Form 706: A Guide for Australians with US Estate Interests (2025)

If you’re an Australian with assets in the United States or a beneficiary of a US-based estate, Form 706 may suddenly loom large in your financial landscape. Although this IRS form is a staple of US estate administration, it’s increasingly relevant for globally connected Australians—especially in 2025 as cross-border financial complexity rises and tax treaties evolve.

What is Form 706 and Why Does It Matter?

Form 706, officially known as the United States Estate (and Generation-Skipping Transfer) Tax Return, is required by the US Internal Revenue Service (IRS) to calculate and report estate tax obligations on the transfer of assets upon someone’s death. For estates exceeding certain thresholds, the form is mandatory—and non-compliance can trigger significant penalties.

• Threshold in 2025: For US citizens and resident decedents, Form 706 must be filed if the gross estate, plus adjusted taxable gifts and specific exemptions, exceeds USD $13.61 million (2025 inflation-adjusted figure).

• Non-residents: Australians who are not US citizens or residents, but who own US-situated assets (think: US real estate, shares in US companies, or certain trusts), may also fall under US estate tax rules. In these cases, Form 706-NA (a non-resident version) is relevant, but the general principles of Form 706 apply.

This form isn’t just bureaucratic paperwork—it’s a crucial step in determining tax liability, the distribution of assets, and, in some cases, eligibility for tax treaties between the US and Australia.

Key Considerations for Australians With US Ties

The reach of US estate taxes, and Form 706 specifically, can be surprising. Here’s what Australians should pay close attention to in 2025:

• Asset Types: US-situated assets include real property, tangible personal property located in the US, and shares of US corporations—even if you live in Sydney or Melbourne. Superannuation funds or Australian shares are generally excluded, but dual citizenship or residency status complicates matters.

• Tax Treaty Updates: The US-Australia Estate Tax Treaty remains in effect in 2025, but ongoing global tax reform discussions could alter key provisions. The treaty often reduces or eliminates double taxation for Australians inheriting US assets, but requires careful documentation and correct filing.

• Executor Obligations: Executors (or personal representatives) of estates with US-situated assets are responsible for timely and accurate filing. The filing deadline is typically nine months from the date of death, with extensions available by application.

Example: If an Australian citizen inherits a Manhattan apartment from a US-based relative, Form 706 (or 706-NA) may be required to determine tax due to the IRS—even if the beneficiary never sets foot in the US.

Filing Process and 2025 Compliance Tips

With increased scrutiny on cross-border tax reporting in 2025, Australian executors and beneficiaries should follow these steps:

• Identify US-situated assets: Take a full inventory, including real estate, brokerage accounts, and business interests.

• Determine filing requirements: Consult the 2025 threshold and review IRS guidance. If the estate includes both US and non-US assets, allocation becomes crucial for treaty benefits.

• Gather documentation: This includes death certificates, asset valuations (as of date of death), prior gift tax returns, and proof of deductions (debts, expenses, mortgages, etc.).

• Complete and submit Form 706: The form is detailed, requiring careful calculation of the gross estate, deductions, and credits. For non-residents, Form 706-NA is submitted instead.

• Claim treaty relief: When applicable, attach the necessary treaty forms and supporting evidence to avoid double taxation.

Recent Policy Note: In 2025, the IRS has updated digital submission processes for Form 706, aiming to streamline cross-border estate filings. However, the complexity of asset reporting and treaty claims remains high, so precision is vital.

What’s Next for Australians With US Estate Exposure?

As global wealth becomes more mobile and tax authorities sharpen their focus on cross-border inheritance, understanding Form 706’s implications is no longer optional for Australians with US ties. Whether you’re an executor, a beneficiary, or simply planning your estate, proactive steps today can prevent costly surprises later.