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Age without wisdom: Do Australians support paying an inheritance tax?

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New research reveals younger Australians are most open to paying inheritance tax.

Inheritance taxes exist in many other parts of the world. OECD countries including the United Kingdom, Germany, Italy, France, Canada and even some states in the USA make their residents pay a tax on the assets they inherit.

Australia is different. We were one of the first wealthy countries in the world to abolish inheritance taxes at a federal level back in 1979.

The state 'death duty' tax was abolished shortly after. Queensland was the first state in Australia to abolish it, followed by South Australia and Western Australia in 1980, Victoria and New South Wales in 1981 and Tasmania in 1982.

There are some exceptions, for example, if you live overseas at the time a parent dies. There's also still capital gains tax.

You don't typically pay tax on a super death benefit or life insurance payout though.

Inequality on the rise

Research shows Australia is becoming more unequal. A report from the Australian Council of Social Service and the University of New South Wales shows that over the past two decades the average wealth of the top 20% has grown at 4 times the rate of the lowest.

Another study by the Australian Institute shows the bottom 90% of Australians have received 7% of economic growth per person since 2009. The top 10% of income earners have gained 93% of the benefits.

In a 2023 survey by the Conversation and the Economic Society of Australia, 52% of economists backed introducing inheritance taxes where equity was the only priority.

Do Australians want an inheritance tax?

Finder recently asked over 1,000 people in a nationally representative survey to find how Australians would feel about an inheritance tax, if it was reintroduced.

Their answers? Many economists won't like it. 85% said they wouldn't be happy to pay an inheritance tax. This number goes up to 92% among 55-64 year olds.

Younger Australians are the most likely to support an inheritance tax but they're still in the minority. 24% of 25-34 year olds and 22% of 18-24 year olds say they'd be happy to pay an inheritance tax. This amounts to 1,385,072 million people.

Finder survey: Would Australians be happy to pay a tax on their inheritence?

Response75+ yrs65-74 yrs55-64 yrs45-54 yrs35-44 yrs25-34 yrs18-24 yrs
No89.29%88.41%92.5%90.06%80.77%76.11%78.02%
Yes10.71%11.59%7.5%9.94%19.23%23.89%21.98%
Source: Finder survey by Pure Profile of 1004 Australians, December 2023

Older Australians may be more reluctant to pay an inheritance tax but a majority say they would be willing to pay more tax. According to another Finder survey, 61% of boomers told us they don't pay too much tax.

This is in stark contrast to millennials. Only 20% said they feel they don't pay too much tax. We asked this question before the changes to the stage 3 tax cuts were announced.

Graham Cooke, Finder's head of consumer research, agrees with the proportion of younger Australians in favour of an inheritance tax.

"Inheritance, passed on from one generation to the next, is the mechanism by which inequality persists," says Cooke.

"It's entirely justifiable to argue that a portion of the wealth accumulated within society should benefit the individual, while another portion should support disadvantaged individuals within society who will never have the benefit of generational wealth," added Cooke. "This is why the introduction of an inheritance tax actually makes the tax system more equitable."

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