Hi,
I was wondering if you receive a death benefit (3 months of income protection insurance benefit) as a result of having income protection insurance, does this form part of the deceased's assessable income?
Hi @JacquiM,
Compensation and insurance payments form 'other income' and do need to be declared.
There are a few things to be aware of when it comes to identifying where to declare this though, so the following information will hopefully help guide you.
A final/ date of death tax return (using the tax return for individuals NAT 2541 form) would need to be lodged on behalf of the deceased person and this covers taxable income received for the financial year up until the date of their death.
A trust tax return may need to be lodged if income is received after the date of death up until the following 30 June. In some cases this type of lodgement will be required for each income year until the estate is fully administered and no longer receiving income.
Of importance though:
If the administration of the estate is completed within the same financial year as the date of death, then a trust lodgement isn't required if all of the following apply:
• No beneficiary is presently entitled to any of the estate's income. • The taxable income of the estate is below the tax-free threshold for individuals.
If the administration of the estate isn't completed within the same financial year as the date of death, then a trust lodgement isn't required if all of the following apply:
• The deceased person died less than three years before the end of the income year. • The net income of the trust estate is equal to or less than the individual tax-free threshold for that income year. • No beneficiary is presently entitled to a share of the income of the trust estate at the end of that income year. • All beneficiaries of the trust estate are Australian residents during the income year.
I hope this provides enough information to help you, and more details can be found on our website as follows: Other Income
Tax returns for Deceased Estates
Trust returns for Deceased Estates
RachATO
Hi @JacquiM,
Compensation and insurance payments form 'other income' and do need to be declared.
There are a few things to be aware of when it comes to identifying where to declare this though, so the following information will hopefully help guide you.
A final/ date of death tax return (using the tax return for individuals NAT 2541 form) would need to be lodged on behalf of the deceased person and this covers taxable income received for the financial year up until the date of their death.
A trust tax return may need to be lodged if income is received after the date of death up until the following 30 June. In some cases this type of lodgement will be required for each income year until the estate is fully administered and no longer receiving income.
Of importance though:
If the administration of the estate is completed within the same financial year as the date of death, then a trust lodgement isn't required if all of the following apply:
• No beneficiary is presently entitled to any of the estate's income. • The taxable income of the estate is below the tax-free threshold for individuals.
If the administration of the estate isn't completed within the same financial year as the date of death, then a trust lodgement isn't required if all of the following apply:
• The deceased person died less than three years before the end of the income year. • The net income of the trust estate is equal to or less than the individual tax-free threshold for that income year. • No beneficiary is presently entitled to a share of the income of the trust estate at the end of that income year. • All beneficiaries of the trust estate are Australian residents during the income year.
I hope this provides enough information to help you, and more details can be found on our website as follows: Other Income
Tax returns for Deceased Estates
Trust returns for Deceased Estates
RachATO
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