Rare Collectible Cars and Inheritance in Australia: What You Need to Know

When it comes to estate planning in Australia, many people focus on homes, investments, and savings. For the car enthusiasts and collectors among us, their prized possessions can hold significant value, both financial and sentimental. But passing them on to the next generation as part of an inheritance requires careful consideration to avoid unexpected tax liabilities or disputes among beneficiaries.

Are Rare Collectible Cars Subject to Inheritance Tax in Australia?

Australia abolished federal inheritance tax in 1979, meaning there is no specific “death tax” levied on estates. However, this doesn’t mean your rare collectible car is entirely exempt from taxation. The Australian Taxation Office (ATO) may still consider the vehicle under capital gains tax (CGT) rules if it’s sold after being inherited.

For instance, if the beneficiary decides to sell the car, they may need to pay CGT on any profit made from the sale. This is calculated based on the difference between the car’s market value at the time of inheritance and the sale price. It’s worth noting that personal-use assets like cars are generally exempt from CGT if their market value is below $10,000. But for rare collectibles with values far exceeding this threshold, proper documentation of the car’s worth at the time of inheritance is crucial to ensure accurate reporting.

Valuing Your Collectible Car for Estate Planning

The value of a rare collectible car plays a pivotal role in estate planning. And while Australia doesn’t impose such taxes, understanding the valuation process remains essential for distributing assets fairly among heirs.

To determine the fair market value of your collectible car, consider obtaining an appraisal from a certified expert. This not only helps establish its current worth but also provides clarity during probate proceedings. Additionally, keeping records of restoration work, provenance, and historical significance can strengthen the case for preserving the car’s legacy.

Challenges with Passing On Rare Cars

While some rare collectible cars appreciate significantly over time, others may struggle to retain their value. For example, models like the 1971–1980 Ford Pinto or the 1971–1977 Chevrolet Vega are now considered almost worthless despite once being sought-after vehicles. Before including a collectible car in your will, assess whether it holds enduring appeal or risks becoming a burden for your heirs.

Another challenge lies in sourcing spare parts for maintenance and restoration. Finding vintage components for older models often involves navigating a complex network of suppliers, auctions, and online forums — a task akin to a treasure hunt. If you’re leaving behind a rare car, consider documenting resources or connections that could assist future owners in maintaining it.

Tips for Including Rare Cars in Your Estate Plan

Dave Kaplan is the co-founder of the Australian estate planning service Willed, and has a few tips on passing on cars in your will.

“When it comes to including vehicles in your will, specificity and clarity are crucial,” he says. “Simply saying ‘I leave my car to John’ could cause issues if you own multiple vehicles or change cars after writing your will. Clearly identify each vehicle you wish to pass on, ideally including registration numbers, and consider what should happen if you no longer own that specific vehicle when you pass away.”

1. Specify ownership clearly: Ensure your will explicitly states who should inherit the car. Ambiguity can lead to disputes among family members, especially if multiple parties express interest in the vehicle.
2. Account for maintenance costs: Rare collectible cars often require ongoing upkeep. Consider setting aside funds or creating a trust to cover expenses related to storage, insurance, and repairs.
3. Consider gifting during your lifetime: Transferring ownership of the car while you’re alive can simplify the inheritance process and allow you to guide the recipient on its care and preservation.
4. Seek professional advice: Consult with a lawyer specializing in estate planning to ensure compliance with Australian laws. They can help structure your will to reduce potential tax implications and maximise benefits for your heirs.