The Taxation of Gifts and Bequests in Australia: A Prototype for Transfer Tax Reform in the United States?

Australian tax law presents a possible prototype for the reform of gift taxation in the United States. Unlike the United States, Australia does not impose a separate transfer tax on gifts and bequests. Rather, gratuitous transfers of appreciated property are treated as capital gains under Australian tax law, exposing donors to income taxation. In an effort to interject the Australian model of taxation into the already robust debate over how best to reform the U.S. transfer tax system, this article examines the advantages and disadvantages of the Australian system and the Australian Income Tax Assessment Act ("ITAA").