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Definition of a gift with reservation

A gift falls within the gift with reservation provisions when either:

1. Ìý

   (a)ÌýÌýÌýÌý possession and enjoyment of the property is not bona fide assumed by the donee at or before the beginning of the relevant period: or

2. Ìý

   (b)ÌýÌýÌýÌý at any time in the relevant period the property is not enjoyed to the entire exclusion, or virtually to the entire exclusion, of the donor and of any benefit to him by contract or otherwise¹

Thus, the question of whether the gift remains taxable in the donor's estate hinges on the nature of the reservation as defined above. This article examines the two elements of that definition.

The 'relevant period' is the period of seven years before the donor's death or, if the gift was made less than seven years before the death, it is that shorter period². Note that the relevant period is the time during which the reservation is to be considered, not the date of the gift itself. Any gift made after 18 March