Inheritances and tax

Taxes you may need to pay when you are left a bequest in a will

Last updated: 29 November 2016

Australia does not have inheritance taxes, but you, or the beneficiaries of your loved one’s estate may be liable for paying capital gains tax (CGT) when a property or asset you inherited from the estate is later sold.

Capital Gains Tax liabilities and exemptions can vary, for example in the case of a property, according to how long your loved one owned it, or lived there, and whether or not it generated an income.

There are also rules – and exemptions – when it comes to dependants and beneficiaries paying taxes on other inheritances from a loved one’s estate. This includes their superannuation, which if it was not tax-free, may or may not have already paid the taxable component. Your age may also be taken into consideration, as well as whether you receive the ‘super death benefit’ payment as a lump sum or an income stream.

You may have to pay tax on an inheritance if it generates money, such as a property that brings in rent. Incomes generated from assets left in wills are assessed for tax payments.

The amount of taxes due to the Australian Taxation Office is assessed from the tax year you became entitled to the bequest, even if you did not receive your inheritance until the following tax year.