Inheritance and Estate Tax in Australia

Australia stands apart from most developed economies in having no inheritance tax, no estate duty, and no gift tax. Federal estate duty was abolished on 30 June 1979; Queensland led the state-level abolition in 1978, and the last state death duties disappeared by 1982. The result is that transferring wealth at death incurs no dedicated death levy in Australia. What remains are three discrete tax rules that practitioners and beneficiaries should understand: CGT rollover on inherited assets, the main residence two-year rule, and the superannuation death benefits tax.

Does Australia have an inheritance or estate tax?

No. Australia has no federal estate tax, no inheritance tax, and no state or territory death duties as of 2026 [1]. Federal estate duty was abolished in 1979, and all state-level death duties followed suit by 1982. There is also no federal gift duty (abolished before the estate duty). The Australian Taxation Office (ATO) confirms that receiving an inheritance is not assessable income and does not attract any dedicated death tax [1]. Probate fees payable to state Supreme Courts are administrative court fees, not transfer taxes, and are modest relative to estate size.

How does CGT apply when inheriting assets?

Death does not trigger a CGT event for the deceased or the executor under Australian law. Instead, a CGT rollover applies so the asset passes to the beneficiary with no immediate tax cost [2][3]. The cost base the beneficiary inherits depends on when the deceased originally acquired the asset:

• Post-CGT assets (acquired by the deceased on or after 20 September 1985): the beneficiary takes the same cost base the deceased held on the date of death, including all permitted cost-base elements.
• Pre-CGT assets (acquired by the deceased before 20 September 1985): the beneficiary's first cost-base element is the market value of the asset on the date of death, effectively resetting the gain to nil at that point.

The CGT event occurs only when the beneficiary later disposes of the asset. At that point, any capital gain is calculated by reference to the rolled-over cost base. The beneficiary may also access the 50% CGT discount if the asset has been held for at least 12 months in total, counting both the deceased's and the beneficiary's ownership periods combined [3].

What is the 2-year main residence rule for inherited property?

Where the deceased's home passes to a beneficiary, a full CGT exemption applies if the beneficiary disposes of the property within two years of the date of death, provided the dwelling was the deceased's main residence just before death (and was not being used to produce income at that point) [4]. The two-year window runs from the date of death, not from the date probate is granted. A discretionary extension may be available where disposal is delayed by circumstances outside the beneficiary's control, such as a disputed estate, incomplete construction, or legal impediments. If the property is not sold within two years, the beneficiary may still qualify for a partial exemption calculated on the proportion of the combined ownership period during which the property was a main residence [4]. Foreign residents are generally not entitled to the main residence exemption and should seek specific advice.

How are superannuation death benefits taxed?

Superannuation does not automatically form part of the deceased's estate. Instead the super fund pays a death benefit either to the estate or directly to nominated beneficiaries. The tax treatment depends on whether the recipient is a tax dependant [5]:

Tax dependants (spouse or de facto partner of any sex, children under 18, financially dependent adult children, and persons in an interdependency relationship with the deceased) receive the death benefit tax-free, whether it is paid as a lump sum or income stream.

Non-dependants (typically adult children not financially dependent on the deceased at the date of death) receive only the tax-free component of the benefit free of tax. The taxable component is subject to withholding by the super fund at the following rates for 2025-26 [5]:

• Taxed element: 15% plus Medicare levy (2%) = 17% effective maximum
• Untaxed element (common in public-sector defined-benefit schemes): 30% plus Medicare levy = 32% effective maximum

Non-dependants can only receive super death benefits as a lump sum, not as an income stream. These withholding rates act as final withholding for most recipients, meaning the benefit does not need to be included in a tax return if the correct amount was withheld.

Does gifting attract tax in Australia?

Australia has no gift tax. Cash gifts to family members are neither assessable to the donor nor the recipient [1]. However, gifting a CGT asset (shares, real property, crypto, collectibles) is treated by the ATO as a disposal at market value on the date of the gift, regardless of what consideration is actually paid [2]. The market value substitution rule applies when parties are not dealing at arm's length, which is the case in most family gifts. The donor therefore realises a capital gain equal to the difference between the market value at the date of gift and their cost base. The recipient takes the asset into their hands with a cost base equal to that market value. This means appreciated assets gifted during lifetime can trigger CGT for the donor, whereas the same assets passed via a deceased estate benefit from the rollover rules described above and defer any CGT event to the beneficiary's eventual disposal.

For those receiving Age Pension or other means-tested Centrelink payments, cash gifts above AUD 10,000 in a financial year (or AUD 30,000 across five years) are deemed to remain as assessable assets for five years under the gifting rules, which can affect pension entitlements.

For a broader overview of Australian tax obligations including capital gains, residency rules, and income from overseas assets, see the Australia country overview. Consult a registered tax agent for advice specific to your circumstances.