Deceased Estate Tax Returns in Australia: A 2026 Tax Agent Guide for Executors and Administrators

The death of a family member or loved one is an emotionally difficult time — and for those appointed as executor or administrator of the estate, it also brings a set of complex legal and tax obligations that must be met with the Australian Taxation Office (ATO). Deceased estate tax returns are among the most technically demanding areas of Australian tax law, involving multiple return types, strict deadlines, and personal liability risks for executors who get it wrong. Engaging a registered tax agent with experience in deceased estate administration is one of the most important steps an executor can take to protect both the estate and themselves.

Understanding Deceased Estate Tax Obligations

When a person dies in Australia, their tax affairs do not simply cease. The legal personal representative (LPR) — typically the executor named in the will, or the administrator appointed by a court if there is no will — becomes responsible for managing the deceased's outstanding tax obligations and lodging any required returns.

The ATO distinguishes between two distinct tax periods that must be addressed separately: the period up to the date of death, and the period during which the estate is being administered. Each period has its own return type, lodgement process, and tax treatment.

Before any returns can be lodged, the LPR must formally notify the ATO of the death and register as the person managing the estate's tax affairs. This registration is a mandatory prerequisite for accessing the deceased's tax records, receiving any refunds owed to the estate, or making payments on behalf of the estate.

The Date of Death Tax Return

The date of death tax return — sometimes called the final tax return — covers the period from 1 July of the financial year in which the death occurred up to the date of death. This return reports all income earned and deductible expenses incurred by the deceased during that period.

One of the most important practical points for executors to understand is that this return cannot be lodged via myTax or myGov. Unlike standard individual tax returns, the date of death return must be submitted using a paper form clearly marked "DECEASED ESTATE." This restriction applies to LPRs acting without a registered tax agent.

If the LPR appoints a registered tax agent, the agent can prepare and lodge the date of death return electronically through the ATO's tax agent portal — a significantly faster and more efficient process. The tax agent can also access the deceased's pre-fill data, income statements, and ATO correspondence, which may be difficult for an LPR to obtain independently.

The date of death return includes all income sources the deceased had during the year, including salary and wages, investment income, rental income, business income, and any capital gains or losses. Deductible expenses incurred up to the date of death — including work-related expenses, investment expenses, and the cost of managing tax affairs — are also claimable. Importantly, the cost of engaging a tax agent to prepare the date of death return is deductible even if the fee is incurred after the date of death.

Trust Tax Returns for the Estate

Income earned by the estate after the date of death is treated differently for tax purposes. Once a person dies, their estate functions as a trust for tax purposes, and any income earned during the administration period — such as bank interest, dividends, rental income, or business income — must be reported in a separate trust tax return.

To lodge trust tax returns, the estate requires its own Tax File Number (TFN), which is separate from the deceased's personal TFN. If the estate continues to operate a business that the deceased was running, a new Australian Business Number (ABN) may also be required.

A trust tax return must be lodged for each financial year in which the estate earns income during the administration period. If the estate is wound up quickly and earns no income after the date of death, no trust tax return may be required. However, estates that hold income-producing assets — such as investment properties, share portfolios, or business interests — will typically need to lodge trust tax returns for each year until the estate is fully distributed.

The tax rates that apply to deceased estate trust income depend on how quickly the estate is distributed. During the first three income years following the year of death, the estate is generally taxed at individual marginal rates, including the tax-free threshold. From the fourth year onwards, the estate is taxed at the top marginal rate of 45% on all income above $416. This creates a strong incentive to administer and distribute the estate as efficiently as possible.

Capital Gains Tax in Deceased Estates

Capital gains tax (CGT) is one of the most complex areas of deceased estate taxation, and one where the guidance of a registered tax agent is particularly valuable. The CGT treatment of estate assets depends on when the asset was acquired, when it is disposed of, and who disposes of it.

• Pre-death CGT events — Any CGT event that occurred before the date of death (such as the sale of an investment property or shares) is reported in the date of death tax return.
• Post-death CGT events — CGT events that occur during the administration of the estate (such as the sale of estate assets by the LPR) are reported in the trust tax return for the relevant year.
• Main residence exemption — If the deceased's main residence is sold by the estate within two years of the date of death, it is generally exempt from CGT. This two-year window is a critical deadline that executors must be aware of.
• Cost base reset — Assets acquired by the deceased before 20 September 1985 (pre-CGT assets) are generally exempt from CGT when sold by the estate. For post-CGT assets, the cost base is reset to the market value at the date of death, which can significantly reduce the CGT liability on subsequent disposal.
• Superannuation death benefits — Superannuation death benefits paid to the estate may be subject to tax depending on the age of the deceased and the beneficiary. A tax agent can help the LPR understand the tax treatment of super death benefits and ensure they are correctly reported.

Personal Liability Risks for Executors

One of the most important — and often overlooked — aspects of deceased estate administration is the personal liability risk that executors face if they distribute the estate's assets before all tax obligations have been settled.

If an LPR distributes assets to beneficiaries and the estate subsequently has insufficient funds to meet an outstanding tax liability, the ATO can hold the LPR personally liable for the shortfall. This is not a theoretical risk — the ATO actively pursues executors who have distributed assets prematurely, and the consequences can be financially devastating.

To protect themselves, executors should ensure that all outstanding tax returns have been lodged and assessed, all tax liabilities have been paid, and any ATO refunds owed to the estate have been received before making final distributions. A registered tax agent can help the LPR obtain a clearance from the ATO before distribution, providing an additional layer of protection.

Australian Regulatory Context

Deceased estate tax obligations are governed by the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997, as well as the ATO's administrative guidelines and practice statements. The ATO publishes detailed guidance on deceased estate tax obligations on its website, including information on how to notify the ATO of a death, how to obtain a TFN for the estate, and how to lodge the various return types.

Registered tax agents who assist with deceased estate returns must be registered with the Tax Practitioners Board (TPB) and are subject to the TPB's Code of Professional Conduct. This code requires agents to act with honesty and integrity, maintain competence, and act in the best interests of their clients — including the estate and its beneficiaries.

If the estate includes superannuation assets, the LPR may also need to interact with the Australian Prudential Regulation Authority (APRA) or the ATO in its capacity as SMSF regulator, depending on the type of superannuation fund involved. A tax agent with experience in superannuation can help navigate these additional obligations.

Disputes about the tax treatment of deceased estate assets can be escalated to the Administrative Review Tribunal (ART) if the LPR disagrees with an ATO assessment. A registered tax agent can represent the estate in ATO review processes and, if necessary, assist with an ART application.

Questions to Ask a Tax Agent About Deceased Estate Administration

When engaging a tax agent to assist with a deceased estate, ask the following questions to ensure they have the relevant expertise:

• Are you registered with the Tax Practitioners Board, and do you have experience lodging deceased estate tax returns?
• Can you lodge the date of death return electronically through the ATO's tax agent portal?
• What information and documents will you need from me to prepare the date of death return and any trust tax returns?
• Are there any outstanding prior-year tax returns that need to be lodged before the date of death return can be processed?
• What are the CGT implications of selling the deceased's main residence, investment properties, or share portfolio?
• How should superannuation death benefits paid to the estate be treated for tax purposes?
• What steps should I take before distributing the estate's assets to protect myself from personal liability?
• Can you help me obtain a clearance from the ATO before I make final distributions to beneficiaries?

How MyMoney® Can Help

Administering a deceased estate is a significant responsibility, and the tax obligations involved are among the most complex in Australian tax law. Executors who attempt to navigate these obligations without professional assistance risk personal liability, ATO penalties, and delays in distributing the estate to beneficiaries.

MyMoney® connects executors and administrators with registered tax agents who specialise in deceased estate administration. Our tax agents can handle every aspect of the estate's tax obligations — from notifying the ATO of the death and obtaining a TFN for the estate, to lodging the date of death return and all required trust tax returns, managing CGT obligations, and obtaining clearance before final distribution.

To get started, post a brief on MyMoney® and receive tailored proposals from experienced tax agents in your area. You can also browse our network of registered tax agents to find a specialist with proven deceased estate experience. At a difficult time, the right tax agent can provide both expert guidance and genuine peace of mind.