A recent 9News report has spotlighted a policy proposal from the Australia Institute that recommends reinstating an inheritance tax and introducing a wealth tax. According to the think tank, such measures could raise up to $70 billion annually, offering a potential solution to funding essential services while addressing growing wealth inequality.
Key Elements of the Proposal
The report outlines three primary revenue-generating measures:
1. Wealth Tax (2%)
Targeted at individuals with net assets above $5 million, this wealth tax is projected to generate approximately $41 billion per annum.
2. Reintroducing Inheritance Tax (Death Duties)
Not in effect since the late 1970s, this tax on estates or inheritances could raise around $10 billion annually, as the report suggests.
3. Abolishing the Capital Gains Tax (CGT) Discount
Currently, CGT provides a 50% discount on assets held for longer than a year scrapping it could recoup an estimated $19 billion per year.
Together, these reforms are framed as fiscally responsible options to bolster funding for public infrastructure, healthcare, housing, social services such as the NDIS, and to reduce intergenerational inequality.
What It Could Mean for Individuals and Businesses
For Individual Wealth Holders and Estates
Moderate to high‑net-worth individuals could face significantly higher tax liabilities directly through wealth and death taxes.
Estate planning will become more critical. Strategies such as gifting, setting up trusts, or leveraging concessional superannuation pathways may become more common.
For family businesses and farms, navigating succession while minimising tax exposure could involve complex advisory support.
For Smaller Businesses and SME Owners
While thresholds aim to spare low- and middle-income earners, the CGT discount removal may still impact small business owners who sell business assets or shares.
Business continuity plans may need revisiting, particularly where succession involves inheritance or asset transfers.
Equity & Revenue vs. Complexity & Economic Risks
On the one hand, these taxes offer a compelling means to raise revenue and promote a fairer tax system. Australia is among the few OECD countries without an inheritance or wealth tax, and this proposal would align us more closely with international norms.
On the other hand, research flags risks such as unintended tax avoidance, asset concealment, and possible contractions in investment, especially if poorly designed or executed.
Policy Feasibility and Political Sensitivity
Treasurer Jim Chalmers has signalled that inheritance taxes and changes to family home tax treatment are off the reform table: “these sensitive tax options” are currently viewed as politically untenable.
Similarly, some media and political commentary have mischaracterised recent superannuation taxation reforms, specifically the doubling of tax on super earnings over $3 million, as a form of “inheritance tax”, which experts argue is misleading.
What This Means for Estate Planning and Tax Strategy
Review estate plans now early planning may help families minimise any future inheritance tax exposure.
Structure wealth transfers thoughtfully, considering the potential introduction of gift taxes to counter pre-death transfers.
Engage expert financial and tax advice, both to navigate the changing landscape and to maintain tax-efficient structures.
Pisani Group stands ready to support our clients with tailored strategies, whether it’s succession planning, trust structuring, or wealth transfer optimisation for resilience and clarity amid shifting tax policy.
Learn more or get in touch with our team today
