Executors: what are your tax responsibilities?

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By Melanie Costin

What is an estate?

The deceased estate includes the property and assets belonging to the deceased person, with some exceptions (e.g. assets owned as joint tenants).  The executor holds the deceased estate in trust and is the trustee.

The executor (appointed by the deceased’s will) can also be known as the administrator (court appointed) or the legal personal representative.

Executors, what are your tax responsibilities?

The deceased and the estate are treated as separate taxpayers.  As a result, as executor you may need to apply for a separate Tax File Number (TFN) to that of the deceased.

As executor you are responsible for finalising the tax affairs of the deceased including:

  • notifying the Australian Taxation Office (ATO) of the death of the taxpayer;
  • lodgement of any outstanding income tax returns of the deceased;
  • lodgement of a date of death return (1 July to date of death);
  • lodgement of any other outstanding tax documents such as Business Activity (BAS) or Instalment Activity Statements (IAS);
  • cancellation of the deceased’s Goods and Services Tax (GST) registration and Australian Business Number (ABN) if applicable; and
  • discharging any associated tax liabilities.

In relation to the estate, you are also responsible for the following:

  • lodgement of any trust income tax returns for the deceased estate;
  • discharging any associated tax liabilities; and
  • in some instances providing beneficiaries with the information they need to include distributions in their own returns and in certain cases paying tax on their behalf.

Why is it important for you to address any tax issues?

As executor you may become personally liable for any outstanding tax debts or unidentified tax obligations if you have distributed all the assets of the estate to the beneficiaries prior to addressing any tax obligations.

Want to know more?

If you would like to know more about the issues raised in this article, please contact Melanie Costin our Business Advisory Senior Manager for assistance.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

 

 

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