In today’s globalised world, more Australians are inheriting property, investments, and wealth from relatives living abroad. Whether it’s a countryside villa in Italy, a stock portfolio in the U.S., or a family trust in Vietnam, the opportunity can be exciting—but the paperwork, confusing.
At the heart of that confusion is one question:
What is the tax on inherited overseas assets for Australians?
In this guide, Legal Finda explores how international inheritances are taxed, how to avoid double taxation, and what every Aussie should know before accepting cross-border assets.
Understanding the Tax on Inherited Overseas Assets
Let’s clear one thing up from the start:
Australia does not have a formal inheritance tax.
That means you won’t be taxed just for receiving an inheritance, even if it comes from overseas. However, this doesn’t mean you’re exempt from all tax obligations.
Here’s what you might still be liable for:
- Capital Gains Tax (CGT) on sale of inherited assets
- Tax on foreign income (such as rent or dividends)
- Currency conversion declarations
- Tax implications based on the origin country's laws
Knowing how the tax on inherited overseas assets applies to your specific situation can help you avoid penalties and financial loss.
Do You Pay Tax on Foreign Inheritance in Australia?
This is one of the most common questions we receive.
Short answer: no, but…
While there’s no inheritance tax in Australia, once you start earning income from those assets or decide to sell them, taxation kicks in.
Here’s a breakdown:
- Cash inheritances: Not taxed directly, but interest earned on deposited funds is taxable.
- Property or real estate: CGT applies when you sell it.
- Shares/investments: Dividends or capital gains must be declared in your Australian tax return.
- Trust distributions: If you're receiving money regularly, this is considered assessable income.
Understanding how this works is key to managing the foreign asset inheritance tax Australia might apply indirectly.
Overseas Inheritance Tax Implications: Country by Country
Tax obligations vary depending on where your inheritance comes from. Some countries apply taxes at the time of inheritance or on the estate itself:
- UK: Inheritance tax of up to 40% on estates above £325,000.
- USA: No federal inheritance tax, but some states do impose one.
- Japan: Inheritance tax applies even to foreign beneficiaries, based on global assets.
- France: Forced heirship laws and inheritance tax rates based on relationship to the deceased.
- India: No inheritance tax, but property transfers may attract stamp duty or capital gains.
Even if tax is paid overseas, you might face double taxation on inherited assets unless a tax treaty (DTA) applies.
Double Taxation on Inherited Assets
If you’re taxed in both countries, it’s called double taxation.
Australia has Double Tax Agreements (DTAs) with over 40 countries, including the UK, US, Germany, France, Japan, and more. These agreements are designed to:
- Prevent you from paying tax twice
- Allow you to claim foreign income tax offsets
- Determine which country has taxing rights on particular assets
To benefit from a DTA, you must report correctly and apply for tax credits.
Failing to do so could mean paying tax in the other country and again in Australia—an expensive mistake.
Scenario: John Inherits Shares in the U.S.
John inherits $100,000 worth of shares from his uncle in California. The U.S. withholds 15% in taxes on dividends paid.
Under the U.S.-Australia tax treaty, John can claim a foreign income tax offset for taxes already paid when he reports dividend income on his Australian tax return.
Scenario: Marie Inherits a Villa in Italy
Marie inherits a villa valued at €450,000. Italy imposes a small inheritance tax. When Marie sells the property years later, she must pay Capital Gains Tax in Australia on any profits.
Her cost base is calculated at the AUD value at the time of inheritance—not the original purchase price. She uses Italy’s DTA with Australia to reduce her liability.
Handling Cryptocurrency as an Inherited Overseas Asset
Inheriting crypto from abroad? Here’s how it works in Australia:
- No inheritance tax when receiving it
- Capital Gains Tax applies when you sell or swap the crypto
- Must report fair market value in AUD at time of inheritance
- Transaction history and wallets must be disclosed to the ATO
Given the lack of regulation in some countries, make sure to work with a lawyer who understands international crypto inheritance law.
How to Handle the Tax on Inherited Overseas Assets: Step-by-Step
- Identify the type of asset (cash, property, shares, crypto, trusts)
- Determine if tax has already been paid overseas
- Check if a DTA applies
- Declare the inheritance (or sale/income) on your Australian tax return
- Convert values using ATO exchange rates
- Claim credits for any tax paid abroad
- Consult Legal Finda for advice and documentation help
How to Structure Your Will to Minimise Future Tax Risks
If you plan to leave overseas assets to your family:
- Use a lawyer who understands cross-border succession
- Specify beneficiaries clearly, by country
- Consider local wills to manage foreign property (without revoking your main will)
- Avoid unnecessary taxation by understanding how treaties affect inheritance overseas
- Appoint local executors where possible to reduce delays
This kind of foreign estate planning Australia can prevent your heirs from tax surprises later.
Countries with the Highest Inheritance Taxes
If you’re inheriting from—or planning to leave assets in—any of these countries, be aware:
- Japan: Up to 55% inheritance tax
- South Korea: Up to 50%
- France: Up to 60% (distant relatives or non-relatives)
- United States (some states): Inheritance tax can be up to 18%
- Belgium: Up to 30% depending on region and relationship
Even if Australian law doesn’t charge inheritance tax, these local charges may eat into what you or your family receive.
Checklist to Avoid Tax Surprises
- Keep documents proving the date and value of inherited assets
- Always convert figures using official ATO rates
- Declare all foreign income and gains
- Understand if you're eligible for a tax offset
- Use a local legal service like Legal Finda for reliable advice
- Review your estate plan if you hold assets in multiple countries
Do You Need to Lodge with the ATO?
Not always—but you must report:
- Income produced by inherited assets
- Capital gains if you sell them
- Any distributions from foreign trusts
- Any claim for a foreign tax credit
The ATO may request documentation such as:
- Foreign tax assessments
- Sale contracts
- Probate or estate letters
- Foreign wills or translations
Why Work With Legal Finda?
Legal Finda simplifies the complex. We help Australians:
- Understand the tax on inherited overseas assets
- Navigate double tax treaties
- Report income or gains from foreign properties
- Draft valid wills across jurisdictions
- Prevent family conflict and tax disputes
We’ll connect you with the right lawyer for your needs—whether you’re receiving assets or planning to leave them.
Conclusion
Let’s recap:
- Australia doesn’t have an inheritance tax, but taxes can still apply
- You must understand the overseas inheritance tax implications and when to report
- Double taxation on inherited assets is a risk—but it can be avoided
- You should work with professionals to handle reporting, strategy, and compliance
- Legal Finda helps you manage the tax on inherited overseas assets with clarity and peace of mind
Start your cross-border estate planning today—speak to Legal Finda.
