U.S. Australia Estate Tax treaty

estate tax treaty

The treaty is still applicable for U.S. estate tax purposes, even though Australia no longer has an estate tax.

Without the treaty, Australians who are not “U.S. persons” would pay a U.S. estate tax on any U.S. assets (including shares in U.S. companies) valued at more than $60,000 USD. By virtue of the treaty, Article IV, Australians are allowed a portion of the Unified Credit against their U.S. estate in the ratio of that etate to their worldwide estate.

For an Australian with a worldwide estate of less than $5.45m in 2016, this will usually mean that no U.S. estate tax is payable. However, a form 706NA will have to be filed for estates with a gross value of more than $60,000, and a Federal Transfer Certificate obtained in order to transfer shares worth more than $60,000 from the deceased’s name. A medallion signature guarantee will also be required; there is only one company in Australia that offers this service.

The devil is in the details – the list of assets included in the calculation of the gross estate for U.S. estate tax purposes may surprise Australians, as it includes joint tenancy property, life insurance proceeds, and assets gifted within three years before death.