Initially, you need to establish if the deceased person had a Will, to determine who the executor is, that is who can manage the Estate.
Next, has a grant of probate been obtained by the executor? If no, you will need to provide further information to the ATO if you wish to establish authority to deal with the tax affairs of the deceased person. If probate has been granted, then the executor has authority to notify the ATO of the person’s death and deal with their tax affairs.
Notifying the ATO of the person’s death can be in paper by completing a “Notification of a deceased person” form with a certified copy of the Death Certificate and Will and submitting it by mail. By doing this, you will have officially notified the ATO of the person’s death and made the ATO aware of the relevant parties acting on behalf of the deceased Estate i.e. the executor.
If you do notify the ATO online, you will need to attend an Australia Post office to provide a certified copy of the Death Certificate and supporting documents.
Alternatively, if you, as the executor have appointed a solicitor to act on your behalf for the Estate, the solicitor can provide the ATO with this information. However, you may be contacted by the ATO to confirm these details.
Do you need to lodge a final individual tax return? This is called a “date of death tax return”. As to whether you need to lodge this form will depend if the deceased:-
• had tax withheld from income they earned
• earned taxable income exceeding the tax-free threshold
• had tax withheld from interest or dividends because no TFN was quoted to the investment body
• lodged tax returns in prior years prior to their death
• should have lodged tax returns in prior years.
If a tax return is not required to be lodged, you need to complete a “non-lodgment advice” for the tax year and send it to the ATO.
Do you need to lodge a tax return for the deceased Estate? This will depend upon the assets of the estate and if any income is received or derived by the deceased Estate. If the Estate is not finalised within the income year and there is income derived from the Estate, then a deceased Estate tax return will need to be lodged every financial year until the deceased estate is fully administered or disbursed. If a deceased Estate return is required, a tax file number will need to be obtained for deceased Estate.
The above information is a general guide only. For enquiries regarding tax, we recommend you contact the deceased’s accountant or the executor’s own accountant to obtain detailed tax advice to finalise the tax affairs of the deceased.
At Everingham Solomons we have the experience and expertise to assist you with any deceased Estate issue, because Helping You is Our Business.
Click here for more information on Suzanne Hindmarsh.