Is there an inheritance tax in Australia?

Australia has no inheritance tax, estate duty, or death tax. They were all abolished by 1979. However, capital gains tax can apply on inherited assets when sold by beneficiaries, and superannuation paid to non-dependants is taxed. The myth of an Australian death tax is just that – a myth.

What was abolished

Federal estate duty was abolished in 1979. State death duties were progressively abolished from the late 1970s. Australia is now one of the few OECD countries with no death tax of any kind.

What still applies

Capital gains tax: inherited assets carry over the deceased’s cost base (or market value at death for pre-CGT assets). When the beneficiary later sells, CGT is calculated from that base. Superannuation tax: super death benefits paid to non-tax-dependants attract 15-30% tax (depending on the components). Income tax during administration: estates pay income tax on income earned between death and final distribution.

Common misconceptions

“There’s a tax on the estate” – no. “Receiving an inheritance is taxable income” – no. “There’s a death tax in Australia” – no, despite recurring claims. Misinformation is widespread but the law is clear.

Estate planning still matters

No inheritance tax doesn’t mean estate planning isn’t tax-relevant. Testamentary trusts can dramatically reduce tax on inherited income for minors. Charitable bequests can shield CGT. Super nominations can cut the super death benefit tax. Good planning still saves significant tax.

Summary

Australia has no inheritance tax or estate duty. But there are still tax issues that affect inheritance – here’s what actually applies.

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Related reading

• Death taxes in Australia: separating fact from fiction
• Capital gains tax on inherited property
• Binding death benefit nominations explained