When someone passes away, their tax obligations may not immediately cease. Importantly, a legal personal representative may need to lodge a date of death (final) tax return on behalf of the deceased person. You may also need to lodge any outstanding tax returns. In this article, we delve into the realm of deceased estates; enquiring into how to lodge tax returns for the deceased.
How to lodge tax returns for the deceased
The first step is to notify the Australian Taxation Office (“ATO”) of the death. Then, it may be deemed that you need to lodge tax returns, or advise the ATO that a tax return is not necessary.
You can only lodge tax returns for a deceased person using a paper tax return, unless you are a registered tax practitioner, such as one of our tax accountants at Quinns.
When preparing the tax return you will need to:
- print the words ‘DECEASED ESTATE’ on the top of page one of the tax return
- sign the tax return on behalf of the deceased person as their executor or administrator.
The ATO will assess a deceased person’s individual tax returns the same as when they were alive. This means the:
- general individual tax rates apply
- full tax-free threshold applies if they are an Australian resident
- Medicare levy and Medicare levy surcharge may also be payable.
When to lodge a date of death tax return
You need to lodge a date of death tax return on behalf of the deceased person if they:
- had tax withheld from their income
- had taxable income that exceeds the tax-free threshold
- had tax withheld from interest or dividends because no TFN was quoted to the investment body, or
- lodged tax returns in prior years (that is, for income years before the income year they died)
You will also need to lodge any outstanding tax returns for income years prior to the year they died.
If the deceased did not have any of the above income, you may need to advise the ATO that a tax return is not necessary.
If you would like help with respect to deceased estates, contact our expert team of accountants and lawyers by calling us on 1300 QUINNS or alternatively, +61 2 9223 9166 to arrange a teleconference or appointment.