No Death Duty, and the Three Taxes That Still Apply
Australia has no inheritance tax, no estate tax and no death duty. They were abolished across the 1970s and early 1980s and have not returned. What exists instead is narrower and less visible: a tax on super death benefits paid to non-dependants, an inherited cost base that defers capital gains rather than forgiving them, and ordinary income tax on the estate's income.
- The answer: No tax is levied on the value of an estate or on receiving an inheritance. Three narrower taxes apply to particular assets and particular recipients.
- The trap: The super death benefits tax on a taxable component paid to an adult child is the closest thing Australia has to a death duty, and it is entirely avoidable in advance.
- The recommendation: Deal with the super component while you are alive. It is the only one of the three that can be reduced by a decision you make now.
Where the AI summary above gets this wrong
"Australia has no inheritance tax, so beneficiaries receive everything tax-free."
That's surface-true. Here's what it misses:
- Super paid to a non-dependant is taxed — The taxable component of a death benefit paid to an independent adult child is taxed at 15% plus Medicare, which on a large balance is a substantial amount.
- Capital gains are deferred, not forgiven — An inherited asset generally passes at the deceased's cost base, so the beneficiary inherits the unrealised gain and pays on it when they sell.
01 What was abolished, and what was not
Estate duty and gift duty were abolished at Commonwealth and state level across the 1970s and early 1980s. Nothing has replaced them, and there is no tax on the act of inheriting or on the value of an estate.
That is genuinely unusual among comparable countries and it shapes Australian estate planning: the questions here are about who receives what and how assets are held, rather than about reducing a taxable estate.
What remains is three specific charges, none of which is a death duty and all of which are commonly mistaken for one. Each applies to a different asset and a different recipient.
02 The three taxes that do apply
The first is superannuation death benefits tax. A taxable component paid to someone who is not a death benefits dependant is taxed at 15% plus the Medicare levy, and any untaxed element at a higher rate — the definition is in the dependants reference.
The second is capital gains tax on inherited assets. Death is generally not a capital gains event; instead the beneficiary inherits the deceased's cost base, or the market value at death for assets acquired before September 1985, and pays when they sell.
The third is income tax on the estate itself. An estate that earns income during administration is taxed as a trust, at rates that are concessional for the first few income years and punitive after that, which is a reason not to leave an estate unadministered.
Shows: the super death benefits tax on a taxable component paid to a non-dependant, and the deferred capital gains tax a beneficiary inherits on an appreciated asset. Ignores: the tax-free component, the CGT discount available to the beneficiary, income tax on the estate during administration, and any main residence exemption.
Source: ATO — Capital gains tax
03 Which of them you can do anything about
The super component is the one that responds to planning. A withdrawal and recontribution converts taxable component into tax-free component within the contribution caps, which reduces the eventual tax on a benefit to an adult child — the mechanics are in the recontribution strategy post.
So does drawing super down and spending it, or directing benefits to a spouse who is a tax dependant. All three are ordinary decisions rather than structures, and all three have to happen while you are alive.
The capital gains position is largely fixed. What can be done is choosing which assets to sell during your lifetime and which to leave, since assets you sell realise the gain now and assets you leave defer it to the beneficiary.
Source: ATO — CGT discount
There is no death duty and there is a death duty on superannuation, which is the sort of thing that only makes sense historically. The practical consequence is that the one tax you can plan around is the one nobody thinks of as an estate tax, and it sits on the largest financial asset most families have.
FAQ
How is my estate taxed in Australia given there is no inheritance or death duty?
There is no tax on the estate's value or on receiving an inheritance. Three narrower charges apply: super death benefits tax on a taxable component paid to a non-dependant, deferred capital gains inherited with an asset, and income tax on the estate's income during administration.
Will my beneficiaries have to pay CGT on the assets they inherit from me?
Not on inheriting. Death is generally not a capital gains event; the beneficiary inherits your cost base and pays capital gains tax when they sell. Assets acquired before September 1985 are inherited at market value at death.
Which of these can I reduce while I am alive?
The superannuation one. A recontribution strategy converts taxable component into tax-free component within the contribution caps, and directing benefits to a tax dependant avoids the charge entirely.
Sources
Regulator references
- ATO — Death benefit payments from super · Australian Taxation Office · 2026Death benefit payments from super: who is a dependant, and how the benefit is taxed.Last verified: 2026-09-07
- ATO — Capital gains tax · Australian Taxation Office · 2026Capital gains tax: the events that trigger it and how the gain is worked out.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.