CAPITAL LEVY ACT

Arrangement of Sections

1. Short title.

PART I

PERSONS TO WHOM THIS ACT SHALL NOT APPLY

2. Persons to whom this Act shall not apply.

PART II

IMPOSITION OF CAPITAL LEVY

3. Imposition of capital levy.

4. Capital to include certain property.

5. Certain property to be excluded from capital.

6. Leviable capital of the head of a family.

7. Leviable capital of person who is not included in a family.

8. Leviable capital of non-resident company.

9. Special provisions applicable to gifts made on or after April 1, 1971, but on or before September 30, 1971, and to the estates of persons dying on or after April 1, 1971, but before date of commencement of this Act.

10. Value of property which constitutes capital.

11. Date of valuation.

12. Separate assessment of husband and wife.

PART III

RETURNS AND ASSESSMENTS

13. Duty of persona chargeable with capital levy to furnish returns if not required to do so by an Assessor.

14. Returns and information to be furnished.

15. Information to be furnished by officials.

16. Who may act for incapacitated or non-resident person.

17. Precedent partner to act on behalf of a partnership.

18. Principal officer to act on behalf of a company or body of persons.

19. Signature and service of notice.

20. Power of Commissioner to impose penalty for failure to famish return.

21. Assessor to make assessments.

22. Additional assessments.

23. Notice of assessment.

24. Validity of assessments.

25. Restriction on disposal of immovable property by any person in respect of whom an assessment is made.

26. Notice of objection in respect of an assessment.

27. List of documents and witnesses

28. Power of Commissioner to obtain information necessary to make Ms determination on a notice of objection.

29. Rejection of a notice of objection.

30. Determination of Commissioner on notice of objection.

31. Finality of assessments.

PART IV

APPEALS

32. Appeal to Board of Adjudicators.

33. Commissioner may refer notice of objection to the Board of Adjudicators.

34. Finality of the decisions of the Board.

35. Appeals to the Supreme Court on questions of law.

PART V

PETITIONS TO THE BOARD OF ADJUDICATORS FOR RELIEF

36. Petition to the Board of Adjudicators for relief.

37. Relief which the Board may grant.

PART VI

PAYMENT, RECOVERY AND REPAYMENT OF CAPITAL LEVY

38. When payment of capital levy is to be made.

39. Payment of capital levy by transferring immovable property to the Crown.

40. Payment by surrender of Government stock.

41. Payment by transfer of shares.

42. Penalty for delay in payment of capital levy or installment of capital levy.

43. Capital levy to include fines.

44. Capital levy to be a first charge.

45. Recovery of capital levy by seizure and sale of property.

46. Proceedings for recovery before a Magistrate.

47. Recovery of capital levy by vesting immovable property of the defaulter in the Crown.

48. Recovery of capital levy out of debts.

49. Recovery of tax from persons leaving Ceylon.

50. Use of more than one means of recovery.

51. When capital levy may be recovered from any person other than the person assessed.

52. Power of Commissioner to obtain information for the recovery of capital levy.

53. Capital levy paid in excess to be refunded.

PART VII

BOARDS OF ADJUDICATORS

54. Panel of Adjudicators.

55. Chairman of the Panel.

56. Constitution of Boards of Adjudicators.

57. Remuneration of Chairman of the Panel and of members of the Board.

58. Functions of the Board.

59. Proceedings before a Board.

60. Decision of the Board.

61. Cost of appeals to the Board.

62. Power of Minister to issue general directions to the Board.

PART VIII

OFFENCES AND PENALTIES

63. Offences of failure to make returns, making incorrect returns.

64. Penalty for contravention of the provisions of section 25.

65. Breach of secrecy and other matters to be offences.

66. Offences of fraud.

67. Penalty for incorrect return.

68. Capital levy to be payable notwithstanding any proceedings or penalties

69. Prosecution to be with the sanction of the Commissioner.

PART IX

ADMINISTRATION

70. Administration of this Act.

PART X

GENERAL

71. Persons assessable on behalf of a non-resident person.

72. Capital levy in respect of deceased payable by executor.

73. Joint executors.

74. Liability in case of dissolved body of persons.

75. Official secrecy.

76. Indemnification of representative.

77. Certain transactions and dispositions to be disregarded.

78. Power to make regulations.

79. Forms.

80. Power to search buildings or places.

81. Admissibility of statements and documents in evidence.

82. Amendment of Schedule to this Act.

PART XI

INTERPRETATION

83. Interpretation.

51 of 1971.

AN ACT to provide for the imposition of a levy on capital and for matters connected therewith or incidental thereto.

[Date of Commencement: 24th November, 1971]

1. Short title.

This Act may be cited as the Capital Levy Act.

PART I

PERSONS TO WHOM THIS ACT SHALL NOT APPLY

2. Persons to whom this Act shall not apply.

This Act shall not apply to—

(a) any person specified in section 28 of the principal Act;

(b) the Government of any foreign country;

(c) the Institute of Chartered Accountants of Ceylon established under the Institute of Chartered Accountants Act, No. 23 of 1959;

(d) any company other than a non-resident company having capital in Ceylon;

(e) any charitable institution within the meaning of section 129 of the principal Act:

(f) any provident, building, savings or thrift society or fund; and

(g) any other person who may be exempted from the provisions of this Act by Order made by the Minister of Finance, approved by the House of Representatives and published in the Gazette.

PART II

IMPOSITION OF CAPITAL LEVY

3. Imposition of capital levy.

(1) Subject to the other provisions of this Act, there shall be imposed—

(a) on every person (including a Hindu undivided family but not including a non-resident company having capital in Ceylon) in respect of his leviable capital on March 31, 1971, a levy at the rates specified in the Schedule to this Act, and

(b) on every person, being a non-resident company having capital in Ceylon, a levy at the rate of 5 per centum of the leviable capital of that company on March 31, 1971.

(2) A levy imposed on any person under subsection (1) is hereafter in this Act referred to as the "capital levy”.

(3) For the purposes of this Act, where an individual has a wife or any child or dependent relative on March 31, 1971, they shall constitute a family and such individual shall be the head of that family.

4. Capital to include certain property.

(1) There shall be included in the capital of a person—

(a) the value of a life interest he has in any property;

(b) being the only beneficiary under a trust, the property subject to the trust;

(c) being one of several beneficiaries under a trust the benefits from which to the beneficiaries can be ascertained, such part of the property subject to the trust as is proportionate to the share of the benefit from the trust;

(d) being the trustee of a trust the benefits from which to all or any of the beneficiaries under the trust cannot be ascertained, the property subject to the trust;

(e) being a partner in a firm, the value of his interest in the firm determined in the prescribed manner;

(f) his approved savings within the meaning of section 69 (a) of the principal Act;

(g) his share in the capital of any corporation or undertaking the profits and income of which are exempt from income tax under section 6 of the principal Act;

(h) his investments in the securities of the Government of Ceylon and his other investments whether he is entitled or not on account of his other investments to any allowance in arriving at his taxable income for the purposes of the principal Act or to any relief under that Act from income tax; and

(i) motor vehicles of which he is the possessor or where he is the head of a family, motor vehicles of which he or any member of his family is the possessor.

(2) Where the estate of a person whose death occurred prior to April 1, 1971, is administered by an executor, then, for the purposes of subsection (1), the executor shall be deemed to be the trustee of the estate and every heir to the whole or any part of the estate shall be deemed to be a beneficiary and the estate shall be deemed to be the property subject to the trust.

5. Certain property to be excluded from capital.

(1) There shall be excluded from the capital of a person—

(a) his immovable property which is outside Ceylon;

(b) being a person not resident in Ceylon on March 31, 1971, his movable property which is outside Ceylon;

(c) being a person who is resident in Ceylon on March 31, 1971, but who is not a citizen of Ceylon, his movable property which is outside Ceylon;

(d) being a member of a Hindu undivided family, his interest in the coparcenary property of such family;

(e) any household effects or other articles (not including jewellery of personal use of which he is the owner;

(f) any such interest in any property as is available to him for a period not exceeding six years;

(g) the rights under any patent, copyright, trade mark or registered design belonging to him unless those rights are held by him as assets of a business, profession or vocation;

(h) his right or interest in any life insurance policy before moneys covered by that policy become due and payable to him;

(i) his right to receive a pension or other life annuity;

(j) any tools and instruments necessary for him to carry on his profession or vocation, subject to a maximum of twenty thousand rupees in value;

(k) any instruments and other apparatus used by him for purposes of scientific research;

(l) any works of art, archaeological, scientific or art collections, books or manuscripts belonging to him and not intended for sale;

(m) any drawings, paintings, photographs and prints belonging to him and not intended for sale;

(n) any heirlooms belonging to him and not intended for sale, but not including jewellery;

(o) any jewellery belonging to him or, if he is the head of a family, any jewellery belonging to him and the members of his family, subject to a maximum of twenty-five thousand rupees in value;

(p) being an employee, the amount to his credit in any provident fund;

(q) any property of which he is the owner but the life interest in which subsists in any other person;

(r) any sum due from him by way of income tax or wealth tax in respect of any year of assessment ending not later than March 31, 1972, or by way of estate duty in respect of the estate or any part of the estate of a deceased person which has passed to him and which is included in his capital for the purposes of this Act;

(s) any sum due from him by way of gifts tax in respect of any gift made by him at any time on or before September 30, 1971;

(t) being an heir to the estate of any person who dies on or after April 1, 1971, but before the date of commencement of this Act, the amount of the estate duty paid or payable by him in respect of such part of the estate of the deceased as is deemed under section 9 to have devolved on him on March 31, 1971, or being the executor of the estate of any such person, the amount of the estate duty paid or payable by him;

(u) motor cycles belonging to him and kept for his personal use or, if he is the head of a family, motor cycles belonging to him and kept for his personal use or belonging to any member of his family and kept for the personal use of that member;

(v) any motor car which is kept for his personal use or if he is the head of a family, any motor car which is kept for his personal use or for the personal use of any member of his family and of which he or that member of his family became the owner or possessor prior to April 1, 1968, and any motor car which is kept for the personal use of any member of his family who is a child in receipt of occupational income and of which that member of his family became the owner or possessor on or after April 1, 1968;

(w) a sum of twenty-five thousand rupees out of the total value of the motor cars which are kept for his personal use and of which he became the owner or possessor on or after April 1, 1968, or if he is the head of a family, a sum of twenty-five thousand rupees out of the total value of the motor cars which are kept for his personal use or the personal use of the members of his family (not being children in receipt of occupational income) and of which he or those members became the owners or possessors on or after April 1, 1968;

Provided that where the total value of such motor cars is less than twenty-five thousand rupees, such total value and not a sum of twenty-five thousand rupees shall be deducted from the capital of that person;

(x) any immovable property in which he has a contingent interest or the life interest in which subsists in any other person.

For the purposes of paragraphs (v) and (w), "occupational income” shall have the meaning assigned to that expression in section 129 of the principal Act.

(2) Where any sum or amount which is payable by any person by way of income tax, wealth tax, gifts tax or estate duty and which is excluded under subsection (1) from the capital of that person has not been assessed, an Assessor may determine a sum or amount which appears to him to be a reasonable estimate of such income tax, wealth tax, gifts tax or estate duty, as the case may be, and the sum or amount so determined shall be excluded from the capital of that person.

6. Leviable capital of the head of a family.

(1) Where any person is the head of a family, the capital of each individual who is a member of that family shall, for the purposes of this Act, be deemed to form part of the capital of the head of that family and accordingly the values of the net capital of all such members shall be aggregated with the net capital of the head of that family and where the aggregated net capital of the head of that family—

(a) includes any premises occupied wholly or mainly for residential purposes on March 31, 1971, and is in excess of two hundred and fifty thousand rupees, or

(b) does not include any such premises and is in excess of two hundred thousand rupees,

such part of the aggregated net capital of the head of that family as exceeds two hundred and fifty thousand rupees or two hundred thousand rupees, as the case may be, shall be the leviable capital of the head of that family and the head of that family shall be liable to the capital levy in respect of such leviable capital.

(2) Where the debts of an individual included in a family exceeds his capital, then the excess shall be set off against the aggregated net capital of the head of that family.

For the purposes of this subsection, debts shall not include any debts specified in any one of the sub-paragraphs (i), (ii), (iii), (iv) and (v) of paragraph (a) of the definition of "net capital” in section 83.

7. Leviable capital of person who is not included in a family.

Where the net capital of any person who is not included in a family

(a) includes any premises occupied wholly or mainly for residential purposes on March 31, 1971, and is in excess of two hundred and fifty thousand rupees, or

(b) does not include any premises occupied wholly or mainly for residential purposes on March 31, 1971, and is in excess of two hundred thousand rupees,

8. Leviable capital of non-resident company.

Such part of the net capital in Ceylon of a non-resident company as exceeds one million rupees shall be the leviable capital of that company and that company shall be liable to pay the capital levy in respect of such leviable capital.

9. Special provisions applicable to gifts made on or after April 1, 1971, but on or before September 30, 1971, and to the estates of persons dying on or after April 1, 1971, but before date of commencement of this Act.

(1) Where any person on or after April 1, 1971, but not later than September 30, 1971, makes a gift of property to any other person, such gift shall, for the purposes of this Act, be deemed to have been made on March 31, 1971, and accordingly such property shall be deemed to have formed part of the capital of such other person on the latter date.

(2) Where the death of any person who, if he were alive on the date of commencement of this Act, would be chargeable with capital levy, occurs on or after April 1, 1971, but before the date of commencement of this Act, any part of the estate of the deceased person to which an heir is entitled shall, for the purposes of this Act, be deemed to have devolved on such heir on March 31, 1971, and accordingly such part of the estate shall be deemed to have formed part of the capital of that heir on the latter date:

Provided, however, that where every heir of the deceased person is chargeable with capital levy, the executor of the deceased person may give notice in writing to the Commissioner within six months after the date of commencement of this Act, requiring that the capital levy be imposed on the capital of the estate and where such notice is given then notwithstanding anything to the contrary in the preceding provisions of this subsection, the executor shall be chargeable with, and be liable to pay, the capital levy on the capital of the deceased person and there shall be excluded from the capital of every heir such part of the estate as is deemed to have devolved on him on March 31, 1971.

10. Value of property which constitutes capital.

(1) Subject to the other provisions of this section, the value for the purposes of this Act of any immovable or movable property forming part of the capital of any person shall be the market value of that property on the valuation date:

Provided that where the movable property consists of shares (not being preference shares) in any company which by its articles restricts the right to transfer its shares, or which is a company in which more than half the shares issued is held by five persons, their wives or minor children, either directly or through nominees, and the Commissioner is satisfied that the shares have not, within the period of twelve months preceding the valuation date, been quoted in the official list of a recognised stock exchange in the United Kingdom or in a list of a like nature issued in Ceylon by any association of brokers approved by the Secretary to the Treasury for the purposes of this proviso, the value of such shares shall, if the Commissioner so directs, be ascertained not in the manner provided by the preceding provisions of this subsection but by reference to the market value of all the assets of the company as a going concern, excluding goodwill, on the valuation date, after deducting therefrom—

(i) the par or redemption value, whichever is greater, of any debentures, debenture stocks and preference shares of the company;

(ii) all debts of the company incurred or created bonafide for consideration in money or money's worth;

(iii) such sum as on a just and fair computation represents any future or contingent liabilities of the company or any liabilities thereof which are uncertain in amount; and

(iv) the amount of any reserve fund separately invested which is bonafide intended to be applied in payment of pensions to employees or otherwise for the benefit of them or their dependants or relatives and in no other manner.

(2) Where any person by whom the capital levy is payable is carrying on a business for which accounts are maintained by him regularly, the Commissioner may, instead of determining separately the value of each property held by such person in such business, determine the net value as a whole of the properties held by such person in such business.

For the purposes of this subsection no account shall be taken of the goodwill of that business.

(3) Where for the purposes of this section the market value of any property cannot be ascertained because such property is not saleable in the open market, the value of such property shall be determined in the prescribed manner.

11. Date of valuation.

(1) Subject to the provisions of subsection (2) and subsection (3), for the purposes of this Act, the valuation date—

(a) in respect of an immovable property of any person—

(i) which was owned by him on March 31, 1971, and was acquired by him on or before March 31, 1970, shall be March 31, 1970, and

(ii) which was owned by him on March 31, 1971, and was acquired on or after April 1, 1970, shall be March 31, 1971; and

(b) in respect of a movable property of any person—

(i) which consists of shares, shall be March 31, 1970, if such property was acquired on or before that date and was owned by him on March 31, 1971, or March 31, 1971, if such property was acquired on or after April 1 1970; and

(ii) which does not consist of shares, shall be March 31, 1971.

(2) Where any person dies on or after April 1, 1971, but before the date of the commencement of this Act, then, for the purposes of this Act, the valuation date in respect of his property, whether movable or immovable, shall be the date of his death.

(3) Where on March 31, 1971, the value of any immovable property forming part of the capital of any person and acquired by him on or before March 31, 1970—

(a) is more than the value of that property on the latter date by reason of any improvements, additions or alterations made to that property, or

(b) is less than the value of that property on the latter date by reason of any damage caused to that property or the destruction or demolition of any building on that property,

the amount by which the value has so increased or decreased shall be added to or subtracted from its value on March 31, 1970.

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