Deceased Estate Administration & Taxation
- websites8439
- Jan 14
- 5 min read
Managing a deceased estate is a significant responsibility, particularly for executors who are also business owners or professionals with limited time. A deceased estate involves finalising a person’s tax and financial obligations after death and ensuring assets are distributed correctly to beneficiaries. While Australia does not impose inheritance tax, there are still important tax and reporting obligations that must be met under ATO rules for deceased estates.
If you are unsure where to start, the Australian Taxation Office provides a clear overview of executor responsibilities which you can review here.
This guide provides a practical step by step overview of deceased estate administration for executors and business owners in Sydney and across Australia. It explains how to notify the ATO, lodge final tax returns, manage capital gains tax, and distribute assets correctly, while highlighting when professional support is essential.
Step 1 Confirm Your Authority And Secure Access To Records
Before you do anything with the ATO, banks, or share registries, confirm who is legally authorised to act. In most cases, that is the executor named in the will. If there is no will, an administrator may be appointed. For ATO purposes, a grant of probate or letters of administration is often what establishes you as the authorised legal personal representative.
Focus on building an “estate file” early. It should include the death certificate, will, probate documents if required, a list of assets and liabilities at date of death, and all income records. If the deceased ran a business, secure BAS, payroll summaries, bank statements, and access to the accounting system so lodgements do not fall behind during administration.
Step 2 Notify The ATO And Get Recorded As The Authorised Contact
This step is where many estates lose time. The ATO generally requires you to notify them of the death and be recorded as the person managing the tax affairs before you can lodge the date of death return or fully manage the tax matters.
The ATO’s current process is designed around their online notification pathway. If you are ready to start, use the official form and follow the identity verification prompts. Start The ATO Notification Of A Deceased Person Online Form here.
If you expect to apply for probate or letters of administration, the ATO checklist explains when you may need the court documents to be treated as the authorised legal personal representative, which can affect what the ATO can provide and how the estate progresses.
Use The ATO Deceased Estates Hub As Your Executor Checklist here.
Step 3 Work Out Which Tax Returns Are Required
Most estates involve two separate tax lodgement obligations.
First is the final individual tax return, often called the date of death tax return. This covers 1 July to the date of death.
Second is the deceased estate trust tax return, which may be required if the estate earns income after death, such as rent, dividends, interest, or business income while the estate is being administered. The ATO notes the estate is treated separately for tax purposes and trust returns may be required each year until the estate is finalised.
Step 4 Lodge The Date Of Death Return And Clear Any Backlog
The date of death return includes all assessable income earned up to the date of death and the deductions that relate to that period. The ATO also notes that outstanding prior year returns may still need to be lodged, and that income earned after death is treated separately as estate income.
If the deceased owned a business, you may also need to review whether any business tax obligations remain outstanding. Even when a business stops trading, the record keeping and lodgement requirements often continue until the estate is finalised.
Practical tip for executors: create a timeline that separates “to date of death” and “after death” income, and file supporting documents into those two buckets. It will save time when preparing both returns.
Step 5 Set Up The Estate Correctly For Trust Tax And Beneficiaries
If the estate earns post death income, you will usually need to set up the estate for tax lodgement, including obtaining a TFN for the deceased estate. An ABN is typically only required if the estate continues to operate a business.
The ATO also explains the concessional tax rate approach for deceased estates in the first three income years in many cases, and why correct trust reporting matters for beneficiaries.
Review The ATO Tax Rates That Apply To Deceased Estates here.
Step 6 Manage Capital Gains Before You Sell Property Shares Or Business Assets
This is where professional advice often pays for itself.
The ATO guidance on inherited assets is clear: in many cases, death itself does not trigger CGT when assets pass to the legal personal representative or beneficiaries. CGT is more commonly relevant when the estate or a beneficiary later sells or disposes of an inherited asset.
That means you should prioritise valuations and cost base evidence early, especially for property and shares. If records are missing, start reconstructing them while it is still easy to contact banks, advisers, and registries.
For the family home, the ATO outlines when an inherited dwelling may be exempt, and how the two year ownership period can apply, including when an extension may be granted in exceptional circumstances outside your control.
Check If You Can Extend The Two Year Ownership Period For An Inherited Home.
If the estate includes a business, company interests, or complex asset transfers, planning the order of events is critical. Selling, transferring, or winding up in the wrong sequence can change the tax outcome and delay distributions.
Get CGT And Distribution Advice Before You Sell With Our Taxation Planning Service.
Step 7 Do Not Distribute Until Tax Is Finalised
Executors can feel pressure to distribute quickly, but distributing too early can create risk if tax is still payable or returns are amended later.
The ATO provides guidance on confirming tax obligations are complete before the final distribution of the estate. Use this as your final checkpoint before you release funds or transfer assets.
Run The ATO Final Checks Before Making A Final Distribution. Also keep lodgement deadlines front of mind. The ATO sets out how failure to lodge on time penalties work, and late lodgements can create unnecessary cost and complexity for the estate. To understand The ATO Failure To Lodge On Time Penalty Rules, please check the page here.
A Clear Deceased Estate Plan Protects Executors And Beneficiaries
A Deceased Estate does not have to become a drawn out tax problem. When you follow the ATO steps in order, keep strong records, lodge on time, and get advice before selling or distributing assets, you reduce the risk of penalties and help beneficiaries receive their entitlements sooner.
If you are administering a deceased estate, or the estate includes a business, property, or investments, our team can guide you through ATO notification, final returns, estate trust returns, and CGT planning with confidence.
