Death taxes in Australia: separating fact from fiction

There is no death tax in Australia. Federal estate duty was abolished in 1979, state death duties followed shortly after. Periodic claims that ‘a death tax is coming’ have been politically motivated rather than reflecting actual policy. The current law applies no tax simply because someone has died.

What’s true

No estate duty. No inheritance tax. No state death duty. Inheritance is not taxable income to the recipient. Family receiving an inheritance face no tax simply for receiving it.

What’s mistakenly called a death tax

Capital gains tax on later sale of inherited assets – not a death tax, applies only on disposal. Super death benefit tax on non-dependants – relates to the deferred-tax nature of super, not death itself. Income tax on estate income during administration – same as any taxpayer’s income tax.

Where the confusion comes from

Political campaigns that mischaracterise existing or proposed taxes. International comparisons (UK, US, Japan all have inheritance taxes). Genuine but rare proposals from think tanks that don’t become policy. Misleading social media posts.

What might change

Inheritance tax has been suggested by the Productivity Commission and others as a wealth-equalisation measure. Successive governments have ruled out introducing one. The political reality makes its introduction unlikely in the near term.

Summary

Recurring claims about Australian death taxes circulate online and in politics. Here’s what’s actually true.

Talk to Sam about your situation

If this article raised questions for your own circumstances, Sam Michele offers free 20-minute initial consultations. Learn more about our wills service, or book a consultation.

Related reading

• Is there an inheritance tax in Australia?
• Capital gains tax on inherited property
• Wills service