential tax, insure yourself and your partner against this amount and establish the payment plan on the second death. The amount is put into a trust that goes directly to the tax-free beneficiaries who then pay the tax bill. I can argue that premiums pay some of the tax up front, but there is tremendous flexibility in knowing that you don’t need to lock in assets now.

Those with a large amount of fixed assets, especially after their recent increase (a house and things that aren’t liquid like cash) can be a bit tied to capital. How to donate your house while keeping an interest in it without falling into the gift trap with reservation rules for example?



Peter McGahan, Managing Director of Worldwide Financial Planning

One of the many options is to create debt inside your estate while moving money outside of your estate. If you use an equity release plan with an independent financial advisor and your lawyer and raise money against the house, the debt inside your estate increases. On death, this debt is subtracted from your taxable wealth, which reduces the tax payable.

During this time, the capital that you have raised is of course still inside the estate, so it is placed in a trust for the benefit of the beneficiaries. There are a lot of options out there, but I’ll use the discounted gift trust I mentioned a few weeks ago to explain a way to get this out of the estate.

The capital raised against the house is placed in a trust which gives you access to withdrawals (your “income”) from the trust for the rest of your life. After seven years, the money offered is out of the domain with the growth of the domain, but it also gets a discount in between.

Income calculates your entitlement to withdrawals (your “income”) and depending on the amount and age, the gift is discounted.

So, after seven years, you have debt inside your estate and the capital and its growth outside the estate. As withdrawals come in every year, they could be redirected to the beneficiaries so that they never go into the estate.

If you have a question about inheritance tax, please call 01872 222422 or email info@wwfp.net or visit us at www.wwfp.net

Peter McGahan is the Managing Director of the independent financial advisor Worldwide Financial Planning . Worldwide Financial Planning is authorized and regulated by the Financial Conduct Authority. The FCA does not regulate credit cards, will drafting, and some forms of mortgage and estate planning.

The information provided is for guidance only and specific advice should be taken before acting on any suggestions made. All information is based on our understanding of current tax practices, which are subject to change. The value of stocks and investments can go down as well as up. Your home can be repossessed if you don’t pay off your mortgage.

More stories about finance from the South West


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Do RRIF Beneficiaries Pay Tax? https://cleversplitter.com/do-rrif-beneficiaries-pay-tax/ Mon, 22 Nov 2021 22:28:36 +0000 https://cleversplitter.com/do-rrif-beneficiaries-pay-tax/ Essentially, a beneficiary may be liable for tax owing if there is not enough money left in the estate. This could apply if an RRSP or RRIF is the primary or sole asset of an estate. However, it is important to consider that a beneficiary of an RRSP or RRIF is different from the beneficiary […]]]>


Essentially, a beneficiary may be liable for tax owing if there is not enough money left in the estate. This could apply if an RRSP or RRIF is the primary or sole asset of an estate. However, it is important to consider that a beneficiary of an RRSP or RRIF is different from the beneficiary of the rest of the estate in determining who gets what from an estate.

Does a beneficiary pay taxes? Can this tax be deferred?

If a beneficiary of an RRSP or RRIF is the deceased’s spouse or common-law partner, or the beneficiary of the deceased’s estate, it may be possible to defer tax , Gay. This tax deferral may apply if the proceeds are transferred to their own RRSP or RRIF by December 31 of the year following the death of the account holder.

In this case, a T4RSP or T4RIF slip will instead be issued to the beneficiary spouse who would claim the income and could also claim an offsetting deduction on their income tax return to avoid tax.

Future withdrawals would be taxable to the beneficiary spouse over time. It does not matter whether the transferring or transferring account is an RRSP or a RRIF. It is also irrelevant that the beneficiary spouse does not have an RRSP or RRIF, as they can open one to receive the transfer.

Beyond a beneficiary spouse, a financially dependent minor child or grandchild, or a mentally or physically disabled financially dependent child or grandchild may also be eligible for a tax-deferred transfer.

The deadline to convert an RRSP to a RRIF is approaching

In your case, Gay, if you’ve turned 71 this year, you’re right that December 31st is an important date. You must convert your RRSP to a RRIF before this deadline, or buy an annuity from a life insurance company, because your RRSP can no longer exist afterwards.

Either way, if you are a beneficiary of a RRIF and the spouse of the deceased person, you can transfer the amount to your RRSP or your RRIF, so that the time of the conversion from your own account does not will not matter for the purposes of the transfer.

If you are not the spouse of the deceased and you are not their financially or physically or mentally or physically dependent child or grandchild, there is no tax relief. Again, tax would be paid by the deceased’s executors on their estate and the income and tax would not be on your tax return.


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Life Insurance and Inheritance Tax – Forbes Advisor UK https://cleversplitter.com/life-insurance-and-inheritance-tax-forbes-advisor-uk/ Wed, 17 Nov 2021 17:10:00 +0000 https://cleversplitter.com/life-insurance-and-inheritance-tax-forbes-advisor-uk/ If you have taken out a life insurance policy to provide financial protection for your loved ones, the proceeds of the claim will generally not be subject to income tax or capital gains tax ( CGT) – but inheritance tax (IHT) may be payable if the payment is part of your estate. Here, we take […]]]>


If you have taken out a life insurance policy to provide financial protection for your loved ones, the proceeds of the claim will generally not be subject to income tax or capital gains tax ( CGT) – but inheritance tax (IHT) may be payable if the payment is part of your estate.

Here, we take a closer look at how it works and what steps you can take to avoid paying the IHT on the proceeds of your life insurance policy.

What is inheritance tax?

Inheritance tax is levied on the estate of a person who dies following his death. A person’s estate can include their property, money, cars and other assets, as well as the proceeds of a life insurance policy.

The IHT will generally not be payable if the value of the estate is below the zero rate bracket (NRB) of £ 325,000 or if you leave anything above the threshold to your spouse or civil partner, or a beneficiary. exempt such as a charity.

However, if the value of your estate is greater than £ 325,000 and the above situations do not apply, the portion of your estate above the threshold may be subject to IHT at the rate of 40%.

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How does inheritance tax work for married couples?

Married and PACS couples can share their thresholds and transfer the unused portion of their threshold without IHT to their partner upon their death. This means that a married couple or registered partnership can pass on £ 650,000 before the IHT becomes payable.

In addition, if you bequeath a property to a direct descendant (a child or grandchild), you can benefit from an additional tax-free allowance of £ 175,000. This can raise the combined IHT threshold by a couple to £ 1million.

Do I have to pay inheritance tax on life insurance?

Paying for a life insurance policy will normally be part of your legal estate. If the life insurance proceeds bring your estate above the IHT threshold of £ 325,000, the portion of your estate above this threshold will be taxable at the rate of 40%.

This could result in the removal of a significant portion of the pot of money that would otherwise have supported your loved ones financially upon your death.

Fortunately, however, there are ways to avoid paying the IHT on your life insurance, as we explain below.

Putting life insurance in “confidence”

The easiest way to prevent the IHT from being charged on life insurance is to put your policy in trust. A trust is a legal arrangement that appoints trustees, such as a lawyer, family members or friends, to look after the policy on behalf of your beneficiaries until such time as the beneficiary is supposed to benefit from it.

It is important to note that writing your life insurance policy in trust means that the payment will go directly to your beneficiaries, rather than part of your legal estate, and therefore no IHT will be due.

But there are also many other advantages to writing a trust policy.

First, it will allow you to decide who will be your trustees and who will receive the money from your life insurance policy. Setting up a trust can be especially important if you are not married or in a civil partnership, as it will ensure that your assets go to the intended beneficiaries.

Writing your policy in trust also means that the payment will get to your loved ones much faster because it bypasses probate – the legal process of sorting out a deceased person’s estate.

Setting up a trust is simple and shouldn’t cost you more. Your life insurance provider will be able to help you and it usually does not require more than a signature on your part. While it is usually best to set up a trust the first time you purchase, you can put your policy in a trust at any time.

Can I use life insurance to pay inheritance tax?

The IHT must be paid before your loved ones can access your estate when you die and as a result, they could be forced to fork out thousands of pounds at one time.

If you know that your beneficiaries will be responsible for the IHT upon your death, you can purchase whole life insurance to cover the full amount of the IHT bill. Whole life insurance policies will pay for each death, rather than within a specified time frame (like term insurance).

Again, to prevent the proceeds of the policy from causing an IHT, your whole life policy must be underwritten in trust. Keep in mind that the premium paid for the policy will also help reduce the value of your estate, which can further reduce the amount of IHT owed upon your death.

If your finances are complicated, it’s always best to speak to an independent financial advisor who can help you find the right solution for your taxes and estate planning.

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Government opposes lower inheritance tax: DONG-A ILBO https://cleversplitter.com/government-opposes-lower-inheritance-tax-dong-a-ilbo/ Sun, 14 Nov 2021 23:18:37 +0000 https://cleversplitter.com/government-opposes-lower-inheritance-tax-dong-a-ilbo/ The South Korean government is opposed to the idea of ​​reducing inheritance tax by implementing inheritance tax. As ruling and opposition parties call for reform of a lean inheritance tax to win the hearts of voters in the run-up to the presidential election, there will inevitably be conflict between the administration and the government. political […]]]>


The South Korean government is opposed to the idea of ​​reducing inheritance tax by implementing inheritance tax. As ruling and opposition parties call for reform of a lean inheritance tax to win the hearts of voters in the run-up to the presidential election, there will inevitably be conflict between the administration and the government. political community.

A study released by the Korea Institute of Public Finance was submitted by the Ministry of Economy and Finance to the National Assembly on Sunday on how to improve the inheritance and gift tax system with a review of the main issues included in the report. The administration opposes the idea of ​​reducing inheritance tax rates from the current level of 10 to 50 percent, adding that the issue requires further deliberation. As many policies are already in place to ensure tax deductions for family businesses and agriculture, for example, it is better to make better use of these deduction-based initiatives rather than introducing inheritance tax rates, he said. “Inheritance tax and income tax have a complementary relationship. Reform of the current tax system should be considered as it is important for the redistribution of wealth.

Not only with this, the administration effectively expresses its objection to the transition from inheritance tax to inheritance acquisition tax in the inheritance tax system, adding that this issue should be reconsidered in the medium and long term. . While inheritance tax is levied on the basis of a total estate sum, inheritance acquisition tax is estimated on the basis of each individual who inherits, thereby reducing the overall tax burden. After reviewing the shift to inheritance tax, the ministry argues that taxation may have a smaller role to play in addressing the issue of inherited wealth, as the risks of tax evasion only increase.

The administration appears to be taking a negative stance towards a greater tax deduction for family business owners who bequeath their property to their descendants. The limit on the tax deduction for family business estates is currently set at 50 billion won, for which the business community is calling for an increase in the limit. However, the government believes there is no need to increase the upper limit, as last year’s average deductibles were 3.97 billion won, lower than the existing legal limit. At the same time, he favors increasing the annual payment period from five years to ten years when an amount of tax payable is more than 20 million won.

With the ministry effectively opposed to reforming the inheritance tax system, conflicts of opinion are expected to arise between government and political circles in a series of sessions chaired by the Tax Subcommittee of the National Assembly from Monday.

kalssam35@donga.com


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Italian beneficiaries of non-Italian irrevocable and discretionary trusts are required to impose supervisory obligations (section RW of the tax return) – Taxation https://cleversplitter.com/italian-beneficiaries-of-non-italian-irrevocable-and-discretionary-trusts-are-required-to-impose-supervisory-obligations-section-rw-of-the-tax-return-taxation/ Fri, 12 Nov 2021 14:48:49 +0000 https://cleversplitter.com/italian-beneficiaries-of-non-italian-irrevocable-and-discretionary-trusts-are-required-to-impose-supervisory-obligations-section-rw-of-the-tax-return-taxation/ Caiazzo Donnini Pappalardo & Associati Italy: Italian beneficiaries of non-Italian irrevocable and discretionary trusts are required to impose supervisory obligations (section RW of the tax return) November 12, 2021 Caiazzo Donnini Pappalardo & Associati To print this article, simply register or connect to Mondaq.com. With the recent fiscal decision (Interpello) n ° 693/2021 of 8e […]]]>


Italy: Italian beneficiaries of non-Italian irrevocable and discretionary trusts are required to impose supervisory obligations (section RW of the tax return)

To print this article, simply register or connect to Mondaq.com.

With the recent fiscal decision (Interpello) n ° 693/2021 of 8e October 2021, the Italian tax authorities clearly addressed a controversial tax audit obligation of Italian beneficiaries of foreign discretionary and irrevocable trusts, confirming the obligation to potential beneficiaries of the trust to declare their rights and the amount of the trust in the “RW tax audit section” of their Italian tax return. This conclusion is based on the interpretation of the definition of “actual beneficiary” (titolare effettivo) of the assets of trusts, as amended by Legislative Decree No. 90/2017 (and in force since 2018).

The above interpretation and conclusion is also reported in the current draft tax circular on trusts, open for comment until September 2021, and which has received several requests for clarification and modification by academics and stakeholders in the market and which is still in the pipeline but is expected to be published and formally promulgated by the tax authorities in the near future.

Warning and actions:

This is not a change of law but a relevant interpretation of the Italian tax authorities in a specific anticipatory tax ruling. The principle, if confirmed (as expected) by the new tax circular on trusts, will be binding on tax offices with a significant impact on future tax assessments of Italian beneficiaries of foreign trusts on tax years from 2018.

Italian tax resident beneficiaries of a discretionary and irrevocable foreign trust are clearly required to declare their “potential” right to the foreign assets of the trust in their tax return only for “tax audit” purposes by completing section RW.

The omitted deposit is heavily penalized by a variable tax penalty between 3% and 15% (increased to 6% – 30% if the trust is incorporated in a non-cooperative country) per fiscal year on the total value of the assets held in trust.

Summary of the tax ruling

An Italian settlor planned to create a true irrevocable and discretionary trust governed by foreign law, appointing a non-Italian trustee and designating as final beneficiaries his minor children (identified only as a category of beneficiaries) tax residents in Italy.

The question raised by the tax ruling concerned the qualification of minor children as “beneficial owners” (titolari effettivi) of the trust: in this case, they must file the Italian tax declaration indicating the “potential” trust law in the tax audit section RW.

In the event that the children were qualified as titolari effettivi, and therefore required to file section RW of the tax return, the settlor asked whether the appointment of an Italian trust company, acting on behalf of its children in the collection of the future income / capital of the trustee, would have avoided this obligation to tax declaration of compliance due to the intermediation activity of the same Italian trust company.

The tax ruling confirmed that, following the 2017 amendment introduced by the IV ° Directive on the fight against money laundering (legislative decree no.90 / 2017), the Italian law on fiscal control (decree-law no. No. 167/90 and art. 1 and 20 of Legislative Decree No. 231/2007) includes among the titolari effettivi trusts and similar entities (committed to filing section RW of the income tax return), also beneficiaries who can be easily identified by reference to a category, such as “my children” and regardless of the percentage of assets allocated to each beneficiary.

Furthermore, with regard to the question on the interposition of an Italian trust company, the Italian tax authorities denied that such a circumstance would have exempted from the obligation of Section RW because this exemption only applies to to trust companies with fiduciary management powers (which would rather be exercised by the trustee in the case in question).

Conclusion

The principle expressed in this tax ruling is very important as it will probably be confirmed by the new tax circular on trusts becoming a mandatory tax directive for Italian local tax offices in their ordinary tax procedures.

We anticipate that, if this is the case, in the near future, tax offices may begin to challenge the omitted RW section filing to all Italian tax resident beneficiaries of foreign, discretionary and irrevocable trusts, even in cases where these beneficiaries are identified only. as a category of potential beneficiaries (such as “my spouse” or “my children”) when these persons can be easily identified at the end of each financial year (ie the spouse or the real children of the settlor).

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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