The relevant provisions on the deduction of the estate tax in case the heir is a lineal descendant
According to the National Taxation Bureau of Taipei, Ministry of Finance, if the heir child is under 20 years old, each may deduct NTD 500,000 from the total estate tax. Besides, it may deduct an additional NTD 500,000 per year until the person reached the age range of 20.
Based on Article 17, paragraph 1, subparagraph 2, of the Estate and Gift Tax Act, the Bureau explained that the heir is a lineal descendant; each may deduct NTD 500,000 from the overall estate. Those under 20 years old shall be deducted NTD 500,000 annually according to the number of years they have reached 20 years old. If the number of years when turning 20 is less than one year or the remainder is less than one year, it shall count as one year. However, the lineal descendants abandon the inheritance; and a second-class lineal descendant inherited instead, the deduction amount limit to the amount formerly deducted before the abandonment of the inheritance.
The bureau pointed out, as an example, that decedent A died on May 30, 2020, whose two adult children (the amount that could deduct was NTD one million = NTD 500,000X2) all abandoned the right of inheritance. However, two minor grandchildren, second-class lineal descendants B, and C inherited instead according to the Act. B and C were born on December 1, 2002, and March 20, 2004, respectively. After calculation, the deduction is NTD 4.5 million (calculated as follows), but the amount that can deduct is limited to NTD one million originally deducted by A's two children. The deduction for the inheritance of the second-class lineal descendants calculates as follows:
(1) Number of deduction years of B:
B was born on December 1, 2002, and will turn 20 on December 1, 2022. Since decedent A died on May 30, 2020, it should deduct the additional three years.
(2) Number of deduction years of C:
C was born on March 20, 2004, and will turn 20 on March 20, 2024. Since decedent A died on May 30, 2020, it should deduct the additional four years.
(3) Inheritance deduction for second-class lineal descendants:
NTD 500,000X(B+C+ additional deduction years)=NTD500,000X 〔1+1+(3+4)〕=NTD 4.5 million
The bureau reminded taxpayers that they should pay attention to the relevant regulations when reporting the deductions for the lineal descendant of the estate tax. If they have any doubts or are not familiar with the provisions of the tax act, they can call the toll-free service number: 0800-000-321. They can also directly contact the national taxation bureau of their jurisdiction to protect their rights and interests.
(Contact person: Mr. Chen, Section Chief of Second Examination Division; Tel. (02)2311-3711 ext. 1561)
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=feebec908c77406c96c3e7063835bc43