Good news, my friend: Australia doesn’t have inheritance tax. That’s right—when you inherit assets, the taxman doesn’t swoop in like a hawk for his slice.
But before you throw a party and start shopping for that yacht, slow down. While there’s no inheritance tax, you’re not completely off the hook. The type of asset you inherit—and what you do with it—can still trigger tax obligations.
Let’s break it down, step by step, so you can keep the ATO off your back and maximise what’s yours.
Cold, Hard Cash 💵 – Yours, Tax-Free (Almost)
Inheriting cash? Congratulations, that’s one of the easiest situations.
- There’s no tax on the money itself.
- Any interest earned on that cash before it’s transferred? The estate covers that, not you.
Pro tip: Resist the urge to blow it all on something ridiculous—unless, of course, it’s an investment that will double your wealth (or at least make you look cool doing it).
Property Inheritance 🏡 – Tax-Free (For Now)
Real estate inheritance sounds like a dream, right? But don’t get too comfortable—the tax-free honeymoon doesn’t last forever.
Here’s how it works:
- There’s no tax when the property is transferred to you.
- But when you sell, the ATO gets interested.
The key? The type of property:
- If it was the deceased’s main residence, you might avoid Capital Gains Tax (CGT) if you sell it within two years.
- If it was an investment property, CGT applies when you sell, based on the original “cost base” (a fancy way of saying what the deceased paid for it).
Moral of the story: Before you sell, run the numbers—because the tax bill could bite hard.
Shares – Free to Inherit, Taxable to Sell 📈
Company shares? Inheriting them is a win—no tax upfront. But there’s a catch:
- Dividends? Taxable at your marginal rate.
- Selling shares? That’s when CGT kicks in.
Pro tip: Hold onto them strategically to minimise taxes or sell smartly to maximise gains. Either way, have a plan.
Estate Sales – Executors, This Is Your Job 🧾
If the estate sells assets—like property or shares—the executor handles the tax side of things. That means:
- Lodging a special estate tax return.
- Paying any CGT on gains before distributing the proceeds.
Executors, beware: If you don’t do this right, you could be personally liable. Translation? The ATO will come knocking on YOUR door, not the deceased’s.
Superannuation Payouts 🦸♂️ – Tax-Free or Taxed?
Super payouts are where things get tricky. Whether it’s tax-free depends on who you are to the deceased:
- Tax-dependents (spouse, kids under 18, or anyone financially dependent): No tax. Collect your payout with a smile.
- Non-dependents (adult kids, cousins, or distant relatives):
- 17% tax on taxable components.
- 32% tax on untaxed components.
- No TFN? You’ll get hit with the highest marginal rate.
Pro tip: If you’re inheriting super, don’t wing it. Proper advice can save you thousands.
Income from the Estate 💸 – Don’t Forget the Taxman
Getting income like rent, dividends, or interest from the estate? Heads up:
- You’ll need to declare it on your tax return.
- It’s taxed at your marginal rate.
Not fun, but hey—income is income.
Why Your Inheritance Needs a Strategy
Inheritance isn’t just a windfall; it’s a crossroads. Make the wrong move, and the ATO takes a bigger bite than necessary. Make the right one, and you maximise what’s yours.
That’s where MW Group comes in. We’ll help you:
✅ Minimise taxes so more of the inheritance stays with you.
✅ Strategise investments to grow your wealth over the long term.
✅ Navigate complex rules with ease—no stress, no confusion.
Let’s Make Your Inheritance Work for You
This isn’t something you want to tackle alone. The tax rules are complex, and every situation is different. At MW Group, we specialise in turning tricky financial situations into smart strategies that save you money.
👉 Book your free consultation now and let us help you protect and grow your inheritance.
Because the only person who should profit from your windfall is YOU.
