January 2014
ADMINISTERING A DECEASED ESTATE
Tax obligations do not end when a taxpayer dies. Several steps need to be considered in winding
up an individual’s tax affairs including consideration of the requirement to lodge a final income
tax return, along with subsequent income tax returns for the deceased estate as circumstances
require.
Home
Our Firm
Lodging a Final Return
Our Services
After a taxpayer’s death, and depending on the income of the deceased, a final tax return may
need to be prepared. This is the same tax return form used for all individuals, except for the
inclusion of the date of death, and an additional disclosure noting that it is a final return.
Knowledge Bank
Careers
Contact Us
If the taxpayer’s income is below the tax-free threshold, and they don’t have any refundable
tax credits (e.g. withholding tax, imputation credits), a final tax return may not be required.
In this case there is still an obligation to notify the tax office by using a “non-lodgment
advice” form.
Assessable income for the deceased includes ordinary income derived from 1 July of the
relevant income tax year, until the date of death. Amounts derived after the date of death are
attributable to the deceased estate, and will need to be included in the deceased estate’s tax
return.
Similarly, deductible outgoings are able to be claimed to the extent that they were incurred
prior to the date of death, in the deceased taxpayer’s return, or alternatively after the date of
death in the estate tax return. Any prior period losses can only be claimed up to the date of
death, in the deceased taxpayer’s return.
Deceased Estate Return
Armidale
ph: 6773 8400
Coonabarabran
ph: 6842 0000
Gunnedah
ph: 6743 0800
Narrabri
ph: 6743 0800
Tamworth
ph: 6763 0100
A deceased estate is a trust that is automatically created when a person dies, and consists of
the assets the person owned on the date of death together with any earnings from that point
onwards. The assets in the deceased estate are held in trust from the date of death of the
person until the estate is fully administered.
A deceased estate tax return is required to be submitted for the period commencing from the
date of death until the end of the income year and thereafter until the estate is fully
administered.
There are special rules regarding the tax rates applicable for deceased estates, depending on
how many years the deceased estate has been submitting tax returns.
For the first three tax years, the deceased estate income to which no beneficiary is presently
entitled is taxed at the same rates as individuals, including the benefit of the full tax-free
threshold, and excluding medicare levy.
January 2014
After the third tax year, the estate is considered to be in prolonged administration and special
tax rates will apply. For the 2013-2014 tax year, these rates are as follows:
Deceased estate taxable income (no present entitlement)
Tax rates
$0 – $416
Nil
Home
$417 – $594
50% of the excess over $416
Our Firm
$594 – $37,000
$89 plus
19% of the excess over $594
Our Services
If the deceased estate taxable income exceeds
$594, the entire amount from $0 will be taxed at
the rate of 19%
Knowledge Bank
Careers
$37,001 – $80,000
$7,030 plus
32.5% of the excess over $37,000
Contact Us
$80,001 – $180,000
$21,005 plus
37% of the excess over $80,000
$180,001 and over
$58,005 plus
45% of the excess over $180,000
Other Issues to Consider
There are many other issues to consider in relation to the administration of a deceased
taxpayer’s affairs, which are not covered in this newsletter.
Rather than waiting until death, there are many benefits to be gained from planning ahead.
Estate planning offers opportunities to manage the passage of wealth from a tax effective
point of view on death. Examples of issues which are relevant to this exercise include having
a valid Will and Power of Attorney in place, consideration of all relevant taxes which may
include capital gains tax and the taxation of superannuation benefits, and that all intended
beneficiaries are considered and allowed for.
Armidale
ph: 6773 8400
Further Information
Coonabarabran
ph: 6842 0000
For more information in regard to managing the affairs of a deceased taxpayer, or to discuss
estate planning, contact your local Forsyths office.
Gunnedah
ph: 6743 0800
Narrabri
ph: 6743 0800
Tamworth
ph: 6763 0100
The Forsyths Team
This document has been prepared for general information only and is not intended as personal
advice. Any statements of law or proposals are based on Forsyths' interpretation as at the
date of issue. Accounting & business services are provided by Forsyths Business Services Pty
Ltd ABN 91 103 898 997, liability is limited under a scheme approved under Professional
Standards Legislation. Financial advice provided by Forsyths Financial Services Pty Ltd, ABN
89 103 898 988 AFSL no. 259938 does not take into account your individual financial
objectives, financial situation or needs. You should consider these before making a financial
decision. We recommend you consult a licensed financial adviser who will assist you. You
should also obtain a copy of and consider the product disclosure statement for any financial
product mentioned before making any decision to acquire that product.