Receiving an overseas inheritance or gift — how it is taxed in Australia
Australia has no inheritance or gift tax, so receiving something from overseas is itself tax-free. However, CGT may apply when you sell an inherited asset, and a tax return may follow if it produces income. Here is a summary of the Australian-side treatment.
Australia has no inheritance or gift tax
Australia has no inheritance tax (or estate tax) and no gift tax. Inheriting or being gifted cash or property from parents, siblings or relatives in your home country does not, in itself, attract any Australian tax. This is true whether you are an Australian citizen, a permanent resident (PR), or living here on a working holiday, student or work visa. This principle is the same thread touched on briefly in the super (superannuation) death benefit context in AUWith's Australian finance and inheritance basics guide. But it is only the 'moment of receipt' that is tax-free — if you later sell an inherited asset or if it produces income, tax may follow at that point. This guide focuses on the 'Australian-side tax treatment' that a resident who receives an inheritance or gift from overseas needs to know.
'Receiving it' and 'selling it later' are different things
The key is to separate two points in time. The moment you receive it is tax-free in Australia, but at the moment you sell an inherited asset or at the moment it produces income, CGT or income tax may arise. Note that this guide covers the Australian tax treatment of an inheritance received 'from overseas'; administrative procedures within Australia such as registering a death or probate are the domain of AUWith's guide to what to do when a family member dies in Australia.
Selling after you receive it — capital gains tax (CGT) and the cost base
Assets such as inherited property or shares are tax-free when you receive them, but CGT (capital gains tax) may apply to the gain when you later sell. The starting point of the tax calculation is the cost base, and for inherited assets — depending on when the deceased acquired the asset and the type of asset — you may use the market value at the date of death, or you may inherit the deceased's original cost base as-is. In particular, whether the deceased acquired the asset before 20 September 1985 (the date CGT was introduced in Australia) is the dividing line. Because this rule is often misunderstood, we do not give a definitive worked example here, and instead recommend checking the ATO's original 'Deceased estates and CGT' material and consulting a tax agent.
The exemption for an inherited main residence
There is an 'inherited dwelling exemption' rule under which, if you inherit the deceased's main residence and dispose of it within a certain period, a CGT exemption may apply (a two-year disposal period is often cited, but this varies with the conditions, whether an extension is available and the state of the asset). The exact requirements and timeframe differ by situation, so do not treat the figures as fixed — checking the original ATO material and a tax agent is essential.
- Inherited assets are tax-free when received — CGT may arise later when you sell.
- The cost base is either the market value at the date of death or the deceased's original cost, depending on when the deceased acquired the asset (before/after 20 Sep 1985) and the asset type — the rules are complex, so confirm with the ATO and a tax agent.
- An inherited main residence may qualify for a CGT exemption if disposed of within a certain period — check the conditions and timeframe in the ATO's 'Deceased estates and CGT'.
CGT event I1 (a deemed disposal) that arises when you leave Australia is a separate topic with a different trigger from inheritance. Inheritance CGT starts from the cost base inherited at acquisition, whereas a departure deemed disposal is triggered at the moment you become a non-resident for tax purposes. Departure CGT is covered in AUWith's capital gains tax (CGT) guide, so we do not explain it again here.
Documents and records to keep when you receive an inheritance
Do not throw away paperwork just because there is no tax right now. You will absolutely need the records below to calculate CGT when you later sell an asset, or to report income. Keeping them at the moment you receive the inheritance is the key.
- Records of the deceased's acquisition date and cost of the asset (contracts, title records, purchase records) — needed especially for the before/after 20 Sep 1985 determination.
- Valuation records of the asset's market value as at the date of death (or date of gift) (property valuations, share closing prices, etc.).
- Will and estate distribution documents, death certificate, and remittance/deposit records (the practicalities of proving the source of funds fall within the remittance guide).
Documents in your home language may need certified translation, and records should be kept for a certain period even after disposal or reporting. Check the ATO's record-keeping principles for the retention period.
Australian tax treatment by case
The Australian tax treatment differs according to the nature of what you received. Here we break it into four typical cases.
Receiving it is itself tax-free. However, if you deposit the money and it earns interest, that interest is reportable income, and transferring a large amount is a separate source-of-funds issue → remittance guide.
Tax-free when received, but CGT may arise when you sell. The cost base inheritance rules (before/after 20 Sep 1985 and asset type) apply → ATO and a tax agent.
There is no inheritance tax, but a super death benefit may be taxed depending on whether the recipient is a tax dependant and other factors. We do not state figures — check with the fund and the ATO, and see the finance basics guide.
Overseas rent, interest and dividends are part of an Australian tax resident's worldwide income to report → foreign income reporting guide. Also check the possibility of a foreign income tax offset.
Step-by-step checklist
Checking in order, from right after you receive it through to reporting, can reduce the parts that are easy to miss.
- Distinguish the nature of what you received — whether it is cash, an asset, or a super death benefit.
- Confirm there is no Australian inheritance or gift tax — receiving it is itself tax-free.
- If it is an asset, secure and keep records of the acquisition date, cost, and market value at the date of death (for future CGT).
- Check whether follow-on income (rent, interest, dividends) arises and prepare to report worldwide income.
- Consult a TPB registered tax agent, a lawyer for estate matters, and a tax adviser in the relevant country for home-country tax.
Common misunderstandings and cautions
Here are misunderstandings and mistakes that immigrants and PRs frequently make.
- Mistaking 'no inheritance tax in Australia' for 'no tax ever' — the CGT and income tax that follow are entirely separate.
- Confusing your home country's inheritance or gift tax with Australian rules — check home-country tax with a tax adviser in that country; this guide is limited to the Australian-side treatment only.
- Not keeping the acquisition records of an inherited asset, making it difficult to work out the CGT cost base later — keep them right when you receive it.
- Confusing the departure deemed disposal (CGT event I1) with inheritance CGT — they are separate topics with different triggers, so see the capital gains tax guide.
- Asking a tax agent about the visa or assets-assessment impact of inherited funds — immigration assessment is the domain of an OMARA registered migration agent and is beyond the scope of this guide.
Useful official links
- ATO — Deceased estates(opens in a new window)
The ATO's official page explaining the tax treatment of deceased estates.
- ATO — Capital gains tax(opens in a new window)
The ATO's capital gains tax guidance covering CGT and cost base rules when you dispose of an inherited asset.
- MoneySmart(opens in a new window)
A free, government-run financial information site — guidance on organising finances after a death or inheritance.
- Tax Practitioners Board — Public register(opens in a new window)
The Tax Practitioners Board public register — check that a tax agent is registered.
- ATO — Foreign and worldwide income(opens in a new window)
The ATO's official guidance explaining the obligation to report foreign and worldwide income.
Frequently Asked Questions
Do I pay tax if I receive an inheritance in Australia?▾
Australia has no inheritance or estate tax and no gift tax, so simply receiving an inheritance is not taxed. This is the same whether you are a citizen, a permanent resident, or living here on a working holiday, student or work visa. However, if you later sell an inherited asset, capital gains tax (CGT) may apply, and if that asset produces income (rent, interest or dividends) an income tax return may follow.
If my parents overseas send me a gift of money, do I have to report it?▾
Receiving a gift is not itself taxable in Australia. However, if you receive a large amount transferred from overseas, your bank or AUSTRAC-related rules may separately require you to prove the source of the funds — this is not a tax but an anti-money-laundering step. For this and for exchange-rate and transfer practicalities, see AUWith's remittance and exchange-rate guide. Gift tax in your home country (e.g. aggregation and deduction rules) should be checked with a tax adviser in that country.
Do I have to pay CGT if I sell an inherited house?▾
It depends. If you sell an inherited asset, CGT may apply to the gain, and the starting point for the calculation — the cost base — varies with when the deceased acquired the asset (before or after 20 September 1985) and the type of asset. An inherited main residence may qualify for an exemption if it is disposed of within a certain period. Because the rules are complex and often misunderstood, check the ATO's 'Deceased estates and CGT' and confirm with a tax agent.
How is the cost base of an inherited asset determined?▾
Depending on whether the deceased acquired the asset before or after 20 September 1985 (the date CGT was introduced in Australia), and on whether the asset was a main residence, you may use the market value at the date of death, or you may inherit the deceased's original cost base. This pre/post-1985 rule is an area of much misunderstanding, so do not treat any calculation as definitive — confirm with the original ATO material and a tax agent.
What if I earn rental income from an inherited property overseas?▾
Australian tax residents must declare their worldwide income, so rental income, interest and dividends from overseas property are reportable in your Australian tax return. If you have already paid tax on it in your home country, you may in some cases claim a foreign income tax offset. This topic is covered in AUWith's dedicated foreign income reporting guide, and because what you must report differs by residency status, also see the non-resident tax guide.
Is there tax if I receive a super (superannuation) death benefit?▾
There is no inheritance tax, but super (superannuation) death benefits are different. Depending on whether the recipient is a tax dependant and other factors, they may be taxed, and the rate and classification vary by situation, so we do not state figures here. Check with the relevant super fund and the ATO. The basic context of super death benefits is covered in AUWith's Australian finance and inheritance basics guide.
Do inherited funds affect a visa or permanent residence assessment?▾
That question is beyond the scope of this guide. For how funds received by inheritance or gift are treated in a visa application or in an assets/financial requirement assessment, consult an OMARA registered migration agent. A tax agent handles tax; a migration agent handles visas. Proving the source of large amounts again falls within the remittance guide's territory.