By TANIA PHILLIPS
THE law that applies to the assets and income of a deceased person depends on which state or territory of Australia the deceased person lived in when they died.
Information on the Australian Tax Office site explains tax responsibilities only. Those who want to find more information about the inheritance laws that apply in states or territories should contact the Public Trustee Office.
Someone who has been appointed as an executor or administrator of the estate of a deceased person will be responsible for managing the deceased estate’s tax affairs as well as carrying out (executing) the terms of the deceased person’s will and complying with the relevant inheritance laws, where there is no will. The information applies equally to an administrator.
When the assets of a deceased estate are distributed, a special rule applies that allows any capital gain or loss made on a CGT asset to be disregarded if the asset passes to the executor, to a beneficiary or from the executor to a beneficiary.
However, if an executor sells an asset of the deceased estate and then distributes the proceeds to the beneficiaries, the sale is subject to the normal rules and CGT applies.
When a person dies, their superannuation is paid to their beneficiaries, either directly or as part of their estate.
Lump sum death benefits paid to dependants are generally tax free. The taxation of lump sum death benefits paid to non-dependants and death benefit income streams depend on a number of factors.
A death benefit termination payment is an employment termination payment (ETP) made by an employer after the death of an employee. How the payment is taxed depends on whether or not the beneficiary is a dependant of the deceased person, and the total amount of payments received.
