As Australia experiences the largest wealth transfer in its history, there’s growing interest in how to manage generational wealth. Many clients ask us questions such as, “Do I have to pay tax on inheritance?” or “How can I ensure my family receives the maximum benefit from my estate?”
The good news is that, with the right strategy, transferring wealth can be far more tax-effective than most people realise. Whether you're passing down property or shares, distributing superannuation, or managing business succession, early planning and smart structuring are key.
We've covered 4 key areas surrounding inheritance and wealth transfer where forward planning can make a real difference, and what that planning entails. Read the articles below for a deep dive, or scroll down for an overview of how inheritances can be subject to tax.
Inheritance Tax in Australia: What You Need to Know
Let’s clear up a common misconception: there is no inheritance tax in Australia. It was abolished back in the 1970s.
However, that does not mean tax is not a factor. Taxes such as Capital Gains Tax (CGT) and superannuation taxes can play a significant role, especially when assets such as property, shares, or business interests are transferred or sold as part of an estate.
Before considering strategies to manage or minimise tax, it’s important to understand the key rules that apply to various types of inherited assets in Australia.
Understanding Pre-CGT and Post-CGT Assets
- Pre-CGT assets are assets acquired by the deceased before 20 September 1985. For these, the cost base resets to the market value at the date of death.
- Post-CGT assets are those acquired by the deceased on or after 20 September 1985, the beneficiary generally inherits the deceased’s cost base.
CGT Discount Eligibility
If you sell an inherited asset (whether shares, investment property, or other CGT assets) at least 12 months after it was first acquired, you may be eligible for the 50% CGT discount. For pre-CGT assets, the acquisition date is the date of death. For post-CGT assets, the acquisition date is the deceased’s purchase date. This rule applies to most individuals and trusts.
Overview of Inheritance Tax Issues
Managing Capital Gains Tax on Property:
Inherited property often brings CGT into play, and the tax outcome depends on what type of property it is and how it is handled after death. CGT rules differ for main residences, investment properties, and pre- or post-CGT assets. Read more about CGT on inherited property .
Managing CGT on Shares:
CGT implications apply to inherited shares depending on when they were originally acquired. Explore strategies for CGT on inherited shares .
Transferring Wealth to Children:
The timing, type, and structure of assets can impact the tax efficiency of passing on wealth. See our guide to tax-efficient strategies for transferring wealth to children .
Business Succession:
While operational handover is important, tax planning is often what determines how much wealth is preserved upon the sale of a business. Get the details on business succession .
The Takeaway: Plan Early, Plan Well
There may be no inheritance tax in Australia, but transferring wealth still comes with complex tax considerations. With expert advice on CGT, structuring and succession, families can protect their legacy and plan with confidence.
At BlueRock, we understand the complexities of inheritance, business succession, and intergenerational wealth transfer. We work closely with families to help them navigate these decisions. Please reach out via the form below if you would like to explore your options with our advisors.
Disclaimer: The content is intended as general information only and should not be considered as advice on any matter and should not be relied upon as such. This has been prepared without taking into account any individual objectives, financial situation or needs. You should therefore consider the appropriateness of the information in regard to these factors before acting or seek advice before making any financial decisions. Blue Rock Investments (Melb) Pty Ltd is the holder of an Australian Financial Services Licence (AFSL No: 335588).
