Deceased Estates Taxed Under s99
A deceased estate is the property of a person who has died. It only includes property the deceased owned in their own name so excludes property owned by trusts and companies. It includes houses, land, jewellery, businesses, cash, shares, motor vehicles, personal property, etc.
When a person dies the executor is given the task of administering the deceased estate and this involves:
- Notifying the beneficiaries.
- Securing and valuing the assets.
- Obtaining authority to administer the estate (through the Supreme Court and is known as obtaining a ‘probate of the Will’).
- Completing income tax returns.
- Paying all debts.
- Dividing the estate.
For large deceased estates this process can take several years. Where the administration of a deceased estate is still in progress (that is, assets being realized and liabilities paid), then the executor of the estate is taxed on any trust income.
Under section 99 the ATO allows the executor taxed on this trust income for up to 3 years to be taxed at the individual tax rates including benefiting from the $18,200 tax free threshold. So, this means that for three years the deceased estate could generate up to $18,200 income pa and pay no tax. If this income was distributed to beneficiaries instead, most likely there would be tax payable.
