Individuals – Deceased Estates
There is no inheritance or estate tax in Australia.
When a person passes away, generally the person responsible for administering the deceased estate is the legal personal representative, namely an executor or an administrator, who has been granted probate or letters of administration by a court.
The ATO will need to be notified of the deceased person’s death and a tax return will need to be lodged by the executor for the period up to date of death:
- A final tax return (called a ‘date of death tax return’) on behalf of the deceased person or a CU non lodgement (if a return is not required) can be lodged with the ATO.
- Earlier year tax returns for the deceased person if outstanding.
You can only lodge tax returns for a deceased person using a paper tax return, unless you use the services of a registered tax agent such as GM Tax.
A deceased person’s individual tax returns are prepared and assessed in the same way as when they were alive.
The individual rates of tax apply with entitlement to the full tax-free threshold along with Medicare levy and the Medicare levy surcharge.
Following the period since date of death the executor will need to consider whether there is a requirement to lodge a Trust tax return for the estate for the period of administration.
A deceased estate is treated as a trust for tax purposes with the executor taken to be its trustee. An individual tax return is generally required to be lodged by the trustee for the deceased’s income from the beginning of the financial year up to their date of death.
However, for the remainder of the income year from date of death up to 30th June, the trustee will be required to lodge a trust tax return for the income received by the deceased estate. A trust tax return will have to be lodged every financial year until the deceased estate is fully administered (all of its assets and income are distributed to the beneficiaries).
The Australian tax year runs from 1st July to 30th June.
We at GM Tax provide fixed fee quotes for advisory work and tax returns.
If you are the executor of a deceased estate and would like a fixed fee proposal from a firm of Australian tax advisors that understands the issues facing executors please complete our online enquiry via our online enquiry via our contact us button or by calling a GM Tax office closest to you.