Leaving money to your kids? What you need to know about Australia’s ‘death tax’
You have reached your maximum number of saved items.
Remove items from your saved list to add more.
You've used all of your gift articles. 3 more will become available on the 1st of every month.
Real Money, a free weekly newsletter giving expert tips on how to save, invest and make the most of your money, is sent every Sunday. You’re reading an excerpt – you can sign up to get the whole newsletter in your inbox.
US founding father Benjamin Franklin’s famous quote about nothing being certain in life other than death and taxes is frequently bandied around, most often by people who are grumpy about having to pay the latter. But what Franklin failed to consider is how the combination of both could result in one of the most bone-chilling, Boomer-worrying concepts ever: the dreaded death tax.
Death taxes, in their simplest form, are either taxes levied on inheritances passed on to beneficiaries, or estate taxes, where the deceased person’s estate is taxed before assets are distributed. They’re generally deeply unpopular among taxpayers who, understandably, don’t love the idea of taxing what they consider to be gifts.
Australia doesn’t have a death tax, but there are still some taxes that come into play when a person dies.Aresna VillanuevaWhat’s the problem?AdvertisementBut if it feels like we can’t embark on any sort of tax reform without the spectre of a “death tax” being raised in Australia, then you’re right. The 2019 federal election was besieged by a misinformation campaign suggesting the Labor Party intended to introduce one. And recently, the government’s CGT and trust changes have led to some suggestions of the same.
This is despite Australia not having any real form of death taxes, even though they would be a massive source of revenue to help address our ever-growing budget pressures, plus improve our ever-worsening wealth inequality. Even a tax that only targeted the wealthiest 5 per cent of estates could raise over $15 billion a year, while a flat 15 per cent tax would garner over $34 billion.
However, just because we don’t have an inheritance tax doesn’t mean there aren’t some taxes that do come into play when people pass away or estates get passed on. So if you want to know what actual “death taxes” you may have to think about, read on:
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
You have reached your maximum number of saved items.
Remove items from your saved list to add more.
You've used all of your gift articles. 3 more will become available on the 1st of every month.
