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Step 32 - Prepare and Lodge Tax Returns

Last updated: June 2019

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Why is this important?

This step explains everything you need to know about the necessary tax return lodgements for the past financial years, the date of death and deceased estate tax return.

 

simplyEstate is here to help with the process. Contact us via email or book a first free phone appointment.

Approximate Effort & Cost

Reading: 20 mins
Completing: 1-10 hrs
Total: 1:20-10:20 hrs
Cost: $0

Effort and cost are general estimates only and are based on the assumption that you complete this step without specialist help.

Instructions

To find out how this Process Guide works, access the instructions here.

Glossary

To find out what the capitalised words mean, access the glossary here.

Forms

Notify the ATO of the death by completing the online form here. You will need to print the form, make an interview appointment with an Australia Post branch within 30 days of completing the form and bring all relevant documents as outlined in Step 32.2.

Other forms not listed here may be required based on your specific circumstances.

32.1 Overview

Now that you have collected all the estate assets and paid all outstanding debts, you can complete the necessary tax returns by going through these steps:

  • determine if any outstanding tax returns need to be completed from previous years;
  • determine if a date of death tax return applies;
  • determine if an estate tax return needs to be lodged.

Contents
32.2 Notify of the Death
32.3 Important Considerations when Completing the Tax Returns
32.4 Types of Tax Returns
   32.4.1 Outstanding Tax Returns
   32.4.2 Date of Death Tax Return
   32.4.3 Deceased Estate Tax Return (Trust Tax Return)
32.5 Actions and Decisions to Complete Step

32.2 Notify of the Death

If not already done so in Step 12 – Notify the Relevant Government Departments, Companies and Organisations, you will need to inform the Australian Taxation Office (ATO) of the death if the deceased person has ever submitted a tax return and has a Tax File Number (TFN).

 

You, as the Executor, Administrator or Next of Kin can notify the ATO by completing the online form using this link. You will need to print the form, make an interview appointment with an Australian Post branch (book here) within 30 days of completing the form and bring the following documents:

  • Certified copy of the Death Certificate;

and one of the following:

  • Certified copy of the Will; or
  • Certified copy of the Grant of Probate; or
  • Certified copy of the Letters of Administration.

If the deceased person did not leave a Will and you have established in Step 27 – Apply for Grant of Probate or Letters of Administration that you do not need Letters of Administration, you can provide the ATO with the following documents instead:

  • Certified copy of the Death Certificate; and
  • a letter explaining why no Letters of Administration are available and which Next of Kin (include the person’s address for correspondence) is to be nominated as the Authorised Contact to deal with the deceased estate tax affairs.

Once you have notified the ATO of the death, you will receive confirmation via post. When you are the Authorised Contact you can act on behalf of the deceased person with the ATO about the deceased person’s tax dealings.

 

If you need further information, you can contact the ATO by calling 13 28 61.

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32.3 Important Considerations when Completing the Tax Returns

  • Tax returns in relation to the deceased person and estate are due for lodgement no later than the 31 October of that financial year for the financial year ending on 30 June as per the usual individual tax return lodgement deadlines. If you likely will not manage to complete and submit the tax return(s), you should contact the ATO at 13 28 61 to seek deferral or extension explaining your situation.
  • Tax returns completed on behalf of a deceased person must be completed using the ATO paper forms and cannot be submitted online;
  • The words ‘DECEASED ESTATE’ must be written on the top of the page;
  • You as the Executor, Administrator or Next of Kin must sign the tax return on behalf of the deceased person;
  • You must state the Tax File Number (TFN) of the deceased person; and
  • You may have applied for a TFN for the deceased estate where applicable.

32.4 Types of Tax Returns

There are three types of tax returns as follows that may apply to your situation:

  1. Individual tax returns that are outstanding from previous financial years;
  2. Date of death tax return; and
  3. Deceased estate tax return.

Depending on your circumstances you may only need to complete one or a combination of these as explained in more detail below.

32.4.1 Outstanding Tax Returns

It is a good starting point to verify if the deceased person has in the past lodged individual tax returns and was supposed to submit tax returns for the years before their death.
You should be able to determine this by checking if in the years leading up to the death the deceased:

  • earned a salary from an employer or was self-employed;
  • earned interest on bank accounts;
  • earned investment returns such as dividends on shares;
  • earned money from a trust where the deceased person was a trust beneficiary;
  • earned money from capital gains after selling an appreciating asset;
  • earned money due to involvement in a business or being a member of a board; or
  • any other form of income as defined by the ATO.

Remember that an individual tax return would only be required once those combined earnings in a financial year exceed the tax-free threshold of $18,200 (as at 2018/19).

 

If you think the deceased person did earn income from any of the above, you should check their personal records and look for a Notice of Assessment for previous financial years. This is a summary document the ATO issues after the tax return was assessed. It determines if the individual needs to pay or will receive a tax debit or credit. The notice also shows the deceased person’s TFN, which is every Australian’s identification number with the ATO.

 

If you are unable to find these documents, you can check with the ATO on 13 28 61 to find out if and when the last tax return was lodged. Make sure to have the deceased person’s TFN handy.

 

If you have established that previous tax returns were not completed and are due, you can print the relevant individual tax return forms for the specific year online here, or you can order these to be sent to you by post by contacting the ATO on 1300 720 092.
If you need specialist assistance, you can reach out to one of simplyEstate’s Specialist Partners as listed in the yellow section to the right or below.

32.4.2 Date of Death Tax Return

Once you have made sure that all individual tax returns for previous financial years were completed and all taxes were paid as outlined in the Step above, you will need to complete a so called ‘Date of death tax return’.

 

This is the final tax return on behalf of the deceased person for the financial year in which the person passed away.
You should determine if a date of death tax return is needed, by adding up all the various types of income that were paid to the deceased person to determine if the total value is greater than the tax-free threshold of $18,200 (as at 2018/19).

 

You will use the same individual tax return paper form and write ‘DECEASED ESTATE’ on the top of the first page.

 

The tax return documents can be accessed online and printed:

32.4.3 Deceased Estate Tax Return (Trust Tax Return)

While you as the Executor, Administrator or Next of Kin administer the deceased estate, you act as the trustee of the estate, which is considered a trust. This is not the same as a testamentary trust explained earlier in Step 29 – Open Testamentary Trust Account.

 

While the deceased estate is being administered and has made capital gains from the sale of assets or earning income through one or more of the following, a trust tax return will need to be submitted for all financial years until the estate is completely finalised and distributed.

 

Types of income may include:

  • interest on ‘Estate of Late’ bank accounts;
  • investment returns such as dividends on shares;
  • income from an investment property or letting the deceased person’s home;
  • income from a trust as a Beneficiary;
  • income from capital gains after the sale of an appreciating asset;
  • income from franked dividends;
  • money from a business; or
  • any other form of income as defined by the ATO.

You will need to complete and submit a trust tax return if the total income of the estate was above the tax-free threshold of $18,200 (as at 2018/19).

 

You may need to declare taxes in the trust tax return or withhold taxes for Beneficiaries that are under 18 years of age or not an Australian resident.
Where the Beneficiary is 18 years or older and an Australian resident for tax purposes, the Beneficiary needs to include any income from the deceased estate, other than inheritance, in their individual income tax return. Superannuation and life insurance benefit payments may include taxable components depending on who receives the payment as discussed in Steps 24 and 25.

 

For more detail about trust tax returns, read the ATO website here.

 

Where your situation is more complicated, or you are unsure if you need to submit a trust tax return, contact one of simplyEstate’s Specialist Partners listed in the yellow section to the right or below.

32.5 Actions and Decisions to Complete Step

If you would like a little help from us at simplyEstate with this Step, you can email us or book your free first phone appointment. If you would like specialist help, get in touch with one of our Specialist Partners listed in the yellow section to the right or below and see how they can help.

 

If you have decided to tackle this Step yourself after reading and understanding this Step, you may want to:

  1. Determine if the deceased person has worked previously and would likely have submitted tax returns in previous years;
  2. Determine if any outstanding tax returns need to be completed from previous years;
  3. Complete the outstanding individual tax returns on behalf of the deceased person;
  4. Determine if a date of death tax return applies;
  5. Complete the date of death tax return;
  6. Determine if an estate tax return needs to be lodged if assets within the estate accounts are generating income greater than the tax-free threshold;
  7. Establish if any Beneficiaries are under the age of 18 and withhold taxes; and
  8. Complete an estate tax return for every financial year from when the estate was set-up and established holding assets that generate income in excess of the tax-free threshold.

Once you have completed all the necessary actions and decisions, you can move on to the next Step by clicking below or save progress at the top.

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