Australia abolished inheritance tax in 1979, so beneficiaries generally do not pay tax simply for receiving an inheritance.
11 March, 2026
Inheritance tax in Australia: What you need to know
First Financial Team
We are often asked about Inheritance tax, sometimes called the “Death Tax” The question comes from clients during estate planning or from those who may be receiving a substantial inheritance, such as property or shares.
The short answer is no. Australia abolished inheritance tax in 1979, so beneficiaries generally do not pay tax on receiving an inheritance.
However, this does not mean inherited wealth is completely tax-free. In many cases, taxes can still arise depending on the type of asset inherited and what the beneficiary does with it.
“While Australia does not have an inheritance tax, inherited assets can still create tax obligations depending on how they are used or sold.”
Capital Gains Tax (CGT) on Inherited Assets
One of the most common tax implications associated with inherited assets is Capital Gains Tax (CGT).
When someone inherits assets such as property, shares, or investments, CGT is usually not payable at the time of inheritance. Instead, the tax is triggered when the beneficiary later sells or disposes of the asset.
For CGT purposes, the beneficiary generally inherits the asset’s cost base. This means, if the asset was purchased after 20 September 1985, the cost base is typically the deceased person’s original purchase price.
If it was purchased before that date, the cost base becomes the market value at the date of death.
For example:
- A property purchased by the deceased for $300,000
- Worth $800,000 when inherited
- Sold later for $900,000
The capital gain may be calculated from the original cost base, meaning CGT could apply to the increase in value over time. The family home may be exempt if it qualifies for the main residence exemption and is sold within certain time limits.
Superannuation death benefits
Superannuation can also have unique tax implications when passed on after death.
Unlike most assets in an estate, superannuation does not automatically form part of the estate. Instead, it is typically distributed according to a death benefit nomination. Tax treatment depends on the relationship between the deceased and the beneficiary:
- Tax-free beneficiaries (dependants)
- Spouse or de facto partner
- Minor children
- Financial dependants
These beneficiaries generally receive superannuation death benefits tax-free.
- Non-dependants
- Adult children
- Other relatives or beneficiaries
These recipients may pay tax on the taxable component of super, often around 15% plus the Medicare levy.
Because super balances can be significant, this is one of the most common areas where inheritance may create a tax liability.
Income tax on inherited assets
Another issue is income generated by inherited assets. While the act of inheriting the asset itself is usually tax-free, any income generated by that asset becomes taxable.
Examples include:
- Rental income from an inherited property
- Dividends from inherited shares
- Interest from inherited savings or investments
Once inherited, this income must be declared in the beneficiary’s tax return and is taxed at their marginal income tax rate. This means inherited investment assets can still create ongoing tax obligations.
Foreign inheritances and cross-border tax issues
Inheriting assets from overseas introduces additional complexity.
Australia generally does not tax the receipt of foreign inheritance itself. However, there may still be tax implications depending on:
- The type of foreign asset
- Whether it produces income
Whether the asset is later sold
For example, income earned from overseas investments may still be taxable in Australia, or foreign tax rules may apply in the country where the asset is located.
Cross-border estates often require specialist tax advice to avoid double taxation or compliance issues.
This table helps to summarise the tax implications of an inheritance
Although Australia does not have a direct inheritance tax, planning ahead can still help reduce potential tax liabilities. Effective strategies may include:
- Structuring investments efficiently
- Managing superannuation death benefit nominations
- Using testamentary trusts
- Considering CGT implications before selling inherited assets
Proper estate planning ensures that assets are passed on tax-efficiently and in accordance with the deceased’s wishes.
Whether you’re thinking about your legacy or receiving an inheritance, it is highly recommended to speak with a financial advisor or tax professional in advance. While Australia does not impose a formal inheritance tax, tax implications, including capital gains tax, income tax, and superannuation rules, can still affect inherited wealth. Understanding these rules can help families preserve more of their legacy and avoid unexpected tax bills.
“Understanding the tax rules around capital gains, superannuation and investment income can help families protect more of the wealth they inherit.”
The team at First Financial comprises financial experts who help hundreds of Australians retire well and make informed, intelligent financial decisions. We cover everything from retirement and financial advice, investment and wealth management, superannuation and SMSF, insurance, tax, aged care, legal and lending services. Contact us for holistic, well-rounded financial management strategies
Key Takeaways
Capital gains tax may apply later if inherited assets, such as property or shares, are sold.
Superannuation death benefits may be taxed differently depending on whether the beneficiary is considered a dependant.
Seeking professional financial advice can help families manage inherited assets and minimise potential tax liabilities.
YOUR FINANCIAL JOURNEY
Building your financial future
Every client journey begins with a conversation. We look closely at where you are now, what matters to you, and what’s possible. Then we structure our advice to match.
Financial
Roadmap
A clear, personalised path to your financial goals.
Tax
Efficiency
Proactive strategies to maximise your tax savings.
Personalised
Investing
Tailored plans aligned with your goals and risk profile.
Ongoing
Support
Regular guidance to keep your plan on track.
CLIENT STORY
Lyn
Life Stage:
Retired widow
Background:
Lyn stepped into financial management for the first time after her husband's passing. With patience and care, First Financial supported her through grief, learning, and empowerment.
- Had never managed finances before
- Was overwhelmed after her husband’s passing
- Needed plain-English explanations and patience
- Sought emotional support and practical clarity
- Offered caring, respectful advice at her pace
- Rebuilt confidence with diagrams, stories, and reassurance
- Supported gradual decision-making around retirement
- Remained a trusted constant through major transitions
“After my husband passed, I was completely unsure where to start. First Financial gave me the space to learn, to ask questions, to grow confident. They drew a diagram that I still have. And now, I sleep well at night knowing I’ve got someone in my corner.”
CLIENT STORY
Larry and Virginia
Life Stage:
Newly retired
Background:
As retirement neared, Larry and Virginia were ready to enjoy travel, family, and freedom, without uncertainty. A friend recommended First Financial, and from the first meeting, they had a clear plan, a safety net, and people they trusted.
- Wanted to travel and enjoy retirement without second-guessing finances
- Needed a structured income plan with buffers for the unexpected
- Valued guidance that felt honest and human, not overcomplicated
- Needed people they could call and count on
- Created a reliable income stream with a set-aside safety net for the unexpected
- Gave them the freedom to travel and spend meaningfully with family
- Kept advice simple, thoughtful, and tailored to what mattered to them
- Built a lasting partnership based on trust
“We’ve travelled the world, Europe, Sri Lanka, Vietnam, without once stressing about the money. They made everything feel simple and gave us the confidence to live well. We feel secure because we know exactly where we stand, and that peace of mind means everything.”
CLIENT STORY
John
Life Stage:
Retired business owner
Background:
After decades of running a successful pharmacy, John sought financial guidance to simplify decision-making and support long-term planning.
- Navigated the sale of a long-held business
- Wanted simple, honest advice after burnout
- Needed a hands-on adviser he could talk to
- Desired financial guidance aligned with lifestyle goals
- Crafted a strategy that supports relaxed, post-work life
- Offered approachable, plain-English advice
- Maintained an ongoing, trustworthy relationship
- Provided flexibility with investments and cash flow
“I feel genuinely supported by First Financial. I can ask anything, and there’s no pressure, just clear advice and real care. The money’s growing, I’m not stressed about it, and I feel completely at ease for the first time. I don’t miss work, but I’d miss the support I get from First Financial.”
CLIENT STORY
Graeme and Craig
Life Stage:
Retired and semi-retired
Background:
Referred by friends who were helped through aged care, Craig sought secure financial guidance after inheriting funds.
- Invest inheritance securely without high risk
- Maintain a modest lifestyle with confidence
- Building trust for someone new to advice
- Accessible, personalised advice
- Provided a low-risk strategy with regular income
- Reassured with steady, market-aware updates
- Established trust through responsiveness and warmth
- Delivered calm, expert support through all transitions
“We feel very secure with First Financial, the income just comes in, and we know everything is being looked after. It’s not just safe, it’s smart. We’ve recommended them to others because we genuinely believe in the team.”
CLIENT STORY
Tim and Adam
Life Stage:
Early retirement and working professional
Background:
When Tim received an overseas medical settlement, he and Adam had just 14 days left in a 90-day window. They needed clear guidance, fast. A referral led them to First Financial.
- Only two weeks left to meet urgent legal and financial deadlines
- Wanted to preserve capital while setting up income for the future
- Needed a plan that supported both retirement and ongoing work
- Hoped to find advice that felt personal, not transactional
- Managed every moving piece, from legal documents to super rollovers
- Designed a strategy that supported both Tim’s retirement and Adam’s career
- Offered clear guidance with steady follow-through, with no stress or pressure
- Built in ethical investing and flexibility, without sacrificing performance
“We’re in totally different life stages, but First Financial built a strategy that supports us both. From urgent legal steps to ethical investing, they handled every detail with calm, care, and real expertise. It’s financial freedom without compromise, and we couldn’t have done it without them.”
CLIENT STORY
Jan
Life Stage:
Retired
Background:
Jan's husband managed the finances until entering aged care. Jan gradually stepped into the financial picture with First Financial’s support.
- Needed financial guidance after business sale
- Lacked experience managing complex finances
- Sought consistent income and long-term structure
- Wanted a familiar, reliable relationship
- Provided long-term support through several transitions
- Helped structure income reliably for retirement
- Empowered Jan through education and reassurance
- Delivered calm advice through both grief and growth
“The money just comes in. I don’t have to think about it. And I know they’re always there. They’ve always been there in the background, just quietly making things work.”
Meet our advisers
FAQs
Is there an inheritance tax in Australia?
No. Australia abolished inheritance tax in 1979, so beneficiaries generally do not pay tax simply for receiving an inheritance. However, taxes may still apply later depending on the type of asset and how it is used or sold.
Do you pay capital gains tax when you inherit an asset?
Capital gains tax (CGT) is usually not payable at the time you inherit an asset. Instead, CGT may apply when you later sell or dispose of the asset, such as property or shares.
How is capital gains tax calculated on inherited assets?
In most cases, the beneficiary inherits the original cost base of the asset if it was purchased after 20 September 1985. If the asset was purchased before that date, the cost base typically becomes the market value at the date of death.
Is the family home exempt from capital gains tax when inherited?
The family home may be exempt from CGT if it qualifies for the main residence exemption. This often depends on factors such as whether it was the deceased’s primary residence and how quickly it is sold.
Are superannuation death benefits taxed?
Superannuation death benefits can be tax-free if paid to a dependant, such as a spouse, minor child, or financial dependant. However, non-dependants, such as adult children, may pay tax on the taxable portion of the benefit.
Do inherited assets create ongoing tax obligations?
Yes. While the inheritance itself is usually tax-free, any income generated from the asset, such as rental income, dividends or interest, must be declared and taxed at the beneficiary’s marginal tax rate.
How can First Financial help with inheritance and estate planning?
First Financial helps clients structure their finances to minimise potential tax implications from inherited assets. This can include advice on superannuation death benefit nominations, investment structures and estate planning strategies.
When should you seek financial advice about an inheritance?
It is best to seek advice before selling inherited assets or making major financial decisions. The team at First Financial can help clients understand the tax implications and develop strategies to preserve more of their wealth for the future.