Comparative Commonwealth Inheritance Taxes

August 11, 2014 Hull & Hull LLP Estate Planning 0 Comments

With Nick Esterbauer’s recent blog post on the UK inheritance tax debate, I thought it might be helpful to compare the various inheritance taxes found in commonwealth countries (and one ex-commonwealth country) around the world.

As Nick explains, estates valued at less than £325,000 (around $600,000 CAD) in the United Kingdom are exempt from the inheritance tax.  Estates whose value exceeds this amount, however, are subject to an inheritance tax of 40%.  That rate can be reduced to 36% if 10% of the estate is left to charity.

The United States’ federal estate tax exemption vastly exceeds the United Kingdom’s at $5,340,000 in 2014.  If the gross estate surpasses this threshold, then it will be taxed a rate of 40%.  This means that most estates in the United States are exempt from the federal tax.  However, individual states often have their own estate taxes with lower thresholds and lower rates of taxation.

Canada does not have an estate tax.  Instead, in Canada an individual is deemed to have transferred all of their assets immediately before their death at fair market value.  A terminal tax return is then filed by Estate Trustees for the deceased`s estate, and taxes are paid on capital gains.  Individual provinces have their own estate taxes as well.  Ontario has an estate administration tax which charges $5 for each $1000 for the first $50,000 of the value of the estate, and $15 for each $1000 exceeding $50,000.

South Africa has an “Estate Duty” which is payable at a rate of 20% of a dutiable estate exceeding R 3,500,000 (around $350,000 CAD).

Australia has no estate tax but assets transferred to a charity, superfund or foreign residents may be subject to the capital gains tax.

New Zealand, India and Singapore have abolished the estate tax.

Thank you for reading,

Ian Hull

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