We are very much in favour of Australians considering retirement overseas, particularly into some of the lower cost Asian countries. It is not without it's challenges, and it's not for everyone, but in many cases it will provide retirees with an interesting lifestyle unattainable in Australia.
Strictly speaking, Australia has no inheritance tax – however, the rules around the application of capital gains tax (CGT) for non-residents differ from those applying to resident Australians where there is an inheritance. As a general rule, capital gains tax (CGT) applies to any change of ownership of a CGT asset, unless the asset was acquired pre CGT (September 1985).
We very much support the idea of Australians spending all or part of their retirement offshore - cost of living differences mean that they can potentially have a much more relaxed and enjoyable lifestyle. It's not for everyone - you need to factor in the impact of prolonged absences from family and lifelong friends - but it is certainly an option that is worthwhile considering.
Update : On Friday, March 8 2013- some ten months after the budget announcement - the Government has released an Exposure Draft outlining how these changes will apply and providing one month for consultation. We, or our sister site Exfin, will shortly provide details and more commentary.
When overseas, Australian politicians like to be seen in the company of successful Australian expatriates - usually in London, New York, Los Angeles and other attractive city environments. Few, if any, visit Australians working in remote resources projects in Africa, South America or various parts of Asia - it's probably neither newsworthy or comfortable for them.