Here is a hypothetical scenario, but quite often true.

Say a couple purchased 200 acres of land on the outskirts of Brisbane in the 50's, built their home and all up spent in dollar terms, say $20,000.

Lets also assume they have now passed away and had three children and ten grand/Ggrand children and their property sells for $300 million.

As it stands today that wealth would be shared (assumption) between just 13 people, resulting in $23 million each, give or take.

Is this fair and just?

What if a law were introduced to say the maximum and beneficiary can receive 'tax free' is $500,000. This would mean inheritance tax apply to the remaining $274 million.

I know ive said similar before, but we are taking about tax reform and we have been told everything is on the table. But is it!

No, they should not pay death taxes.

Why is everyone always talking about raising taxes?

What about keeping to a budget, both state and federal governments should look at wastage (public servants wages and benefits, grants, arts funding, human rights commission, foreign aid, the list is endless)

If governments only spent on education, health, defence and law (ASIC, ACCC etc) We would have enough to fund these and give TAX REFUNDS to working people.

As I have said before the ATO says for every %1 collected in income tax revenue, 40 cents is wasted. That is only 60 cents pays for hospitals, defences etc.

If you gave every working Australian $1 they would spend it and produce a 3-4 fold effect. You buy something, the retailer makes a profit, he buys something and the circle continues. Now with GST the government gets 10% on each transaction, everyone wins.

Lower taxation is the only way to stimulate the economy without causing huge debt problems down the track.

The more tax revenue, the more government spending meaning more tax revenue is needed. It is a never ending path to lower living standards

In australia 579 companies can work there tax bill down to nothing, That must be fixed before anything else can be dreampt up.

Dear Rehctub,

What you describe has nothing to do with inheritance, but with the loophole in capital-gains tax which allows unlimited exemption when selling one's home. This way, if one of the children lives in the parents' estate for a year, they can then sell it tax-free, then distribute the proceeds among the rest of the family without paying any tax.

Had they sold the house immediately, then capital-gains tax would apply.

On the other hand, capital-gain tax as it stands is unfair because it doesn't take inflation into account: $20,000 of the 50's is much more today. To make it fair, capital-gains tax should be charged like any other income at one's full tax-margin, but after adjusting for inflation.

Now suppose the parents did not live there and sold those acres before their death: then they would already have paid capital-gains tax, so charging the children an inheritance-tax on top would be unfair.

Yuyutsu,

Wrong on several points:

1. CGT only applies to items bought after 1985.
2. CGT doesn't apply to items bequeathed to a relative
3. CGT profits (but not losses) ARE inflation indexed.

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The trouble with death duties is that they are so easy to avoid. In the example mentioned, if there were death duties, the family could institute several policies to avoid them eg - set up a company with all kids having say 100 shares each and the parents one share each, sell the house to the company for reduced figure (no CGT), rent the house back to the parents at some reduced rent. Upon death the duties are then paid on only a small fraction of the value.

To overcome this you then introduce gift duties and then they find some other mechanism. In the end we end up with a massive administrative mess, accountants making money on schemes and no extra taxes being raised. That's why they got rid of death duties.

Dear Mhaze,

1. True.
2. That's an unfortunate loophole: no tax should apply when someone (relative or otherwise) receives an asset, but if/when they sell it, they should then be paying CGT based on whatever the asset was originally bought for.
3. Only if purchased before 1999.

The trouble with death duties is that the same long-dead person who originally earned it for their future generations, unfairly pays again and again and again, often even to a state they never resided in, or which didn't even exist in their days.

It's natural and healthy for money/assets to run in the family for generations on end, where it is being used as security for subsequent generations, so those who need it (for example if they fall ill, become disabled or lose their home through natural or made-man catastrophes) can draw on it and those who are more fortunate can increase it. The family's money does not belong to any state, especially as a family could be spread around the globe regardless of who currently happens to hold it on trust. This money is likely to have been generated long before Australia was even created and perhaps to be needed and used once it no longer exists.