Mining and resources executives work hard to build wealth, yet two facts remain: death and taxes. As Benjamin Franklin quipped, nothing in life is certain except those two. The good news? Understanding what tax applies when you’re not here, can help reduce their impact on your estate and protect your legacy.
Many assume that because Australia has no formal inheritance tax, their estate will not face significant taxes. Not true. While state inheritance duties were abolished in 1980, other taxes such as capital gains and tax on superannuation payouts still apply and can erode wealth if left unplanned.
This article explores what taxes apply for when you’re not here and touches on potential strategies to maximise wealth transfer and minimise tax leakage. We’ll cover superannuation, employee share schemes (ESS), capital gains tax (CGT), property, and estate planning structures designed to help you preserve your family’s financial future.
Superannuation
Superannuation is often your largest asset yet widely misunderstood. A common myth is: “My super will automatically go to my family via my Will.” In reality, super is held in trust by your fund and paid according to your beneficiary nomination or trustee discretion, not your Will. Who can receive your superannuation benefits is tested at the point of your death, with people like siblings and friends being generally unable to receive these benefits directly from your super fund.
Tax treatment varies, payouts to tax dependants (spouse, minor children) are tax-free, but payments to non-dependants (adult children) can incur up to 15% tax on the taxable component (or 30% on untaxed elements), plus Medicare levy – effectively 17% (or 32%). This “stealth death tax” means large balances left to adult children can shrink significantly.
For example, let’s consider Michael, a General Manager with a superannuation balance of $1,000,000. Micheal’s superannuation balance is made up of 100% taxed element, as all of his superannuation balance is from contributions from his employer and tax effective contributions he has made along the way. On Michael’s passing, he doesn’t have a spouse, but does have two children, one aged 17 and one aged 21. Let’s assume Michael’s superannuation is split equally between his two children, via a binding death benefit nomination with his superannuation fund.
| Child Age 17 | Child Age 21 | |
|---|---|---|
| Gross Amount | $500,000 | $500,000 |
| Tax Payable (including Medicate Levy | Nil | 17% $85,000 |
| Net Amount Received | $500,000 | $415,000 |
As seen above, Michael’s youngest child receives a net benefit of $500,000 while his older child, received a net amount of $415,000.
This “stealth” estate tax is worth understanding so you know the true after-tax value of your estate when you are not here. There are strategies that can help reduce the tax on superannuation benefits paid to adult children, but they require a broader understanding of your overall estate plan.
Important update: From 1 July 2025, Division 296 tax will apply an additional 15% tax on earnings for individuals with total super balances above $3 million. This change makes proactive planning even more critical for high-net-worth individuals.
Speak to a financial adviser now to review your superannuation strategy in light of Division 296 and ensure your estate plan minimises future tax impacts.
Employee Share Schemes (ESS)
For mining and resources executives, Executive Share Schemes (ESS) are often one of the most valuable components of remuneration. Your unvested shares may lapse or trigger tax events at death, depending on plan rules.
Unvested shares held at death, often have a proportional vesting from date of grant to the date of death. This results in taxable income being created within your estate, which must be lodged in your estate’s tax return.
Further to this, fully vested shares generally pass to your estate under CGT rollover, meaning there is no immediate tax on death. However, gains will be taxed when sold (either in the estate or by a beneficiary who receives the resulting shares), and any posthumous income (such as dividends) may need to be reported in the estate’s tax return.
Executors often face decisions about whether to sell shares for cash or transfer them to beneficiaries – each option has tax and liquidity implications.
Planning Implications:
- Include ESS in your Will and empower executors to deal with plan administrators.
- Prepare an “ESS legacy folder” with vesting schedules, tax statements, and key contacts.
- Consider strategic structuring, such as transferring vested shares into a family trust or SMSF (subject to compliance rules), to provide continuity and tax flexibility.
- Understand vesting conditions and minimum shareholding requirements to avoid compliance issues.
Why this matters: ESS shares are more than a reward, they’re part of your wealth story. With foresight, they can become a cornerstone of intergenerational wealth rather than a source of complexity.
Speak with a financial adviser who understands ESS and estate planning. They can help you model scenarios, coordinate with tax and legal specialists, and ensure your family isn’t left with unexpected tax burdens or administrative challenges.
Capital Gains Tax (CGT)
Death itself isn’t a CGT event in Australia; assets generally pass to your estate and then (potentially) beneficiaries without immediate tax being payable. For assets acquired after 20 September 1985, beneficiaries inherit your cost base and acquisition date, so tax applies only when they sell or transfer these shares away from themselves. This often leads to the misconception that “there’s no tax when I die,” but the reality is that CGT is deferred, with the cost base being transferred to beneficiaries, not eliminated.
Why this matters: Eventually, someone pays the tax, either the estate if assets are sold during administration, or the beneficiary when they dispose of them. Executors also need to manage posthumous income (e.g., rent, dividends) and lodge appropriate tax returns for the estate.
Planning implications:
- Keep accurate cost base records for all assets and pass these to your executors. Missing records can lead to higher tax bills.
- Consider timing asset sales during your lifetime or within the estate’s administration period. Estates may access concessional tax rates or the 50% CGT discount in certain circumstances.
- Match assets to beneficiaries strategically: For example, leaving growth assets to heirs in lower tax brackets can reduce future CGT.
- Be mindful of overseas heirs: Non-resident beneficiaries can trigger immediate and additional taxes, so specialist advice is essential if your family is global.
Smart planning turns CGT from a hidden risk into a manageable outcome.
Family Home and Investment Properties
Property often carries both financial and emotional weight. The family home is generally exempt from CGT if sold within two years of death, but investment properties don’t receive the same treatment. Executors should carefully consider whether to sell during estate administration or transfer ownership to heirs, as each option has tax implications.
Title matters: Joint tenancy means property passes outside the Will, which can conflict with succession goals. Holding property as tenants-in-common allows shares to be willed separately – an important consideration for blended families.
Clear instructions prevent disputes. Talk to your family about your wishes and ensure your Will gives executors the flexibility to act in the best interests of the estate. With thoughtful planning, property can remain a cornerstone of your legacy rather than a source of conflict.
Estate Planning (Wills & Trusts)
Estate planning is more than writing a Will – it’s about creating a structure to manage and transfer wealth efficiently.
A robust plan includes:
- An up-to-date Will.
- Strategies for assets outside the Will (super, insurance).
- Instruments for life events (powers of attorney, health directives).
For many in mining and resources, or those with large superannuation balances, ESS or business interests – testamentary trusts are powerful tools.
They offer:
- Tax benefits: income can be distributed to minors at adult tax rates, saving thousands annually.
- Asset protection: shielding wealth from creditors or relationship property claims.
Other tools include Super Proceeds Trusts and aligning existing family trusts with your succession plan. Philanthropy can also feature charitable bequests often reduce CGT.
Inheritance Tax: Myth vs Reality
Australia has no formal inheritance tax, but estates still face taxes – CGT, superannuation death benefit tax, and income tax on estate earnings. These can significantly reduce inheritances if unplanned.
The absence of a single “death duty” is an opportunity: with strategic planning such as gifting during life, using testamentary trusts, and optimising super, you can transfer wealth tax-effectively. International assets add complexity, so seek advice if you or your heirs have global ties.
Don’t let the myth of “no inheritance tax” breed complacency. Every estate benefits from proactive planning.
Final thoughts…
Death and taxes are inevitable, but their impact on your wealth isn’t. By planning now covering super, shares, trusts, and property you can help protect your family’s financial wellbeing and preserve your legacy.
Engage qualified advisers to review your arrangements and fill any gaps.
At Resources Unearthed, we specialise in helping mining and resources professionals achieve these outcomes. For more information, please contact James Marshall for a 20-minute, no-obligation discussion. You can call James at +61 (0) 7 3007 2000 or email contact@resourcesunearthed.com.au.
To learn more about James, visit this link.
Resources Unearthed is a solutions hub that connects senior executives, established professionals, and business owners in mining and resources with proven specialist advisers.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth ABN 54 139 889 535 AFSL 357306. This advice is general and does not take into account your objectives, financial situation, or needs. You should not act on it without first obtaining professional financial advice specific to your circumstances.
*Please note: For financial advice and services relating to this matter that are not offered under the Fortnum Private Wealth AFSL, in accordance with our collaborative advice model, when required, such matters are referred to appropriately qualified professionals.
