Politics · Other · 2 hrs ago
Australia has no inheritance tax, but some inherited assets can be taxed
Australia does not have an inheritance or estate tax, despite recurring claims that it does.
The distinction matters because receiving an inheritance is generally not taxed, although income or capital gains from inherited assets can be.
A $500,000 cash inheritance from a parent would generally carry no tax, according to tax specialist Mark Chapman.
But superannuation left to an independent adult child can be taxed, while benefits left to a spouse or eligible dependent child are paid tax-free.
For an independent adult child, tax on the taxable part of a super benefit is generally 15 per cent, plus the 2 per cent Medicare levy.
In the example given, a $500,000 super benefit could mean an $85,000 tax bill if the whole amount is a taxed taxable component.
The tax treatment depends on the asset and who receives it, and inherited investment properties and shares can also have tax consequences.
Australia does not have an inheritance or estate tax, but some inherited assets can create tax liabilities.
Cash inheritances are generally not taxed, while income or capital gains from inherited assets may be.
Superannuation death benefits paid to non-dependants can be taxed.
A non-dependant receiving a taxable superannuation benefit may pay 15 per cent tax plus the 2 per cent Medicare levy.
The article says a $500,000 taxable superannuation benefit left to an independent adult child could result in an $85,000 tax bill.
- Who
- People inheriting assets in Australia, including beneficiaries of superannuation death benefits.
- What
- Australia has no inheritance tax, but some inherited assets can lead to tax liabilities.
- When
- When a person dies or inherited assets generate income or capital gains.
- Where
- Australia.
- Why
- Tax can apply to income or capital gains from inherited assets and to some superannuation death benefits.
This story does not have two clearly opposing sides.
The article says claims that the Labor Party intended to introduce a death tax featured in a misinformation campaign.
Government changes to capital gains tax and trusts prompted suggestions of a death tax, the article says.
- Inheritance tax
- Australia does not have one
- Cash inheritance
- A $500,000 cash inheritance is generally not taxed
- Superannuation tax
- Non-dependants may pay 15 per cent tax plus the 2 per cent Medicare levy on the taxable component
- Example tax bill
- $85,000 on a $500,000 taxable superannuation benefit left to an independent adult child
- Tax-free recipients
- A spouse or qualifying dependant children can receive super as a tax-free lump sum
3 sources
What people are saying
The important distinction is that Australia generally doesn’t tax the act of inheriting wealth, but it can tax income or capital gains arising from inherited assets.
If somebody dies leaving $500,000 in superannuation to an independent adult child, and the entire amount is a taxed taxable component, the tax bill could be $85,000.