Estate Duty: Matrimonial Home Allowance

Abstract

The matrimonial home allowance gave rise to a number of cases, such as the one to which this note refers, that demonstrate how the structure of tax systems means that a difference in the form of a transaction can have a significant effect on the tax outcome. Had the deceased in T and B v Commissioner of Inland Revenue (1983) 6 TRNZ 264 (HC) registered her house as a matrimonial home, then her husband could have claimed a deduction from the overall estate duty claimed. Instead, because it was merely a term in the deceased’s will that her husband should have a matrimonial home, no allowance could be claimed.

While of historic and comparative interest, as at 2009 the case has little precedent value. The Estate and Gift Duties Act 1968 is still on the statute book, but the rates of the estate duty are now zero, in effect abolishing the tax.

Keywords: Estate Duty, matrimonial home allowance, estate planning, structure of tax transactions

JEL Classification: K34