Inheritance Tax in AustraliaAccording to the Australian Taxation Office website, “There are no inheritance or estate taxes in Australia.” However, the site also states that “There may be some tax obligations for beneficiaries, depending on the nature of any distribution they may receive.”
According to H&R Block, if you reside in Australia and you receive inheritance money from abroad, beneficiaries do not need to pay additional taxes unless specified by the executor. However, if you end up investing any of the income that you receive from the estate, your earnings may end up being taxable.
Even though Australia currently does not have an inheritance tax, there are some specific financial transactions that may still be taxed. Following an individual’s death, his or her estate could keep making an income from things like interest on savings accounts, capital gains from asset sales, or dividends from stocks. In these cases, a trust tax return will be due on any of the income that is taxable, and the tax has to be handled by the beneficiaries or the executor named in the will. A trust tax return must be filed every year until the estate is fully administered, meaning all assets have been distributed to the beneficiaries. If the estate is resolved during the year of death, there are some exemptions from the trust tax return if the income thresholds are low enough.
It is also important to note that inheritance law will vary between territories and states throughout Australia. You should get in touch with your local Public Trustees office to determine the rules that apply to your territory or state.
Individuals who live in Australia and are unclear of their taxation responsibilities can check the Australian Taxation Office’s website. You should also contact a qualified accountant to have all of your questions answered and to ensure you pay any necessary taxes when they are due.