Dealing with the loss of a loved one is never easy. On top of the emotional toll, there are also important tax and administrative responsibilities that must be addressed—particularly if you’ve been appointed to handle the deceased’s estate. As a legal personal representative (LPR), you are responsible for finalising their tax obligations with the Australian Taxation Office (ATO).
Below is a guide to help you understand the key steps involved.
Your first step is to formally notify the ATO of the individual’s passing. To do this, you will need to:
- Establish your identity as the deceased’s representative;
- Provide documentation such as the death certificate, grant of probate, or letters of administration.
To be fully authorised to manage a deceased person’s tax affairs, you must be recognised as their Legal Personal Representative (LPR). This is typically the executor named in their will, or, if there is no will, a court-appointed administrator—usually the next of kin.
To gain recognition as an LPR, you must apply to the Supreme Court in your state or territory for a grant of probate (if there is a valid will), or for letters of administration (if there is no will). This process legally confirms your authority to manage the estate.
If the deceased was running a business at the time of their death, additional considerations apply. You may need to:
- Review existing business structures;
- Determine if any tax obligations remain (e.g. BAS, PAYG, GST);
- Engage a tax professional or legal adviser experienced in deceased estates and business succession.
You may be required to lodge:
- The final (date of death) tax return for the individual; and
- Any outstanding prior year returns.
The ATO can assist in granting you access to the deceased’s tax history once you’ve been formally recognised as the LPR. This helps you determine whether any tax is owed or refundable.
Once a person has passed away, their estate becomes a trust for tax purposes. If the estate generates income—such as rent from property, dividends from shares, or interest on bank accounts—you’ll be required to:
- Apply for a Tax File Number (TFN) for the estate;
- Lodge an estate (trust) tax return annually until the estate is fully administered.
Any franking credits or tax refunds owed to the estate can also be claimed during this process.
Before the estate can be distributed, you must ensure:
- All tax liabilities are paid;
- Any credits or refunds are received;
- All tax registrations (including ABN, GST, and PAYG) are cancelled where applicable.
Once all tax obligations have been fulfilled and the estate is finalised, you can distribute the assets to the beneficiaries as outlined in the will or according to intestacy laws (if no will exists).
Finalising a deceased estate is a detailed and time-consuming process. It typically takes 6 to 12 months, but can extend longer depending on the complexity of the estate, outstanding tax matters, or legal disputes.
If you’re managing a deceased estate and require guidance on your tax responsibilities, speak with us as we can help you navigate this complex process with clarity and confidence, ensuring all obligations are met and the estate is administered efficiently.