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  • If you are a beneficiary of a deceased estate

    A beneficiary is a person who receives all or part of the distribution from deceased estate. There may be some tax obligations for any distribution you receive.

    On this page:

    Receiving super benefits

    If the deceased person had super, the super fund's trustee will work out who to pay any benefit to (either as a lump sum or an income stream). Super paid after a person's death is called a 'super death benefit'.

    The tax on a super death benefit depends on:

    • whether you were a dependant of the deceased under taxation law
    • whether it is paid as a lump sum or income stream
    • whether the super is tax-free or taxable and whether the super fund has already paid tax on the taxable component
    • your age and the age of the deceased person when they died (for income streams).

    Find out about:

    Receiving assets

    Capital gains tax (CGT) applies to the disposal of an asset, so if you receive an asset you are not affected by CGT.

    If you later sell that asset, CGT may apply.

    Find out about:

    Earning income

    If you as a beneficiary are presently entitled to income of the deceased estate, the income is assessable in the income year your present entitlement arose, not in the income year you receive the amount.

    For example, if you were presently entitled to the deceased estate income on 30 June 2020 but did not receive it until September 2020, you are personally assessable on that amount in the year ended 30 June 2020. You would report this amount on your 2019–20 tax return, not in the income year ended 30 June 2021.

    See also:

    • When a beneficiary is presently entitled – information for executors.

    Completing your tax return as a beneficiary

    As a beneficiary, you need the following information to complete your individual income tax return:

    • Your share of trust income to which you are presently entitled.
    • The amount of your entitlement that was paid to someone else for your benefit.
    • The assessable income amount.
    • Your share of franking credits associated with any dividends in the trust distribution (the amount of tax paid by the company paying the dividend).

    If you are an Australian resident beneficiary, you are entitled to franking credits when you include the income distribution in your tax return.

    See also:

    Beneficiaries presently entitled but under a legal disability

    If you are a beneficiary presently entitled but under a legal disability you also need to know the amount of tax the trust paid on your behalf. If you need to lodge your own tax return you are entitled to receive a tax credit for this so that the same amount isn't taxed twice.

    Non-resident beneficiaries

    If you are a non-resident beneficiary, you will also need to know the amount of:

    • interest in your distribution and the withholding tax paid
    • unfranked dividends in your distribution and the withholding tax paid
    • franked dividends in your distribution
    • tax the trust paid on your behalf.
    Last modified: 29 Apr 2021QC 40485