Capital Acquisitions Tax Consolidation Act 2003 section 42

Provisions to apply where section 98 of Succession Act 1965 has effect

Section 42 prevents a double charge to inheritance tax where a benefit under a will is preserved from lapse by section 98 of the Succession Act 1965, ensuring that the person who ultimately receives the property is taxed as taking from the original testator.

• Where a beneficiary under a will predeceases the testator but leaves surviving issue, section 98 of the Succession Act 1965 prevents the gift from lapsing — the benefit passes to the deceased beneficiary's estate as if he or she had died immediately after the testator.
• The benefit taken by the estate of the predeceased beneficiary is not treated as an inheritance for CAT purposes, preventing a double tax charge on what is essentially a single transfer of wealth.
• The person who ultimately receives the property is deemed to take an inheritance from the original testator as disponer, not from the predeceased beneficiary — this applies whether section 98, its predecessor (section 33 of the Wills Act 1837), or an equivalent law of another territory operates.
• The class threshold applicable to the ultimate beneficiary is determined by his or her relationship with the original testator, not with the predeceased beneficiary.