Section 302: liability of a legal representative

Introduction

A legal representative can be assessed for the deceased person's income and can continue proceedings from the stage reached at death. The ordinary limit on liability is what the estate can meet.

The section makes an important exception where the representative deals with estate assets while tax remains unpaid. Personal liability can then arise, capped by the value of the affected asset.

Key takeaways

The legal representative's basic liability

Where a person dies, his legal representative is liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased would have been.

For the purpose of making an assessment (including an assessment, reassessment or recomputation under section 279) of the deceased's income, and for levying any sum on the legal representative under this liability: any proceeding taken against the deceased before death is deemed to have been taken against the legal representative and may continue from the stage it had reached on the date of death; any proceeding that could have been taken against the deceased had he survived may be taken against the legal representative instead; and all provisions of the Act apply accordingly. The legal representative is deemed to be an assessee for the purposes of the Act.

Liability is limited to the estate - with an exception

Subject to the exception below, the legal representative's liability is limited to the extent to which the estate of the deceased is capable of meeting the liability.

However, every legal representative becomes personally liable for any tax payable by him in that capacity if, while the liability remains undischarged, he creates a charge on, disposes of, or parts with any assets of the deceased's estate that are in, or may come into, his possession. In that situation, his personal liability is limited to the value of the asset so charged, disposed of or parted with.

Interaction with sections 304, 305

The provisions of section 304(2) and (5), and section 305, apply to a legal representative so far as they are not inconsistent with Section 302 - these deal with a representative's duties, responsibilities and liabilities, and the right to recover tax paid from the person on whose behalf it was paid.

Step-by-step flow for the liability of a legal representative under Section 302

1. 1

   Has the person died, and who is the legal representative?

   Section 302 applies to the legal representative of a deceased person.

2. 2

   What sum would the deceased have been liable to pay?

   Under Section 302(1), the legal representative is liable to pay it in the like manner and to the same extent as the deceased.

3. 3

   Which proceedings are involved?

   Under Section 302(2), proceedings started against the deceased continue against the legal representative from the stage they had reached on the date of death, and proceedings that could have been taken against the deceased may be taken against the legal representative. The legal representative is deemed to be an assessee (Section 302(3)).

4. 4

   Limit the liability to the estate

   Under Section 302(4), the liability is limited to the extent the estate of the deceased can meet it, subject to Section 302(5) to (7).

5. 5

   Did the legal representative charge, dispose of or part with estate assets while the tax was unpaid?

   • Yes: The legal representative is personally liable, limited to the value of the asset so charged, disposed of or parted with (Section 302(5) and (6)).
   • No: Liability stays limited to the estate. Sections 304(2) and (5) and 305 apply so far as consistent (Section 302(7)).

Practical checklist

Frequently asked questions