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Mitchell is a Principal Lawyer of Sharrock Pitman Legal. He is an Accredited Specialist in Business Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:


CALL: (03) 8561 3318

Taxes and Deceased Estates

Nothing is certain in life except death and taxes! There are important issues for an executor to consider when dealing with deceased estates and their taxes.  Upon obtaining Probate or Letters of Administration, a deceased's Legal Personal Representative (i.e. Executor or Administrator) is responsible for finalising the affairs of the deceased and their estate. One crucial element is that of attending to any tax payable by the Deceased or by their Estate.

From a tax standpoint, a Legal Personal Representative is responsible for:

1. Notifying the Australian Tax Office ("ATO") of the passing of the Deceased

2. Preparing and lodging any outstanding tax returns the Deceased failed to submit and paying all outstanding tax obligations

3. Preparing and lodging a Date of Death Income Tax Return (if required)

4. If a tax return is required for the Estate, preparing and lodging Estate Income Tax Returns, and

5. If the Deceased was registered for an Australian Business Number ("ABN") or Goods and Services Tax ("GST"), preparing and lodging a final Business Activity Statement.

When is a Tax Return Required?

A deceased person and their estate have essentially the same requirements to lodge a tax return as any other taxpayer. The most effective way to assess whether a tax return is required is to ask yourself: 'If this were my own financial circumstances, would I need to lodge a tax return?'

When assessing whether a Date of Death Income Tax Return or an Estate Income Tax Return are required, consider the following three questions:

1. Did the Deceased or the Estate pay tax or have tax withheld?

2. Is the taxable income over the minimum income threshold?

3. Was the taxpayer conducting a business?

If you answer 'yes' to any of the above questions, then it is highly likely an income tax return will be required.

Date of Death Tax Return

Where the Deceased was lodging tax returns up until their passing, a Date of Death Income Tax Return will likely be required for the part of the financial year from July 1 to the date of death of the Deceased.

If you determine that there is no need to lodge a Date of Death Tax Return, then you should lodge a Non-Lodgement Advice with the ATO. A Non-Lodgement Advice notifies the ATO that no tax return will be lodged and ensures they do not mark the Deceased down as having outstanding tax returns.

Estate Income Tax Return

An Estate Income Tax Return aligns itself with the administration period of the Estate, that is, any income earned after the passing of the Deceased. However, it is likely an Estate Income Tax Return will not be required where:

1. The Deceased passed away less than 3 months before the end of the financial year

2. There is no beneficiary presently entitled to a share of the income of the Estate

3. The net income of the Estate is less than $18,200, and

4. There are no non-resident beneficiaries of the Estate.

If an Estate Income Tax Return is required, the Executor or Administrator will need to apply for a Tax File Number ("TFN") for the Estate (separate to that of the Deceased's personal TFN).

Final Business Activity Statement

If the Executor or Administrator continues to conduct a business, which was owned and operated by the Deceased, then you will need to apply for a new ABN and, if applicable, GST registration on behalf of the Estate.

Capital Gains Tax

In the majority of cases, a transfer of assets on death to a Legal Personal Representative or beneficiary will not attract Capital Gains Tax ("CGT").

Where assets purchased after September 1985 are transferred to a Legal Personal Representative or beneficiary, the capital gain or loss is deferred until the asset is subsequently on-sold to a third party. Under these circumstances, the asset being disposed of is deemed to have been acquired by the Legal Personal Representative or beneficiary at the cost base of the Deceased.

Assets purchased prior to September 1985 are also exempt from CGT. However, the cost base is then taken to be the market value of the asset as at the date the Deceased passed away.

If you require assistance identifying whether a Date of Death or Estate Income Tax Return are required, or simply need assistance with estate administration, please feel free to contact our Wills and Estates Team on 1300 205 506 or complete the form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by one of our lawyers

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For further information contact

Mitchell Zadow

Mitchell is the Managing Principal of our law practice.

He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.

More on

Probate & Estates

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be placed on the Supreme Court website for at least 14 days prior to any application.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself does not take long to process the application (maybe another 1 to 2 weeks) and this is done 'on the papers'. This means you do not have to go to a court hearing. There is also a general discretion for the Court to issue a 'Requisition' asking that you provide more information before they process the application and this can delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

  • Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
  • There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
  • There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.
  • You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
  • It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is a Principal Lawyer of Sharrock Pitman Legal. He is an Accredited Specialist in Business Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE: 
(03) 8561 3318

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For fifty years Sharrock Pitman Legal has made a significant and long term contribution to meeting the legal needs of business owners and residents in the City of Monash and greater Melbourne area.