Being appointed executor of a loved one’s estate brings enough emotional weight. You shouldn’t also have to navigate an unfamiliar deceased estate tax return process on top of it. However, understanding the basic process in advance makes it considerably easier to manage. It also helps you avoid unnecessary stress during an already difficult time.
You generally need to lodge a tax return for the deceased person, covering the period from the start of the financial year up to their date of death. This return covers any income they earned during that time. Consequently, this is a separate return from any ongoing tax obligations of the estate itself. It’s often the first step in settling the person’s tax affairs.
Sometimes the estate keeps earning income after the date of death. For example, a property that hasn’t yet sold might still generate rent, or savings might still earn interest. In these cases, you may need to lodge a separate trust tax return for the estate itself, generally until the assets are fully distributed to beneficiaries.
Notifying the ATO. You generally need to inform the ATO of the person’s passing. This affects how they manage future correspondence and obligations.
Gathering financial records. This includes income statements, bank records, investment statements, and any other documents you need to prepare outstanding returns.
Lodging outstanding returns. You generally need to complete any tax returns not yet lodged for previous years, along with the date of death return.
Managing ongoing estate income. If the estate continues to generate income during administration, you need to track and report it appropriately.
Distributing to beneficiaries. Once you settle tax matters, you can distribute assets according to the will. However, beneficiaries may have their own tax considerations depending on what they receive.
Inherited assets often carry specific tax implications, particularly for capital gains tax purposes. The way you treat an asset’s cost base can depend on when the deceased originally acquired it, along with other factors specific to inherited property. Therefore, if you’re planning to eventually sell an inherited asset, understand these implications first. Don’t assume standard rules apply.
Not knowing what records exist. Locating the deceased’s financial records, particularly if they weren’t well organised, can be one of the more time-consuming parts of the process.
Uncertainty about ongoing obligations. Many executors don’t realise that estate income earned after death may need separate reporting, beyond the date of death return.
Balancing timing with beneficiary expectations. Family members are often keen to finalise distributions quickly. However, you need to properly settle tax matters first to avoid complications later.
Deceased estate tax matters involve specific rules that differ from a standard tax return. Getting them wrong can create complications for both the estate and beneficiaries down the track. Therefore, having a tax agent guide you through your deceased estate tax return — particularly during an emotionally difficult time — takes a genuine load off your shoulders as executor.
EBATS helps executors and administrators navigate date of death returns, ongoing estate obligations, and beneficiary tax questions with clarity and care.
📍 Suite 2.2/47 Queen St, Campbelltown NSW 2560, Australia 📞 0404 471 816 🌐 www.ebats.com.au 📧 [email protected]
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