How to Submit a Tax Return for a Deceased Estate: 6 Easy Steps by Funera Sydney

How to Submit a Tax Return for a Deceased Estate: 6 Easy Steps by Funera Sydney

As part of their responsibilities in handling an estate, an Executor of a Will or an Administrator plays a crucial role in managing the taxes associated with the deceased estate during its tenure. This includes filing tax returns for both the deceased individual and the estate for the relevant financial year.
  • Understanding the Process
    • Notify the Australian Tax Office (ATO)
    • To commence the process, inform the Australian Taxation Office (ATO) of the deceased person's passing by completing the online ATO Notification of a Deceased Person form or by downloading a paper form. Follow up by scheduling an interview at an Australia Post retail branch within 30 days, bringing along the original or certified copies of the Will, Letters of Administration, or Grant of Probate.

    • Compile Inventory of Assets & Liabilities
    • Before initiating any tax return, create an inventory detailing the deceased estate's Assets and Liabilities, providing a comprehensive overview of its financial standing. This includes bank accounts, trusts, investments, real estate, mortgages, personal loans, and other debts.

    • Determine Tax on Inheritance
    • In Australia, there is no inheritance tax on inherited property. However, other taxes may apply to the estate, necessitating professional taxation advice. Communicate potential tax implications to beneficiaries when known.

    • Prepare for Various Taxes
      • Income Tax:
      • Payable on any earnings, including income generated during the estate administration process.

      • Company Tax:
      • Applicable if the deceased owned and transferred a business to a beneficiary.

      • Capital Gains Tax:
      • Applies to the profit from the sale of certain assets, with exemptions for inherited assets under specific conditions.

        *Note: Capital gains tax can be intricate, and consultation with a professional is recommended.*

    • Prepare Tax Returns
    • Once the ATO acknowledges you as the Authorised Contact, prepare a tax return for the deceased individual (date of death tax return) and any outstanding returns from previous financial years. Clearly mark these as "DECEASED ESTATE" on the top of the page.

    • Lodge a Final Estate Tax Return
    • After filing the necessary returns and settling debts, lodge a final estate tax return if capital gains have been realized or if profits exceed the tax-free threshold. Obtain a tax assessment to identify the amount payable and decide whether to pay immediately or set aside funds before distributing assets to beneficiaries.

Concluding Thoughts

As part of estate administration, the Executor or Administrator must adhere to the ATO's individual tax return lodgement deadlines, typically by October 31 of the relevant financial year. For those facing challenges meeting this deadline, contact the ATO on 13 28 61 for deferral. For comprehensive information on tax returns and deceased estate taxation matters, reach out to the ATO on 13 28 61 or visit their website.

For additional assistance or guidance throughout this process, Funera Sydney is here to support you with empathy and professionalism. You can reach us at the following numbers:

  • Main Line: (02) 9954 6655
  • Sydney: (02) 9954 6655
  • Newcastle: (02) 4955 1110
  • Wollongong: (02) 4243 8755
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