When someone dies: the tax to-do list

Death and Taxes: What to Do When a Loved One Passes Away

There’s an old saying that nothing is certain except death and taxes. But there’s another certainty—when death comes, tax affairs will surely follow.

If you’ve recently lost someone close to you and are responsible for handling their tax matters, there are a number of essential steps you’ll need to take to advise the Australian Taxation Office (ATO).

First Steps: Notify the ATO

Begin by:

• Establishing your identity with the ATO as the deceased’s representative.

• Formally notifying the ATO of the person’s death using one of the following:

  • A death certificate,

  • A grant of probate, or

  • Letters of administration.

Becoming the Authorised Legal Personal Representative (LPR)

To take full control over the deceased’s tax affairs—including access to their tax records and assets—you must be recognised as the Legal Personal Representative (LPR).

You can become the LPR by:

• Being named executor in the deceased’s will, or

• If there is no will, being appointed as an administrator by the Supreme Court (usually the next of kin).

Recognition by the court:

• The court must confirm the will’s validity and officially appoint you as the estate’s representative.

• Where no will exists, the court issues letters of administration to the appointed individual to manage the estate.

LPR Tax Responsibilities

As the LPR, your key tax obligations include:

• Lodging a 'date of death' tax return for the deceased.

• Ensuring all tax liabilities are paid before distributing assets to beneficiaries.

If the Deceased Operated a Business

You’ll need to determine whether the deceased ran a business. If so:

• Seek specialist tax or legal advice.

• If they were a sole trader or a partner in a business, you may need to:

  • Lodge a Business Activity Statement (BAS) for the final quarter.

  • Lodge any outstanding BAS.

  • Pay any taxes owed, which may include:

    • Goods and Services Tax (GST),

    • Capital Gains Tax (CGT) (particularly if business assets are sold).

Lodging Final and Outstanding Tax Returns

• Submit the final tax return (the ‘date of death’ return).

• Check for and lodge any previous year tax returns that may be outstanding.

• Settle any amounts owed to the ATO before distributing assets.

Additionally:

• If the estate earns income after the date of death (e.g., from shares or rental property), you may need to:

  • Lodge a trust tax return for the estate.

  • Claim any tax refunds or franking credits owed to the estate.

Final Administrative Steps

Before distributing the estate:

• Ensure all tax liabilities are paid.

• Confirm all tax credits or refunds are received.

• Cancel any tax registrations, such as:

  • Australian Business Number (ABN),

  • GST registration,

  • PAYG withholding, etc.

Once all of the above is complete, you may proceed to distribute the assets according to the terms of the will or as directed by the court.

Need Help?

Handling a deceased estate’s tax affairs can be complex and emotionally taxing. If it feels overwhelming:

• Seek professional assistance to ensure due diligence is met and all ATO obligations are satisfied.

• Be aware that finalising an estate can take 6–12 months or longer, depending on complexity.