What are the rules on inheritance for my family in Australia?

Q&A: Dominic Coyle

In Australia, certainly as far as foreign inheritances are concerned, no tax is due at all

In Australia, certainly as far as foreign inheritances are concerned, no tax is due at all

 

I am aware that the thresholds for inheritance tax in Ireland are: parent to son or daughter €310,000; grandparent to grandchild €32,500; annual small gift allowance €3,000 to anyone. Do the same thresholds apply if the children or grandchildren reside abroad. In Australia, for example?

Mr DW, Limerick

Every country has its own approach to inheritance and to lifetime gifts of various sizes.

In Ireland, as you know, the beneficiary is liable for inheritance tax, or capital acquisitions tax, as it is known formally – assuming the inheritance of gift brings them above the relevant threshold.

It is worth mentioning that you’re slightly out on one of those thresholds: the parent to child threshold is now €320,000, having been increased by €10,000 last year. There is no certainty what will happen in Budget 2020 next week but it would not be surprising to see another small increase in this threshold.

It won’t mean much in tax terms but might go somewhat to spreading good cheer in a budget that is likely to have precious little to dispense.

Our near neighbours, the UK, adopt a totally different approach. There, it is the estate that is taxed and not the beneficiaries. Any tax due is dependent on the size of the overall estate. Any bequests or other inheritance are paid net of tax due.

In Australia, it is different again. Certainly as far as foreign inheritances are concerned, no tax is due at all. Obviously if your children or grandchildren invest any inheritance, there may be tax due on earnings such an investment would yield.

As far as I am aware, one-off financial gifts from abroad are also not subject to any tax in Australia, although it might make sense for your family over there to check that out with their local tax office.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.

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