There a few steps you need to take when your loved one has passed, or coincidently if you are an executor of an estate you will need to follow the same steps.
Until the date of death, usually you will file an individual tax return, and you as an executor will sign this tax return, for example if your loved one’s date of death is the 01/04/2019, your deceased 2019 Individual tax return will be lodged for the 2019 year, hence all the income and deduction will start from 01 July 2018 till 01/04/2019.
What happens after this initial date of death?
When you have an individual pass within the financial year and has income from assets, until the will and the trust has been administered, all assets and income are then provided to the beneficiaries, so those individuals that inherit the assets.
Before or until such time, the trust may have earned income, and this income is then taxed with lodging a trust tax return for the estate. The income can be distributed to all the beneficiaries.
The executor’s role
Regardless if the other beneficiaries receive the assets and or income, you as the executor of the testamentary trust need to work out if you need to lodge a trust tax return for the deceased, initially once all the assets are divided between the parties, the deceased estate could have earned income from its assets, then if this is the case you will need to lodge this income tax return until such date that all assets and income derived are in the beneficiaries names, once this is completed the beneficiaries will lodge their own personal individual tax return declaring their income from the inheritance. Please be aware that the date of the transfer of these assets to the beneficiaries trigger what we call the capital gains tax assets date of purchase.
When do you not need to lodge a trust tax return for deceased estate?
If you winded up your deceased estate and none of the beneficiaries are entitled to any more money, income or assets, or if the taxable income of the estate is under the tax free threshold of $18,200 for the 2019 Income tax year then these two events means you do not need to lodge a tax return, at Australia wide tax solutions we recommend that you lodge the trust tax return even if it’s under $18,200 as we can create the tax return to say that it is a final tax return so that way the Australian tax Office does not keep on sending you letters to lodge.
See us for an appointment so we can quote you on what it will cost for you to wind up the testamentary trust for a deceased estate