Doing a final tax return for the deceased person

Do you need to lodge a final return for a deceased person

You may need to lodge a final tax return for the deceased person for the income year in which they died. This is called a 'date of death' tax return.

This is different to the trust tax return for the deceased's estate. For tax purposes, income received by the deceased estate after the person's death is treated separately to the income of the deceased person.

Who can lodge a date of death tax return

You can lodge the date of death tax return after you have notified us of the person's death and been entered on our records as the person who is managing the deceased's tax affairs.

Usually, the authorised legal personal representative (LPR) lodges the deceased person's date of death tax return.

If you are not an authorised LPR, we will assess the lodged tax return and determine the appropriate action within the law and our internal policies.

If the deceased did not have a will (died intestate) and no one has been appointed to administer the estate within 6 months of the date of death, we may:

• raise an assessment of the estate's tax-related liabilities
• seek to recover any amount of tax owing.

When a tax return is required

You must lodge a date of death tax return if any of the following applied to the deceased person in the income year in which they died:

• they had tax withheld from their income, including from interest or dividends
• their taxable income was above the tax-free threshold
• they lodged tax returns in the income years before their death, or had outstanding tax returns.

Outstanding tax returns

When you notify us of the death, we can tell you if the person had any outstanding tax returns for prior income years.

If there are outstanding tax returns, you will also need to lodge these.

If you fail to lodge a return or provide relevant information, we can assess the amount that is payable or refundable.

If a tax return is not required

If a date of death tax return is not required, let us know by completing and sending a non-lodgment advice form.

On the form, where it asks for the reason, print ‘DECEASED’, followed by the date of death.

Period of the tax return

The date of death tax return covers the period from 1 July of the income year in which the person died, up to the date of death.

This is different to a trust tax return for the deceased estate, which is for the period after the person died.

Lodging the tax return

You lodge a date of death tax return using the paper form tax return for individuals. You cannot use myTax or myGov, because these can only be used by the person who holds the account to lodge their own return. This includes where you are claiming a refund of franking credits.

If you are the authorised LPR of the deceased estate and have appointed a tax agent to help you, the agent can prepare and lodge the return online.

Preparing the tax return

• Obtaining the deceased's tax information
• Identifying information
• Income and deductions
• Capital gains tax
• Losses
• Medicare levy
• Study and training loan repayments

Obtaining the deceased's tax information

If you can't find the information you need in the deceased person's papers:

• if you are the authorised LPR of the deceased estate, you can obtain the deceased person's tax information from us
• if you are not the authorised LPR of the deceased estate, the deceased person's former tax agent may be able to help with information and advice. Otherwise, we may still be able to assist you.

Identifying information

When preparing the return:

• write ‘DECEASED ESTATE’ at the top of the first page
• give the name as 'LEGAL REPRESENTATIVE OF [taxpayer's name] (DECEASED)', or similar
• to the question ‘Will you need to lodge an Australian tax return in the future?', print X in the ‘No’ box
• sign the tax return with your name 'on behalf of [deceased person's name]'.

The deceased person's tax file number (TFN) may be in their personal papers. If you are the authorised LPR, you can obtain the TFN from us.

Income and deductions

Include:

• income earned and deductible expenses incurred by the deceased person in the income year up to the day they died
• costs of preparing the return, such as tax agent fees and similar expenses incurred by the executor or administrator, even if they were incurred after the deceased's death.

Income and deductions incurred by the estate after the deceased's death are reported in a trust tax return.

Capital gains tax

For CGT events that happened before the deceased's death, include those capital gains and losses in their date of death tax return.

If an asset passes under the will to a foreign resident, charity or super fund, capital gains tax (CGT) may apply at the time of the taxpayer's death. Any capital gain or capital loss that applies in these circumstances must be reported on the deceased's date of death tax return.

Losses

Tax and capital losses incurred by the deceased cannot be carried forward for use by the deceased estate.

If these losses cannot be deducted or applied in the date of death tax return, they will lapse.

Medicare levy

The tax return has 2 questions about the Medicare levy.

For question M1:

• If the deceased person (and any dependants) was fully exempt from the Medicare levy until their death, the number of days they are exempt from the Medicare levy (label V) is the number of days in the income year.
• If the deceased person was half exempt from the Medicare levy until their death, the number of days they are half exempt from the Medicare levy (label W) is the number of days in the income year.

For question M2:

• If the deceased person (and any dependants) was covered by private hospital cover or was exempt from the Medicare levy until their death, the number of days that they do not pay the Medicare levy surcharge (label A) is the number of days in the income year.

Study and training loan repayments

You do not need to include information about repayments of study and training loans (such as the Higher Education Loan Program). This is assessed automatically.

If the income reported in the tax return is more than the minimum repayment threshold, the assessment will include a final repayment. After this, any remaining debt is cancelled.

Notice of assessment, refunds and tax owing

We will send the notice of assessment to you, including details of any refund or tax owing.

You must provide for any tax owing before distributing the estate's assets to the beneficiaries. If this is not done, you may be personally liable for any tax owing.

If you are the authorised LPR, we will release any refund or franking credits to you.

If there is no authorised LPR, we will assess whether we can release refunds or franking credits. We may take into account:

• the terms of the will, if there is one
• the rules of succession, if there is no will.