Executors and Tax Returns

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When attending to the estate of a deceased person; executors and tax returns matters can be complex.  One of an executor’s many responsibilities in relation to the estate of a deceased person is to finalise the deceased’s taxation matters.  Whilst there is no longer an ‘inheritance tax’ in Australia, there are likely to be income tax and capital gains tax issues in most estates, which must be finalized by the executor prior to distributing the estate among beneficiaries.

The Australian Taxation Office has recently revised some of the information available of its website in order to make these matters simpler to understand for both executors and beneficiaries. Prior to obtaining professional accounting assistance to finalize the deceased’s taxation matters, the information available provides useful general information for executors to understand the factors that impact upon the taxation treatment of  various payments and other transactions which are likely to be dealt with in the course of the estate’s administration.

Superannuation will also need to be addressed by executors in the majority of deceased estates, and payouts may be subject to taxation. The revised information published on the ATO website also provides an explanation of the treatment of superannuation death benefits, and the various factors which affect the treatment of these payments for taxation purposes.

If the deceased was actively engaged in the workforce prior to their death, a ‘death benefit employment termination payment’ may be made to the estate by their employer. Components of these payments may be taxable, whilst others may be tax free – professional advice on the treatment of these payments for taxation purposes is essential. The calculation of taxation liability depends on whether or not the beneficiary was a dependent of the deceased, and the total amount of the payment. However, the information published by the ATO provides executors with a useful starting point for understanding both how these payments are calculated, and factors that are relevant to their taxation treatment.

For more information regarding Executors and Tax Returns

Please contact our Business Development Team or call us on (07) 3252 0011 to book an appointment with one of our specialist Estate Lawyers today.