probate

Assets can include shareholdings, unpaid present entitlements from trusts, real property (including rental income) and personal property (such as collections – cars / coins / art).  Subject to the wishes of the Deceased, some of these assets may need to be sold, transferred to beneficiaries, or held on trust.  Until assets are transferred to beneficiaries, they may continue to produce an income for the estate.

Any tax return lodged for an estate is called a ‘trust tax return’.  Until the assets of an estate are distributed to beneficiaries and the administration of an estate is completed, the executor of an estate may be required to lodge a trust tax return for each year that the assets remain in the estate.

An executor should also obtain a tax file number for the estate and open a separate bank account, if the estate assets are likely going to take time to sell, but are still producing an income for the deceased.  The Australian Tax Office (ATO) states that, for the first three income years of a deceased estate, an executor must file a trust tax return if:

i)             if the deceased’s net income is more than the tax-free threshold for individuals (i.e – above $18,200.00);

ii)            if a beneficiary is presently entitled to any of the estate’s income at the end of an income year;

iii)           if the beneficiary is not an Australian Tax Resident.

You should also consider whether you may be required to lodge a tax return if you are intending to claim franking credits on any dividends paid to the estate.

If you’re an executor / administrator of an estate, contact us to discuss your estate tax obligations.