Inheritance tax in Australia: Complete guide for expats

Read on to learn about inheritance and estate tax in Australia, with a quick look at how providers like the multi-currency service could help you repatriate your money if you inherit there, or pay taxes from abroad if you need to do so.

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How does inheritance tax work in Australia?

Australia does not have inheritance tax, which means that if you're an Australian tax resident, and receive an inheritance from someone living locally, you are unlikely to be taxed on this income in Australia.

However, there are taxes paid to the Australian Tax Office (ATO) when someone dies, which are deducted from the estate value before distributions are made. If you inherit an asset like a property from a deceased person and subsequently sell it you may also have to pay capital gains tax (CGT), and if you're an expat in Australia you may still have to consider taxes in your home country.

In Australia when someone dies, the executor of the will, or an appointed representative must work with the ATO to complete a final tax return and pay any duties owed. Usually there is a final tax filing submitted covering any tax owed at the point of death, and a follow up return required if income accrues while the estate is being wound up. This is similar to an estate tax which is used in many countries, as technically it is the deceased person who is subject to the tax rather than the beneficiary of an inheritance.

The difference between estate tax and inheritance tax can be confusing. The key difference is when the tax is assessed, and who has to pay it, here's what you need to know:

• Estate tax, estate tax is paid by the executor of the estate, before any of the assets can be distributed to beneficiaries.

• Inheritance tax, inheritance tax is paid by beneficiaries of specific inheritances given after someone dies.

Tax can be complicated, and even more so if there are different countries involved or if you're navigating a new system in a different country. The information in this article does not constitute advice. Tax requirements can change and are highly personal, get advice from a tax professional to understand your own obligations.

Australian inheritance laws and succession rules

Upon the death of someone in Australia, the executor of the will is required to start the process to manage the estate of the deceased person. Distributions from the estate's assets, after tax, can be made according to the will, meaning the deceased person can decide what is left, to whom, after death.

If someone dies without a will in Australia, state and territory legislation laws dictate who the beneficiaries are after taxes have been deducted. Generally these laws favour the individual's spouse and children, but there are some variances on a local level about how succession laws apply.

Who pays inheritance tax in Australia?

When someone dies in Australia the tax is paid to the ATO by the executor of the will, and before any distribution of money to family members or other beneficiaries.

If you're an Australian tax resident and get an inheritance from another Australian resident who has died, you probably do not owe tax immediately to the ATO. However, the situation gets more complicated if you inherit an asset and sell it, if you're not a tax resident or if your home country requires you to report and pay tax on worldwide income.

As inheritance tax rules and exceptions can change and may be complicated to navigate, get personal advice if you're unsure of your obligations.

International inheritance tax considerations

If you're an expat in Australia from a country which requires you to pay tax on worldwide income, you may still need to report and potentially pay tax on your Australian inheritance. In this case you'll likely need professional support to make sure you've paid the right amount and covered your duties in Australia and your home country.

If you're a beneficiary of a will in Australia and live overseas, there are also some important differences on how inherited assets can be taxed. For example, if you inherit a property as a non-resident, or if the deceased person had not been resident in Australia, there may be no main residence exemption offered which means you need to pay CGT if you sell.

There are also different reporting requirements for the executor of an Australian will if any beneficiaries are non-resident. This means the executor must complete a trust tax return annually for the 3 years after the death of the individual in question.

If you inherit in Australia and need to pay capital gains or other taxes, or if you've inherited and need to repatriate your inherited funds to your home country, providers like the service, OFX or Xe Money Transfer may be able to help.

These services offer high value transfers with the mid-market rate, OFX has no transfer cap and a 24/7 phone service if you like to talk through your transactions, while Xe Money Transfer uses variable fees and rates on transfers all around the world.

How much is inheritance tax in Australia?

While there's no inheritance tax in Australia, tax still needs to be paid on the income of an individual who dies up to the date of their death. The executor of the deceased person's will is responsible for informing the ATO that the individual has died, and completing and submitting final tax returns on their behalf.

At the time of writing, income tax in Australia depends on the income amount earned, and runs from 0% to 45%.

How to calculate inheritance tax

The process of calculating the taxes owed after someone dies can be complicated, and can vary depending on the situation of the individual involved. Usually the representative of the deceased person must lodge a 'date of death' tax return if there was any tax paid or payable for the deceased person during the tax year they died.

There may also be a requirement to complete a trust tax return for the deceased estate, depending on the assets and income of the estate, as well as the beneficiaries' own circumstances.

There's guidance on the ATO website which covers the most important documents to complete and return, and professional help is also available with completing this process.

Paying inheritance tax in Australia

The executor of the will, or the representative of the deceased person, must file the final tax returns depending on the specific situation.

Once the final filings have been submitted, the executor of the will is responsible for setting any due taxes, and can pay with BPAY, ATO online services, or other methods.

Australia inheritance tax for non-residents

While there may not be any tax to pay in Australia if you inherit following the death of an Australian resident, you may need to report and pay tax in your home country, or wherever you're a tax resident.

This can mean that you need to report your inheritance as income or another form of asset on your annual tax filing in your home country. You might also have to comply with other laws in your home country depending on the rules there and your overall assets both in Australia and elsewhere.

To give an example, if you're a US citizen and come into money overseas, you may need to report under FATCA, the Foreign Account Tax Compliance Act. This states that US persons living outside the US may have to report foreign assets over 200,000 USD. US taxpayers living in the US who have assets of 50,000 USD or more overseas must also declare it.

It's also helpful to know that non-residents are likely to need to pay capital gains tax on inherited Australian property as no primary residence exemption will apply. This applies when you sell the property, get local tax advice in Australia if you're inheriting property so you can plan your taxes accordingly.

Assets subject to inheritance tax

Tax is paid on any income earned in the tax year, on behalf of the deceased person, by their representative or executor. The main other tax which may apply is CGT which is payable in certain circumstances on assets like property, however, exemptions can apply here. Get professional advice if you're unsure which of your assets in Australia may be taxable following an inheritance.

Estate tax in Australia

Estate taxes are settled by the executor of an estate, prior to any distributions to beneficiaries. This is closer to the system in Australia, although the specific taxes paid upon the death of someone there may not be called estate taxes.

There's usually no liability to the beneficiary in Australia as this is settled centrally. Once you have received any inheritance you can then choose to hold it in Australia or repatriate it with a provider like the multi-currency service to your home country if you'd like to.

Inheritance tax rates and thresholds in Australia

Where taxes are owed on the assets and income of a deceased person in Australia they're paid according to the prevailing rates. There are certain exemptions and deductions, which can make the calculation of tax complicated. If you're involved in settling the affairs of a loved one who has died in Australia you'll likely need to get professional advice to handle the system.

Inheritance law and pensions in Australia

If the deceased person has a pension, such as those known as a superannuation or super in Australia, there may be some tax to pay.

The tax treatment depends on several factors including whether or not the policy continues to pay out after the death of the individual, such as in the event that the deceased has transferred this benefit to their spouse, and the age of the individuals involved.

Inheritance tax planning

In some countries it can be helpful to take steps to plan your estate to limit the amount of taxes your beneficiaries will pay upon your death. Some options can include creating a trust, gifting amounts to loved ones rather than waiting for them to inherit, or leaving assets to registered charities.

As there is no specific inheritance tax in Australia, these tactics may not be required, take professional advice if you need help with your tax planning in Australia.

Gift tax and lifetime transfers

Australia does not tax money given as a gift in most cases. This can mean that gifting money to loved ones is an approach to managing your estate planning, rather than leaving the funds to be distributed after your death.

Bear in mind that the same might not be true for gifting assets like property. In this case, CGT might be payable depending on the specifics of the situation.

Inheritance procedures and probate

When someone dies in Australia, the executor of their will must contact the ATO to inform them of the individual's death. If there is no will, alternative arrangements can be made to have an appointed representative take over the process.

Depending on the situation including the size of the estate and the types of assets, there may be a need to get legal documents like a grant of probate or letters of administration, to show you're entitled to manage the estate. The representative or executor must then submit final tax returns to the ATO, and pay any taxes owed for the individual and their estate.

Managing the closure of an estate can take 6, 12 months. Only after all of the tax and other duties have been completed can any inheritances be paid out to individuals named in the will, or according to succession laws.

Common mistakes and pitfalls to avoid

If you've inherited in Australia, you'll need to get professional help with your tax affairs and the practical management of the estate. Here are a few tips.

• Get the professional support you need to help manage the deceased estate if you are called on as the executor of a will

• If any tax filing or payment is required, be sure to check the deadlines as there may be penalties for late payments

• Check your obligations both in Australia and your home country, in some cases you may need to report or pay tax in both

• If you're repatriating funds after an inheritance, use a provider like the multi-currency service to get the mid-market rate on your currency conversion, and keep the costs of your transaction low

Recent changes and updates in Australia

As things do change relating to tax law on a pretty frequent basis, it's important to check the most up to date details as related to your own situation if you find yourself needing to handle the Australian inheritance process.

For example, while there's no inheritance tax in Australia at the moment, in August 2025 headlines were made when a thinktank proposed reinstating this tax as a revenue raising avenue for the Australian government.

Getting professional help for taxes in Australia

It's important to seek professional advice when dealing with estate or inheritance tax in Australia, depending on your situation you may need to talk to tax advisors, lawyers, and estate planners. You may also need advice in your home country to make sure you're covering all your duties.

While there are fees to pay for professional support, note that mistakes could be costly, and navigating an unfamiliar tax landscape without help can be extremely stressful. Get the help you need promptly to make things as simple as possible for yourself, and to give you peace of mind that you've got everything in order.

Conclusion

While inheritance tax isn't used in Australia, there may still be taxes to pay on the income or estate of a deceased person. Plus, you may have duties in your own home country, or any other country in which you hold tax residency. If you've inherited in Australia, or if you're involved in managing the estate of a deceased person there, you'll need professional advice to navigate what can be a very complicated process.

This guide covers many of the important points to know about, and remember, if you need to repatriate funds from Australia, or pay tax in Australia from elsewhere in the world, you could save money on fees if you use the service. This service is well set up for large international transfers offering high limits, mid-market rate currency exchange, and fee discounts when sending larger amounts. Spend less on administration, and get a smooth international payment with a multi-currency service.

Useful resources

Australian Taxation Office, deceased estates

Australian Taxation Office, inherited property and CGT

Australian Taxation Office, beneficiaries of inheritance

Australian Taxation Office, income tax rates

FATCA, IRS reporting requirements for foreign assets for US persons

ATO community, gift taxes