ATO Deceased Estate Tax Return: What Executors in WA Must Lodge

Tax does not stop when someone dies. As executor, you inherit responsibility for the deceased's outstanding tax obligations — and potentially for filing returns on behalf of the estate itself while it remains open. Getting this wrong exposes you to personal liability.

There are two distinct types of tax return that may apply, and confusing them is one of the most common mistakes executors make.

The Date-of-Death Individual Tax Return

The first obligation is a standard individual income tax return lodged on behalf of the deceased for the period from 1 July of the last financial year to the date of death. This is not a special form — it is the same individual tax return (NAT 2541) the deceased would have lodged themselves.

The executor or administrator lodges it with the ATO as agent for the deceased's estate. The return covers all income earned by the deceased up to and including the day of death: salary or wages, investment income, super pension payments, rental income, and any capital gains or losses triggered by the death itself.

Certain capital gains tax (CGT) events may be triggered at the time of death depending on the nature of the assets and who inherits them. The main residence exemption has specific rules about inherited properties and when they must be sold to preserve the CGT benefit. If the estate includes investment property, shares, or other CGT assets, an accountant familiar with deceased estate taxation is worth engaging.

The ATO expects this return to be lodged by the usual 31 October deadline if you are lodging yourself, or by the extended date if a registered tax agent is handling it.

The Deceased Estate Trust Tax Return

This is the one that surprises many executors. Once probate or letters of administration is granted, the estate becomes a separate legal entity — a deceased estate trust — for tax purposes. If the estate earns income after the date of death (rental income from a property that has not yet been sold, interest on estate bank accounts, dividends from shares held in the estate), the estate must lodge a trust tax return (NAT 0660) for each financial year it remains open and earning.

The estate is treated as a separate taxpayer. In the first three income years after the person's death, the estate receives the individual tax-free threshold — currently $18,200 — so modest income-earning estates may have minimal or no tax to pay. After three income years, the estate is taxed at the top marginal rate on all income, which is a strong incentive not to leave an estate open indefinitely.

If the estate is fully administered and all assets distributed within the same financial year as the death, and the estate earns no income after the date of death, there may be no deceased estate trust return required at all.

What the ATO Needs From You as Executor

To lodge as the estate's representative, you will need to notify the ATO of the death and your appointment as executor. You will also need a Tax File Number (TFN) for the estate if it will be earning income — this is a separate TFN from the deceased's individual TFN and is obtained by applying to the ATO.

Key steps:

• Notify the ATO of the death (can be done through the Australian Death Notification Service for Centrelink, but the ATO must be separately notified for tax purposes)
• Apply for a TFN for the estate if the estate will be earning income
• Lodge the date-of-death individual return for the deceased
• Lodge annual trust returns for the estate for each year it remains open and earning income

Capital Gains Considerations in WA

Deceased estates in WA often include real property that is sold during the administration process. The CGT treatment of the sale depends on when the property was acquired, whether it was the deceased's main residence, and how long the estate holds it before selling.

As a general rule, if the property was the deceased's main residence and it is sold within two years of death by the executor, the main residence exemption may still apply. This two-year window can be extended in some circumstances. If the property was an investment property rather than a main residence, CGT will apply based on the cost base and market value at the date of death.

These rules are complex and the amounts involved are typically significant. Getting independent tax advice on the CGT position before selling estate property is money well spent.

When to Get a Tax Agent Involved

If the estate includes business income, significant investment assets, multiple financial years of open administration, or any complexity around the CGT position, a tax agent or accountant who specialises in deceased estate work will save you more than they cost.

For simple estates where a final individual return is the only obligation and the estate is quickly distributed, a competent executor can manage it. The WA Estate Settlement Guide covers the tax filing sequence in context with the rest of the estate administration — including when to apply for an estate TFN, when a trust return is required, and how to finalise the estate with the ATO before making the last distribution to beneficiaries.

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