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  • Doing a date of death tax return

    The date of death tax return is the final personal Tax return for individuals of the deceased person with their personal TFN. It covers the period from the previous 1 July to the date of death. For example, if a person died on 6 March 2015, their date of death tax return covers the period 1 July 2014 – 6 March 2015.

    As an executor, you'll need to lodge a date of death tax return on behalf of the deceased person if they:

    • had tax withheld from the income they earned
    • earned taxable income exceeding the tax-free threshold
    • had tax withheld from interest or dividends because no TFN was quoted to the investment body
    • lodged tax returns in prior years (that is, for income years before the income year in which they died).

    If a date of death tax return is not required, complete and send us the Non-lodgment advice. On the form, where it asks for the reason, print ‘DECEASED’ followed by the date of death.

    If a date of death tax return is required, prepare and lodge a paper Tax return for individuals. You may also need the Tax return for individuals (supplementary section).

    On this page:

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    How to complete the date of death tax return

    When preparing the date of death tax return for the deceased person, as their executor you need to:

    • print the words ‘DECEASED ESTATE’ on the top of page one of the Tax return for individuals
    • show the name of the taxpayer as 'THE LEGAL REPRESENTATIVE OF JOHN CITIZEN DECEASED', or similar
    • print ‘X’ in the ‘NO’ box at the question ‘Will you need to lodge an Australian tax return in the future?’
    • sign the tax return on behalf of the deceased person.

    The general individual tax rates, with the full tax-free threshold, apply to the deceased person's date of death tax return, if they are an Australian resident. The Medicare levy and Medicare levy surcharge may also be payable.

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    Income and deductions

    You can include tax agent fees and similar expenses incurred by the taxpayer’s executor, as well as all:

    • assessable income earned or derived by the deceased person
    • tax-deductible expenses incurred up to the date of death.

    In the deceased estate's trust return, include:

    • income earned
    • any deductible expenses incurred after the date of death.

    Do not include these in the date of death return.

    For capital gains or losses that happened before the person's death, you need to include those that the taxpayer would have had to declare when they lodged their Tax return for individuals if they were alive.

    Also, a capital gain may arise for certain assets that are owned by the deceased at death. You include capital gain or loss if the asset passes under the will to a non-resident or a tax-advantaged entity. This means it is a tax-exempt entity (for example, a church or charity) or the trustee of either a:

    • complying superannuation fund
    • complying approved deposit fund
    • pooled superannuation trust.

    Tax-exempt entity

    Don't include any capital gain or capital loss from a gift of property under the will if the gift is made to a deductible gift recipient where it would have been income tax deductible if it had not been a testamentary gift. The value of a testamentary gift of property:

    • can be any amount for gifts made on or after 1 July 2005
    • must be valued at greater than $5,000 for gifts made from 20 September 1985 to 1 July 2005.

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    Non-resident beneficiary

    If a deceased's post-capital gains tax (CGT) asset passes under the will to a non-resident, any capital gain or capital loss is taken into account in preparing the deceased person’s date of death return if both of the following apply:

    • The deceased person was an Australian resident when they died.
    • The asset is not ‘taxable Australian property’ in the hands of the beneficiary.

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    Medical expenses

    When you calculate the deceased person's net eligible expenses, if any, for the medical expenses tax offset, you can include amounts they incurred that you paid as the person's executor.

    You cannot claim any tax deduction for funeral expenses. You cannot include funeral expenses when working out any medical expenses tax offset.

    Losses

    If the deceased person has accumulated losses at the date of death, they can be offset against income in the date of death tax return (capital losses may be offset against capital gains). However, they can't be carried forward into the deceased estate.

    Ordinary losses, as well as capital losses, that can't be offset in the date of death tax return for the deceased person will lapse.

    Medicare levy

    Question M1: If the deceased person (and any dependants) was fully exempt from the Medicare levy until their death, the number of days that 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 that they are half exempt from the Medicare levy (label W) is the number of days in the income year.

    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 don't have to pay the Medicare levy surcharge (label A) is the number of days in the income year.

    Study and training support loan repayments

    You don't include any information about Higher Education Loan Program (HELP), Student Start-up Loan (SSL), ABSTUDY Student Start-up Loan (ABSTUDY SSL), Trade Support Loans (TSL) or Student Financial Supplement Scheme (SFSS) in the Individual tax return as these are assessed automatically.

    If the deceased person had an accumulated HELP, SSL, ABSTUDY SSL, TSL or SFSS debt at the time of their death, and their income exceeded the minimum repayment threshold, the assessment issued for the date of death tax return will include a final compulsory repayment. After this, any remaining HELP, SSL, ABSTUDY SSL, TSL or SFSS debt is cancelled.

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    Notice of assessment

    As the executor, we will send you the notice of assessment and any refund owed. However you may also need to:

    • pay any tax liabilities
    • withhold amounts from the assets or income of the deceased estate to pay any tax liabilities.

    Next step:

    Last modified: 17 Apr 2019QC 49906