Permanent return · Moving back to Korea

Australia Has No Inheritance Tax — So Why Is There a Korean Tax? (Korea–Australia Inheritance)

By Jai Kim · 23 June 2026 · 6 min read

When Korean-Australians talk about inheritance, the line you hear most is — “Australia has no inheritance tax.” Half true, half not.

Australia has no general inheritance tax. But if you have family in Korea, hold Korean assets, or move back to Korea, the story changes entirely. And there’s one fact most people miss.

What decides inheritance tax isn’t the heir’s nationality — it’s whether the deceased was a Korean resident.

That one thing decides almost everything.

The bottom line

Australia has no general inheritance tax; Korea does.
The heir’s citizenship doesn’t matter.
If the deceased was a Korean resident, the worldwide estate is taxable; if a non-resident, only Korean assets.
But a non-resident’s deductions shrink to a ₩200m basic — it’s not automatically better.
There is no inheritance tax treaty between Korea and Australia.

The hinge — not who receives, but who died

Many assume “my child is an Australian citizen, so no Korean tax.” Not so. Korean inheritance tax looks at the deceased’s residency (Inheritance & Gift Tax Act, Art. 3).

The heir's nationality or residence is irrelevant — the deceased's status decides scope and deductions. (Inheritance & Gift Tax Act, Art. 3 / 18–21)

If the deceased was a Korean resident — not just Korean property and deposits, but Australian property, shares and bank accounts — the worldwide estate — can fall under Korean inheritance tax.
If the deceased was a Korean non-resident — only assets situated in Korea (e.g. a Seoul apartment, Korean deposits) are taxed; Australian assets can be outside Korea’s reach.

It all comes back to tax residency — “which country’s resident is who?”

Case 1 — a Sydney son inherits

The son is an Australian citizen living in Sydney; the parents live in Seoul. When a parent dies, the worldwide estate of the Korean-resident parent is taxable. The son’s nationality is irrelevant.

Case 2 — parents who fully moved to Australia

The parents live in Sydney as Korean non-residents and hold a Sydney house, Australian investments, and a Seoul apartment. Here Korea can tax only the Seoul apartment.

Myth ① — “Australia has no inheritance tax, so that’s the end of it”

Only half true. Australia has no general inheritance tax, but ① if the deceased was a Korean resident or held Korean assets, Korean inheritance tax can apply, and ② selling an inherited Australian asset later can trigger Australian CGT.

For CGT, the cost base carries over, and an inherited dwelling may be exempt if you dispose of it within two years of death or it was the deceased’s main residence at death, among other conditions (ATO) — see Australian CGT and reverse migration. In short, “no inheritance tax” and “no tax” are very different things.

Myth ② — “Gifting early solves it”

Also half true. Korean law adds gifts made to heirs within 10 years before death back into the estate (Art. 13; five years for non-heirs). Gift ₩500m at 70 and die at 76 → that ₩500m re-enters the estate.

The deeper trap: those added-back gifts reduce the inheritance deduction cap (Art. 24 — deductions are limited to the taxable estate minus the added gift amounts). So someone who’d have owed nothing without the gift ends up paying both the gift tax and inheritance tax caused by the shrunken deductions.

To genuinely save, the plan must be more than 10 years out. That’s why people call inheritance “a tax you prepare for 10 years ahead, not 1–2.”

Myth ③ — “Becoming a non-resident is always better”

It can be wrong. A non-resident gains a narrower taxable scope, but the deductions shrink too.

Resident’s death: ₩200m basic (Art. 18) + ₩500m lump-sum (Art. 21) + spouse deduction (Art. 19, min ₩500m) → with a spouse, usually at least ₩1bn in deductions.
Non-resident’s death: Art. 19 and 21 apply only to a resident’s death → only the ₩200m basic (Art. 18).

So with substantial Korean assets, non-resident status can be worse. (Filing is also due in 6 months for a resident, 9 months for a non-resident.)

No inheritance tax treaty between Korea and Australia

People ask, “Isn’t there a Korea-Australia tax treaty?” There is — but the 1982 treaty covers income and corporate tax, not inheritance or gift tax (treaty text). So inheritance is governed by each country’s domestic law. With no Australian inheritance tax, double-tax conflict is limited — but that means Korea’s taxing rights are the whole analysis. Income-side double tax is covered in the Korea–Australia treaty.

So what is real tax saving?

Legitimate saving comes down to four things.

Genuine residency design — do you really have your life-base in Australia and qualify as a Korean non-resident? (Substance is everything — pretending doesn’t work.)
Using deductions properly — spouse and lump-sum deductions (inheritance), gift deductions (₩50m for a lineal ascendant, ₩20m for a minor, ₩600m for a spouse — Art. 53).
Gifting more than 10 years out — real pre-gifting that escapes the add-back. Time is the most powerful tool.
Where assets sit — Korean or Australian; location decides the taxing rights.

The line between saving and evasion

With CRS automatic exchange of financial information and overseas-account reporting expanding, nominee holdings, concealment, and fake non-residency are very risky. The line is clear.

Tax saving = building structures within what the law allows. Evasion = hiding the facts.

So the “trick” doesn’t end in penalties and prosecution, use the principles, not the folklore.

References

Scope of inheritance tax — Inheritance & Gift Tax Act Art. 3 (resident: worldwide estate / non-resident: Korea-situated assets). Liability: Art. 3-2.
Pre-death gift add-back — Art. 13 (gifts to heirs within 10 years, to others within 5 years, added to the taxable estate).
Inheritance deductions — basic Art. 18 (₩200m) · spouse Art. 19 · lump-sum Art. 21 (₩500m) · deduction cap Art. 24 (subtracts added-back gifts).
Gift deductions — Art. 53 (₩50m lineal ascendant · ₩20m minor · ₩600m spouse).
Residency — Income Tax Act Art. 1-2 / Inheritance & Gift Tax Act Art. 2. Korea-Australia treaty (1982) — income tax only; inheritance not covered.

(Korea Law Information Center, law.go.kr · ATO)

Closing

Australia has no inheritance tax. But Korea’s still exists, and the deceased’s residency matters far more than the heir’s citizenship. Inheritance isn’t a tax that starts at death — it’s one that starts 10 years earlier. Prepare with the principles, not the folklore.

Frequently asked questions

If my child is an Australian citizen, do they avoid Korean inheritance tax?

The heir's nationality or residence doesn't decide the scope. Korean inheritance tax turns on whether the deceased was a Korean resident (Inheritance & Gift Tax Act Art. 3). If the deceased was a Korean resident, the worldwide estate — including Australian assets — can be taxed.

Australia has no inheritance tax, so is there no tax at all?

Australia has no general inheritance tax. But ① if the deceased was a Korean resident or held Korean assets, Korean inheritance tax can apply, and ② selling an inherited Australian asset later can trigger Australian capital gains tax (CGT). 'No inheritance tax' is not 'no tax'.

Can I avoid inheritance tax by gifting early?

Gifts made to heirs within 10 years before death are added back to the estate (Art. 13). Worse, those added gifts reduce the inheritance deduction cap (Art. 24), so you can end up paying more. To genuinely save, the planning must be more than 10 years out.

Is becoming a non-resident always better?

Not necessarily. A non-resident's taxable scope narrows to Korean assets, but the spouse and lump-sum deductions (Art. 19, 21) don't apply — only the ₩200m basic deduction (Art. 18). With substantial Korean assets, non-resident status can be worse.

Inheritance & gifts Tax Double taxation