Estate planning in Australia

Updated: Jul 10, 2018

Made your estate plan simple for Australia


Estate planning in Australia

Death taxes in Australia: There is no inheritance tax in Australia, with all states in Australia abolishing what was known as death duties in 1979 following the lead of the Queensland Government led by Joh Bjelke-Petersen. However, assets acquired from the estate may become subject to Capital Gains Tax as well as superannuation death tax. Follow the steps below for death tax calculations.


Capital gains tax (CGT): To calculate the total tax upon death, find the the Capital gain tax (CGT) rate and the status or future planning of estate allocations amount. You would be able to calculate the taxes paid up on death and how can potentially save the estates tax. A capital gain or capital loss on an asset is the difference between what it cost you and what you receive when you dispose of it. You pay tax on your capital gains. It forms part of your income tax and is not considered a separate tax – though it's referred to as capital gains tax (CGT). All assets you’ve acquired since tax on capital gains started (on 20 September 1985) are subject to CGT unless specifically excluded. Most personal assets are exempt from CGT, including your home, car, and most personal use assets, such as furniture. CGT also doesn’t apply to depreciating assets used solely for taxable purposes, such as business equipment or fittings in a rental property.


Superannuation tax: This tax can only be passed on tax-free when it is left to a spouse or dependent children under the age of 18. 


Super contribution tax: Super contribution mean sometimes super tax as you may end up paying more. Refer to Super contribution limits prior making contribution. The tax treatment of both super and death benefits is also affected by whether the benefits are paid as a lump sum or income stream (regular payments)


Gift & Donations tax: There is no Gift tax in Australia, However You cannot claim as a gift or donation items that provide you with some personal benefit, such as: raffle or art union tickets, items such as chocolates and pens, the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner, membership fees, payments to school building funds made, for example, as an alternative to an increase in school fees, payments where you have an understanding with the recipient that the payments will be used to provide a benefit for, Also, The gift must be made to a deductible gift recipient. We call entities that are entitled to receive tax deductible gifts 'deductible gift recipients' (DGRs). The gift must be money or property, which includes financial assets such as shares. The gift must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting the types of deductible gifts they can receive.


References

  1. Australia Taxation office website link www.ato.gov.au

  2. Superannuation contribution limits under www.ato.gov.au

  3. Gifts & Donations under www.ato.gov.au

Due to the dynamic nature of tax laws, refer to Australian taxation office website for most accurate information. The information provided here is compliant to the Australian Taxation Office Copyright terms and conditions found on www.ato.gov.au.

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