When someone dies in Australia, their tax obligations don’t die with them — and as executor, they land on your desk. There are two separate tax returns to think about: a “date of death” return for the person who died (covering 1 July up to the day they died), and a trust tax return for the deceased estate itself (covering everything earned after death). Get the split wrong and you’ll face delays, penalties, or a surprise personal liability. This guide walks through exactly what to lodge, when, and how — with worked 2026-27 examples.
The two returns, side by side
This is the single most important thing to understand: the deceased person and the deceased estate are two different taxpayers in the ATO’s eyes. Mix them up and everything downstream goes wrong.
| Date-of-death return | Estate trust return | |
|---|---|---|
| Who is the taxpayer? | The deceased individual | The deceased estate (treated as a trust) |
| Period covered | 1 July → date of death | Day after death → 30 June (then each year until finalised) |
| Form | Paper Tax return for individuals (no myTax) | Trust tax return (estate needs its own TFN) |
| Typical contents | Salary to date of death, dividends/interest received before death, super income received before death | Rent, dividends, interest earned after death; capital gains on assets the estate sells |
| When is it due? | Normal lodgment window: 1 July–31 October after year-end (earlier if the estate is finalised sooner) | Each year until the estate is finalised |
One edge case worth knowing: if the person died on 30 June, the date-of-death return covers the entire financial year and there is no part-year estate return for that year — the estate’s first trust return starts the following 1 July.
Do you actually need to lodge a date-of-death return?
The ATO says you must lodge one if any of these applied to the deceased in the income year they died:
- Tax was withheld from their income — including from interest or dividends (not just wages)
- Their taxable income for the part-year was above the $18,200 tax-free threshold
- They lodged tax returns in the years before they died, or have outstanding returns from earlier years
If none of those apply, you don’t lodge a return at all — instead you send the ATO a non-lodgment advice form with the reason printed as “DECEASED” followed by the date of death. And if earlier years’ returns were never lodged, those need lodging too — when you notify the ATO of the death, they can tell you exactly which years are outstanding.
One point executors routinely miss: the final return still gets the full $18,200 tax-free threshold. It is not pro-rated to the part of the year the person was alive. Someone who died in July 2026 gets the same threshold as someone who died in June 2027 — the ATO taxes the part-year income at ordinary resident individual rates.
The 2026-27 figures your examples will use
The date-of-death return is taxed at normal resident individual rates. For 2026-27 these are:
| Taxable income | Tax on this income |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,020 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,370 plus 45c for each $1 over $190,000 |
On top of that: the 2% Medicare levy on taxable income, and the Low Income Tax Offset — up to $700 for taxable incomes of $37,500 or less, phasing out to nil at $66,667. If you’re not sure how these stack up on a real income, run the numbers through the income tax calculator before you start the paper form.
Worked example: Jan’s final return
Jan died on 14 October 2026. Her date-of-death return covers 1 July 2026 → 14 October 2026. Here’s what the executor puts on it:
- Salary earned up to the date of death: $34,000 (PAYG withheld: $3,200)
- Fully franked dividends received 12 August 2026: $1,400 (franking credits: $600)
- Bank interest earned to 14 October: $900
- Taxable income: $36,300
Tax at 2026-27 resident rates: 15% × ($36,300 − $18,200) = 15% × $18,100 = $2,715. The Low Income Tax Offset applies in full ($36,300 is under $37,500): $2,715 − $700 = $2,015. Add the 2% Medicare levy ($726): total liability $2,741.
Now the credits: $3,200 PAYG withheld plus $600 in franking credits = $3,800. Against a $2,741 liability, that means a $1,059 refund — and here’s the kicker: you can only claim that franking-credit refund on the date-of-death paper return. Miss it and the money stays with the ATO. An accountant who reviewed one estate found the deceased had been leaving roughly $3,000 a year in unclaimed franking refunds for a decade — a $30,000 windfall for the estate once the final return was done properly.
How to actually lodge it (and why you can’t use myTax)
- Notify the ATO of the death. Anyone can phone unofficially to pause correspondence; for official notification you need the death certificate (or probate/letters of administration). The ATO will then tell you which prior-year returns are outstanding.
- Work out who the authorised LPR is. To manage the deceased’s tax affairs with full ATO access, you need to be the authorised legal personal representative — grant of probate (executor) or letters of administration (administrator), issued or resealed in Australia. Without it, the ATO legally can’t release full information or transfer refunds and franking credits to you.
- Get the paper form. The date-of-death return is lodged on the paper Tax return for individuals. You cannot use myTax or myGov — those only let a person lodge their own return. Write “DECEASED ESTATE” at the top of page one, and name the taxpayer as “THE LEGAL REPRESENTATIVE OF [NAME] DECEASED” — because you are signing, not the deceased.
- The one workaround: if the authorised LPR appoints a registered tax agent, the agent can prepare and lodge the return online. This also applies when you’re claiming a franking-credit refund.
- Get a separate TFN for the estate if it will keep earning income after death (rent, dividends, interest). The estate’s income goes on trust tax returns — never mixed into the date-of-death return.
- Finalise tax before distributing. The ATO says administration typically takes 6–12 months. Do not hand out the inheritance until every return is lodged and assessed — see the liability trap below.
The estate’s trust returns: the three-year concession
For the first three income years of the estate, you must lodge a trust tax return if any of these apply: the estate’s net income exceeds the $18,200 tax-free threshold; a beneficiary is presently entitled to income at year-end; or a beneficiary is not an Australian tax resident. From the fourth year onwards, a return is required if the estate earns any income at all.
The part the legal guides bury: for those first three years, undistributed estate income is taxed at ordinary individual rates — including the $18,200 tax-free threshold. From year four, undistributed income is hit at the top marginal rate (45%). That makes slow administrations genuinely expensive. On $40,000 of undistributed estate income: at individual rates the tax is 15% × ($40,000 − $18,200) = $3,270; at 45% it’s $18,000. The concession is worth nearly $14,730 — a real incentive to finalise within three years.
Here’s the quieter worked case. Jan’s estate (from the example above) earns, between 15 October 2026 and 30 June 2027: $12,400 net rent and $2,100 in fully franked dividends ($900 franking credits). Net income: $14,500 — under the $18,200 threshold, no beneficiary presently entitled, all beneficiaries resident. Strictly, no trust return is required. But the executor lodges one anyway to claim the $900 franking-credit refund. If no return is lodged, those credits simply vanish.
7 mistakes executors make (and what they cost)
1. Trying to lodge in myTax. It won’t work, and weeks get wasted. Paper form, or a tax agent.
2. Assuming the spouse can just ring the ATO. Unless they’re the authorised LPR (or an authorised contact), the ATO can’t discuss the account or release funds. Next of kin ≠ legal authority.
3. Distributing the estate before tax is settled. The authorised LPR is liable for the deceased’s outstanding tax debts up to the value of the estate’s assets — and can be personally liable if they distribute assets while on notice of an ATO claim (see the ATO’s practical guideline PCG 2018/4). Finalise tax first, distribute second. Always.
4. Letting carried-forward losses die unused. Any tax losses or capital losses the deceased was carrying forward cannot transfer to the estate — if they can’t be used in the date-of-death return, they’re gone forever. A $30,000 capital loss with no gains in the final return is $9,000 of tax shelter (at 30%) evaporating.
5. Forgetting franking credits. Dividends received before death go on the date-of-death return with their franking credits; dividends to the estate go on the trust return. Both can generate refunds. Unclaimed credits are one of the most common executor oversights.
6. The CGT event K3 trap. If an asset passes to a foreign-resident beneficiary, a tax-exempt entity, or a complying super fund, the deceased is treated as having disposed of it at market value just before death — and the gain lands in the date-of-death return. One reviewed estate copped a $210,000 assessment this way on shares transferred to an overseas beneficiary.
7. Missing the small-business and sole-trader loose ends. If the deceased ran a business: a final BAS is needed for the quarter they died (ending the day before death), the ABN should be cancelled, and CGT can apply on the sale of business assets. For the property side of inherited assets, see our CGT on inherited property guide and for super payouts the super death benefits tax guide.
FAQ: the questions executors actually ask
Can I do the date-of-death return in myTax?
No. The ATO requires the paper Tax return for individuals — myTax and myGov can only be used by a person lodging their own return. If you’ve appointed a registered tax agent as the authorised LPR’s agent, they can lodge it online for you.
Do I need probate if the estate is small?
Maybe not — some states let small estates be administered without a grant. But without probate or letters of administration you are not the authorised LPR, so the ATO has legal restrictions on what it can disclose and may not be able to transfer refunds or franking credits to you. Banks and share registries often demand the grant too.
They died on 30 June. Do I still lodge two returns?
No — if death occurred on 30 June, the date-of-death return covers the whole financial year. The estate’s trust returns start from the following 1 July. (Die on 1 July and it’s the opposite: a full new-year return for one day’s income, plus a full estate year.)
Do beneficiaries pay tax on their inheritance?
Australia has no inheritance or estate tax — receiving the inheritance itself isn’t taxed. But income the estate distributes to beneficiaries (rent, dividends) is taxable in the beneficiaries’ hands, and selling an inherited asset later can trigger CGT (see our CGT calculator for the numbers). Assets passing to foreign-resident beneficiaries can trigger CGT event K3 in the date-of-death return itself.
How long do I have to lodge?
The normal lodgment window applies: 1 July to 31 October following the end of the financial year (a tax agent gets a longer lodgment program). If the estate is finalised before 30 June, you can lodge the final returns earlier. Any outstanding prior-year returns need lodging too — the ATO will tell you which years when you notify them of the death.
What happens to their carried-forward tax losses?
They die with the person. Tax losses and capital losses can’t be carried into the estate or transferred to beneficiaries. Use them in the date-of-death return (offsetting any capital gains crystallised before death) or lose them permanently.
The bottom line
Being an executor means running two tax files at once: the deceased’s final paper return (1 July to date of death, full $18,200 threshold, franking credits claimed or lost) and the estate’s trust returns (first year starting the day after death, individual rates for three years, top marginal rate after that). Notify the ATO early, get the LPR paperwork sorted, lodge the paper return, claim every franking credit, use up the losses — and don’t distribute a cent until the tax is finalised. Run the date-of-death figures through the income tax calculator first so the numbers on the form are right the first time; the ATO’s own checklist for what to do when someone dies is the official step-by-step to keep beside it.
