• If you are a beneficiary of a deceased estate

    There may be some tax obligations for beneficiaries, depending on the nature of any distribution they may receive:

    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 year your present entitlement arose, not in the year the amount is received. For example, if you were presently entitled to the deceased estate income on 30 June 2016 but did not receive it until September 2016, you are personally assessable on that amount in the year ended 30 June 2016, not in the year ended 30 June 2017.

    See also:

    Completing your tax return

    As a beneficiary, you need the following information:

    • 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
      • This means that the company paying the dividends has paid income tax for the amount.
      • If you are an Australian resident beneficiary, you are entitled to the associated franking credit when the income distribution is included in your Tax return for individuals.
       

    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 Jun 2017QC 40485