Need to manage tax and super affairs after someone dies? When someone dies, you’ll need to notify the ATO and provide documents like a death certificate, probate or letters of administration.
We’ve put together some helpful info to guide you through what to do and how to get started.
How do I notify the ATO when someone dies?
We understand that tax won’t be your priority when someone passes away. But it’s a good idea to let us know that a person has died so we can stop sending correspondence to them.
completing an online form this opens in a new window and attending an interview at an Australia Post outlet to present your support documents. Note: they don’t need to be certified copies if you go with this option.
If you’re the authorised LPR, you may decide to appoint a solicitor or tax agent to help you manage the estate. If you do, we can share the deceased person’s info with them too.
If you are not the authorised LPR, we can still help you but there are some legal restrictions on the info we can share.
If the deceased person earned income in the year they died, you may need to lodge a final tax return. This is known as a ‘date of death’ tax return, and is different to the trust tax return for the deceased estate this opens in a new window . The return essentially finalises their personal tax obligations up until their date of death.
Generally, the authorised LPR should lodge the return. If you aren’t the authorised LPR, you can still lodge – we’ll just review the return to determine what actions we need to take.
What if no income was earned in the year of death?
If a date of death tax return is not required, you can let us know by completing a non-lodgment advice form this opens in a new window . Where the form asks for a reason, print ‘DECEASED’ followed by the date of death.
What happens to HECS-HELP loans upon death?
If a deceased person has a study loan, the amount they owe is worked out up until the day they passed.
When their final tax return is processed, we’ll work out if a final compulsory repayment this opens in a new window is required. Any outstanding loan amount that remains after this will be cancelled.
What happens to other government agency debts upon death?
If there are outstanding debts with us or other government agencies, they’ll need to be handled by the deceased estate.
If the estate has enough assets to cover the debts, the executor must pay the amounts owing. After that, the remaining assets can be distributed to beneficiaries according to the will.
Do I need to submit a trust tax return?
Finalising a deceased estate can take anywhere between 6 to 12 months – sometimes longer. A trust tax return covers the period after their death and tells us about any income generated by the estate. For example – interest, dividends or rental income.
If you’re required to lodge a trust tax return, you’ll need to do so each year until the estate has been fully distributed to the beneficiaries.
Can probate expenses be claimed as a tax deduction?
Whether you can claim probate expenses depends on the type of deceased estate tax return you’re completing.
If it’s the final tax return for a deceased individual (also known as a date of death tax return), you can include:
all assessable income earned or derived by the deceased person.
all deductible expenses incurred up to the date of death.
You can include tax agent’s fees and similar expenses you incur as the executor.
How do I complete my own tax return if my spouse dies?
If your spouse passes away during the income year, there are some steps you’ll need to follow when completing your own tax return. They include:
answering Yes at the question 'Did your spouse die during the year, and you did not have another spouse on or before 30 June…?'
adding the date of passing in this section of the return.
Do I have to pay tax as a beneficiary of a deceased estate?
If you receive an inheritance as a beneficiary of a deceased estate, you won’t need to pay tax on the inheritance itself. However, you may have tax obligations for the assets you inherit. These can include:
Income tax if you inherit assets that generate income, such as dividends from shares or rental income from property.
You don’t need to declare inherited money or assets, like jewellery, on your tax return. Our article has more information on tax on gifts and inheritances.
This is a helpful overview of the tax implications of managing a deceased estate. It's important to remember that the legal personal representative (LPR) has a significant responsibility in ensuring all tax obligations are met. Key considerations include:
Timely Notification: Promptly informing the ATO with the necessary documentation is crucial to avoid delays and ensure access to relevant information.
Final Tax Return: Accurately preparing and lodging the final tax return, including all income and deductible expenses up to the date of death, is essential.
Estate Income: Understanding the tax treatment of income generated by the estate after the date of death and the potential need for a trust tax return is vital.
Beneficiary Obligations: While inheritances are not taxed, beneficiaries should be aware of potential tax implications on inherited assets that generate income or are sold.
Seeking professional accounting advice is highly recommended to navigate the complexities of deceased estate tax matters and ensure compliance.
