Inheritance tax is a tax on the money or the possessions you leave to your family or friends when you die. But, do you have to pay inheritance tax on gold bullion? In most countries, the answer is yes, but there are clever ways you can pass on more to your family as opposed to the tax man. More on that later…
No matter what the value or consistency of your assets, you will need to pay some kind of tax on your inheritance. There are various tax brackets, rules and limits for different countries. Below are the current guidelines for inheritance tax for the United Kingdom, United States, Canada and Australia.
United States Estate Tax/Gift Tax on Gold Bullion
Whether gifted or inherited, sales of all physical gold holdings are subject to up to 28% capital gains tax. For gold and silver bullion that’s been inherited, capital gains tax is only applicable on the difference between the value of the bullion on the date of death and value on the date of sale. For example. If gold bullion was worth $100k on the date of death, and worth $110k on the date of sale, $2800 capital gains tax would be due. $110k – $100k = $10k / 100 x 28= $2800.
United Kingdom Inheritance Tax on Gold Bullion
In the U.K. the calculations are a little easier. If your estate and total bullion assets is worth more than £325,000 when you die, your heirs will have to pay inheritance tax at the rate of 40%. For example. If your assets are worth £1m, £675k would be applicable to inheritance tax. £675k / 100 x 40 = £270k inheritance tax. If you received £325,000 worth of gold bullion only and nothing else, you wouldn’t have to pay a penny.
Canada Inheritance Tax on Gold Bullion
There aren’t any inheritance taxes in Canada. However, immediately prior to death there is a deemed disposition of all capital that is owned by the individual at the time of death. This usually results results in the recognition of some amount of gain or loss and is included in computing income in the year of death. If gold bullion is held in a RRSP or RRIF it is fully taxable in the year of death unless it is bequeathed to the individual’s spouse or child.
Australia Inheritance Tax on Gold Bullion
There is no inheritance tax on gold bullion in Australia. Capital gains tax of 17% may be applied in special circumstances if the heir is a non dependant, charity or foreign resident in Australia.
Give Gold as a Gift to your Family
If you’re an Australian or Canadian citizen you’re pretty much laughing when it comes to gold inheritance tax, but what if you’re from the United States or the United Kingdom?
In the USA you can gift anyone up to $15000 per annum completely tax free, this can be made up of cash or assets – including gold bullion. That’s $15000 per person not in total. If you decide to gift anything over that it will be eligible for gift tax which is at a rate of 40%. This is usually paid for by the indivisible gives the gift, not the receiver.
In the UK you can gift up to £3000 annually per person without incurring any capital gains tax on the gift. This is known as your ‘annual exemption’. You can also carry any unused annual exemption forward to the next year – but only for one year.
If you are giving away gold bullion to your family or friends make sure you make records of what you gave and who you have it to, when you have it and how much the gold was worth on the day that you gifted it. This ensures that if that are any audits or tax checks you’ll have records to provide the IRS (USA) or the HMRC (UK).
When investing in gold bullion and in particular when you have doubts regarding tax issues, please make sure you speak with your accountant first. The contents of this article is informational only and legislation or tax rules may differ for your specific circumstances. For any other questions about gold bullion investment feel free to email us at firstname.lastname@example.org. For more information about inheritance tax and gold bullion US citizens can visit the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/estate-and-gift-taxes and UK citizens can visit the HMRC website: https://www.gov.uk/inheritance-tax.