How to slice up an inheritance and keep tax low
Q: I am listed as the sole beneficiary in a relative’s will and am expecting to receive an inheritance of around $300,000 in the near future. I am currently on a salary of $65,000 a year. I would like to gift $150,000 of the inheritance equally amongst my father, brother and sister. Do I need to pay any income tax on the $300,000 inheritance received? Or do I only need to pay income tax based on the $150,000 I am receiving? What would be the best way to minimise any income tax payable on the inheritance for both myself and my siblings? D.T.
A: There is no inheritance duty or gift duty in Australia. You won’t pay any tax on the $300,000 you receive as an inheritance and no tax is payable by yourself or any recipients if you give the money to other people. The only situation where you might be caught out is if the money is in fact part of a superannuation death benefit received from anyone other than a spouse, or someone classified as a “tax dependant”. In that case some tax may be payable on the Taxable Component. You haven’t mentioned this, so I won’t go into the complexities and, anyway, any such tax could be paid by the deceased estate before any money is passed to you.
Source The Age Newspaper