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24
May
  • Posted By : Administrative
  • Category: General Tax Topic
  • Comments: 0

HOW CAN YOU DO TRUST TAX RETURNS FOR A DECEASED ESTATE?

Under Australian law there are no death duties, however, income and some capital transactions may be taxed as a result of a person’s demise. Tax consequences may differ from the perspective of the:

  • Deceased person; 
  • Executor, or; 
  • Beneficiary of the departed’s property.

There are a number of phases of supervision of a deceased estate. These include the following: 

  • Burial of deceased person; 
  • Executor appointed by Will or administrator appointed by the Court; 
  • Apply for probate and granted by the Court;
  • Assets vest in executor who administers an estate;
  • Date of death and trust tax return lodged;
  • Initial stage: net income of the estate is applied to reduce debts (including tax liabilities),
    and so on;
  • Intermediate stage: part of the net income of an estate that is not required to pay debts, etc., may be paid to beneficiaries;
  • Last stage: debts, etc., are paid or provided for in full and net income and assets of the estate are distributed to beneficiaries.

An executor of a deceased estate has certain taxation responsibilities both on behalf of the deceased person and the deceased estate. Some of the responsibilities include:

  • Notifying the Australian Tax Office (ATO) of the person’s death, to discontinue any sort of notification which may cause suffering to the spouse or other relatives;
  • Lodging previous tax returns on behalf of the deceased person, if needed;
  • Lodging 'date of death' (final) personal tax return on behalf of the departed individual;
  • Applying for a trust tax file number for the deceased wealth if trust tax returns need to be filed henceforth;
  • Preparing and lodging trust tax returns for the departed’ s wealth, if required;
  • Making distributions of income and capital of the wealth to beneficiaries; 
  • Paying tax on behalf of the beneficiaries.

Any tax liability that may arise as the executor of an estate is independent of the executor’s
personal tax liability.


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