Over the next few decades, Australia is expected to witness something we’ve never seen before: trillions of dollars changing hands as baby boomers pass on their wealth to their children and grandchildren.
Depending on the estimates, it could be anywhere from $3.5 trillion to $5 trillion. And while this presents a significant opportunity for the next generation, it also comes with tax consequences that many families overlook — sometimes until it’s too late.
There’s no formal “inheritance tax” in Australia, but that doesn’t mean there aren’t tax traps waiting in the wings.
If you're expecting to inherit assets — or you’re planning your own legacy — it’s worth understanding that the way money and assets are passed down can dramatically affect their after-tax value.
Here are a few areas that often catch people out.
Let’s start with the most common scenario: inheriting property or shares.
Receiving cash? No tax.
Inheriting investments or real estate? Different story.
If you inherit a property and decide to sell it quickly — say, within two years of the deceased’s passing — there’s a good chance you can avoid CGT, assuming it was their main residence. But hold onto it longer, or if it was generating rental income, and you may face a significant tax bill when you eventually sell.
This is often missed during estate planning or the grieving process. It’s important to think ahead, because the timing and use of inherited assets can have a lasting impact on your finances.
This one surprises many people.
If a spouse or dependent child receives a super payout after someone passes away, there’s usually no tax. But if it goes to an adult child, sibling, or anyone who isn’t classed as a "tax dependent", the super fund will withhold tax — sometimes up to 17% or even 32%, depending on how the super was built up (e.g. taxable vs non-taxable components).
This can amount to tens or even hundreds of thousands lost unnecessarily, purely due to poor structuring or outdated beneficiary nominations.
Some parents want to help their kids early — gifting property, shares, or other investments while they’re still around to see the benefit.
It’s a generous idea, but it can come with a tax sting. That gift is treated as if you sold the asset, and you’ll be liable for capital gains tax based on its market value at the time of the transfer. Unless you’ve got capital losses to offset it, this could trigger a hefty bill.
There are good reasons to give while you’re alive — but they need to be weighed up carefully, not done emotionally or reactively.
Well-structured family or testamentary trusts can offer real benefits when it comes to tax efficiency, asset protection, and flexibility — especially when dealing with blended families, young beneficiaries, or complex asset holdings.
But like anything else, they need to be set up properly, and in line with your goals and your family dynamic. A poorly constructed trust can create more confusion and conflict than it solves.
From what we’ve seen with our clients — particularly professionals and business owners — the most important thing is to start early. Good estate planning isn’t about transferring wealth when someone dies. It’s about making decisions today that protect and preserve value across generations.
Here’s where we suggest you start:
Whether you’re preparing to leave a legacy or anticipating an inheritance, the key is to approach it with eyes open — and with the right team around you.
At Verity Advisory, we work with clients who want to make smarter, more intentional financial decisions — especially at life’s big turning points.
If you’d like to talk through your own situation, we’re here.
Book a talk with an Adviser, and we’ll walk through your situation, understand the structure, and build a plan that protects what matters.
