Administering a deceased estate is a significant responsibility. As an executor or administrator, you’re tasked with ensuring that the estate is properly managed, including its legal and financial affairs. One of the most crucial aspects of this process is meeting tax obligations. While it might feel overwhelming, being informed and supported by the right professionals can make a world of difference. 

Your Role as Executor or Administrator 

When someone passes away, their tax responsibilities don’t end with them. It becomes the role of the executor or administrator to ensure all outstanding tax matters are resolved, both those owed by the deceased and any new obligations that arise during the administration of the estate. 

Common Tax Obligations in Estate Administration 

Here are some key areas you may need to be across: 

1. Final Individual Tax Return (Date of Death Return) 
   Also known as the “date of death return,” this covers the period from 1 July to the date of death. Depending on the deceased’s income, you may be required to lodge this final return. If the deceased did not earn income or was not previously required to lodge tax returns, you might instead need to submit a “non-lodgement advice.” 
2. Estate’s Tax File Number (TFN) 
   If the estate continues to earn income after death, such as rent, interest, or dividends, you may need to apply for a separate TFN for the estate. For tax purposes, the estate becomes a “trust” and may need to lodge annual tax returns until administration is complete.
3. Trust Tax Returns 
   Should the estate receive income during the administration period, annual trust tax returns are required. These returns report income such as bank interest, rent, and investment earnings. Executors may also need to manage tax on distributions made to beneficiaries. 
4. Capital Gains Tax (CGT) 
   CGT may apply if estate assets, like shares or real estate, are sold. However, exemptions or rollover relief may apply depending on timing and circumstances. It’s essential to consider CGT implications early to ensure correct handling. 
5. Superannuation Death Benefits 
   The tax treatment of superannuation death benefits can vary. Factors include whether the payment goes directly to a beneficiary or via the estate, and whether the recipient is considered a “dependent” under tax law. This is a complex area and requires professional guidance. 

Important Cautions 

Executors and administrators should be aware that: 

• They may be personally liable for unpaid tax debts if they distribute estate funds before ensuring all obligations are met. 

• Accurate recordkeeping is essential, log all income, expenses, and distributions made from the estate. 

• Early advice is key. Delays in addressing tax obligations can result in penalties or interest. 

We’re Here to Support You, But Not with Tax Advice 

While Nurture Law specialises in estate planning and administration, we do not provide tax or financial advice. That said, we work closely with accountants and other professionals and are happy to help coordinate these matters on your behalf. If you need a referral to an accountant who understands deceased estates, just let us know. 

Need Support Administering an Estate? 

At Nurture Law, we offer practical guidance and compassionate support through every step of estate administration. While we’ll leave the tax advice to the accountants, we’ll be right beside you to help manage the process. 

Reach out today to learn how we can support you and your loved ones.