Estate tax in Australia has been a perennial discussion topic. The political reality is that no government has chosen to introduce a comprehensive estate or inheritance tax since the system was largely dismantled in the 1970s and 1980s.

The 2026 situation is interesting because the discussion has shifted. Some of the policy framing has moved from “should we introduce estate tax” to more specific questions about superannuation tax, capital gains tax on inherited assets, and property-specific measures.

What’s actually changed

Superannuation death benefit taxation has been adjusted. The tax-free threshold for super balances and the treatment of death benefits paid to non-dependants has been modified. The effect is more tax on superannuation passed to adult children.

Capital gains tax on inherited assets remains based on cost base inheritance. Inherited assets retain the original cost base. This means deferred capital gains pass to heirs and are taxed when the heir disposes of the asset. This isn’t new but periodic discussion suggests changing it to step-up basis or to crystallisation at death.

Property-specific changes have happened in some states. Land tax modifications and stamp duty changes affect inherited property differently than five years ago. The state-specific picture varies significantly.

Trust taxation rules have been tightened. Several measures targeting family trusts as wealth transfer vehicles have been implemented in recent budgets. The effect is to reduce some of the tax planning benefits family trusts provided.

What’s been discussed but not enacted

Several specific proposals have been discussed but not implemented:

Comprehensive estate or inheritance tax. Periodic Productivity Commission and academic reports have argued for an estate tax. The political reality has been that no major party has been willing to campaign on it. It remains discussed but not on the legislative agenda.

Step-up cost base elimination. Treasury reviews have noted that the current treatment of inherited capital gains is generous. Eliminating the inheritance of cost base (forcing crystallisation at death) has been discussed but not implemented.

Wealth tax adjacent measures. Various proposals for taxing wealth above certain thresholds have surfaced periodically. These don’t have political traction.

Modifying the principal residence exemption. The capital gains exemption on the family home is one of the largest tax expenditures in the system. Trimming it for very expensive homes has been discussed periodically.

What the politics look like

The political coalition that opposes estate tax in Australia is large and motivated. It includes:

• Older voters (highest concentration of asset holders)
• Property owners broadly
• Family business operators
• Most of the financial planning industry
• Both major parties’ donor bases
• Most state governments (which would compete with federal estate tax)

The political coalition that supports estate tax includes:

• Some economists and policy researchers
• Younger voters in some segments
• Some unions and progressive advocacy groups
• Some academic economists

The numerical and motivation imbalance is significant. Estate tax in any comprehensive form is unlikely to be enacted in the next political cycle.

What estate planning practitioners advise

Estate planning advice in 2026 reflects the current reality:

Plan around current rules with awareness of likely changes. Most practitioners advise clients to plan around current rules but not to assume rules won’t change. Particularly for wealth transfer planning over 20+ year time horizons.

Address superannuation death benefits explicitly. The taxation of super passing to adult children is a significant issue. Strategies including drawdown during life, contribution to surviving spouses, and direct beneficiary nominations are routinely discussed.

Consider testamentary trusts where appropriate. Testamentary trusts retain some advantages despite the trust taxation tightening. They’re not for everyone but they’re a useful tool for specific situations.

Document family business succession explicitly. The intergenerational transfer of family businesses and farms remains a high-stakes planning area. Without clear documentation and structure, this often results in tax outcomes nobody intended.

Don’t over-plan for hypothetical future changes. Significant restructuring done in anticipation of estate tax that doesn’t get enacted creates costs that don’t pay back. Reasonable planning under current rules with flexibility for change is the right balance.

What individuals should do

The practical estate planning advice for most Australians:

1. Have a current will that reflects your actual wishes
2. Have valid binding death benefit nominations on superannuation
3. Have powers of attorney for financial and health decisions
4. Address digital assets explicitly
5. Review the plan every 3-5 years or after significant life changes

For higher net worth individuals:

1. Consider testamentary trusts for tax efficiency in passing wealth to adult children
2. Address business succession explicitly if applicable
3. Consider lifetime gifting strategies if appropriate to your situation
4. Engage a planning lawyer for estates above $5-10 million

The current Australian estate planning environment is well-developed and reasonably stable. The expectation of dramatic change is mostly speculative. Planning around current rules while remaining open to adaptation is the practical posture.

The longer-term direction

The longer-term direction in tax policy is uncertain. The pressures that point toward more aggressive wealth taxation:

• Rising wealth inequality
• Aging population requiring more government services
• Government deficit pressures
• International trends in some peer economies

The pressures that point against:

• Political reality of asset-holder voting bloc
• Tax competition from other jurisdictions
• Concerns about capital flight
• Political coalition stability

The realistic prediction is incremental adjustments to existing tax rules rather than fundamental change. The exact direction of those adjustments depends on political circumstances. Planning that’s flexible to those adjustments is more valuable than planning that bets on a specific outcome.