Date of Death Tax Return and Estate Tax Returns: What ACT Executors Need to File

Most ACT executors understand they need a death certificate, a Grant of Probate, and patience with frozen bank accounts. Fewer realise they also inherit the deceased's tax obligations — and that there are multiple returns to lodge, not just one. Getting the tax side wrong doesn't just mean ATO penalties. It can delay the final distribution to beneficiaries by months and leave the executor personally exposed if they distribute estate funds before obtaining tax clearance.

The Three Tax Returns an Executor May Need to Lodge

There are up to three distinct tax returns involved in settling a deceased estate, and they serve different purposes:

1. The Date of Death Tax Return (Final Individual Return)

This is the deceased person's final personal income tax return. It covers the period from 1 July of the current financial year through to the date of death. If someone died on 15 March 2026, this return covers 1 July 2025 to 15 March 2026.

The executor lodges this return using the deceased's existing Tax File Number (TFN). It reports all income the deceased personally earned up to and including the date of death: salary, rental income, dividends, interest, superannuation lump sums received before death, and capital gains on any assets disposed of before death.

Key points for ACT executors:

• Lodge by the standard deadline. If the deceased normally lodged through a tax agent, the agent's extended deadline applies. If self-lodging, the standard 31 October deadline applies for the financial year in which the death occurred.
• Claim deductions as normal. Work-related expenses, donations, and other deductions the deceased incurred up to the date of death can be claimed pro-rata.
• Medicare levy. The deceased's final return is subject to the standard Medicare levy. No exemption applies simply because of death.
• Any refund goes to the estate. The ATO pays the refund into the estate bank account, not to individual beneficiaries.

2. The Estate Trust Return (Income Earned After Death)

Here's where many executors get confused. Any income generated by estate assets after the date of death — rental income from an investment property, share dividends, bank interest — does not belong on the deceased's final personal return. It belongs on a separate trust tax return for the estate.

To lodge this return, the executor must first apply for a new Tax File Number for the estate itself. The estate is treated as a trust for tax purposes, and it gets its own TFN, separate from the deceased's personal TFN.

How to get an estate TFN:

1. Complete the ATO's "Application for a Tax File Number for an estate" form (NAT 3799)
2. Attach a certified copy of the death certificate and the Grant of Probate (or Letters of Administration)
3. Submit by post or through a registered tax agent

Processing takes 28 days. Until the estate TFN is issued, the executor should hold off opening dedicated estate bank accounts (banks will request the estate TFN to set up the account properly).

The estate trust return must be lodged for every financial year the estate remains open. If probate was granted in October 2025 and final distribution happens in April 2027, the executor will need to lodge estate trust returns for the 2025–26 and 2026–27 financial years.

3. The Prior Year Return (If Unfiled)

If the deceased hadn't yet lodged their tax return for the previous financial year at the time of death, the executor must lodge that too. Check the deceased's myGov account or contact their tax agent to confirm whether prior year returns are outstanding.

Capital Gains Tax: The Date of Death Rule

Capital gains tax (CGT) has a specific rule for deceased estates that catches many ACT executors off guard, particularly with Canberra property values.

Assets passing to beneficiaries under a will are not subject to CGT at the point of transfer. The CGT event is deferred — it rolls over to the beneficiary, who inherits the deceased's original cost base. The capital gain is only triggered when the beneficiary eventually sells the asset.

However, if the executor sells an estate asset (such as an investment property) during the administration period rather than transferring it to a beneficiary, the estate itself realises the capital gain, and it must be reported on the estate trust return.

For ACT executors managing property in Canberra — where median house prices have risen significantly over the past two decades — this distinction can mean the difference between a tax bill of tens of thousands of dollars now (if sold during administration) versus deferring that liability to the beneficiary (if transferred under the will).

The ACT Stamp Duty Connection

This is an ACT-specific nuance worth highlighting. When property is transferred to a beneficiary in full conformity with the will, the ACT Revenue Office exempts the transfer from conveyance duty (stamp duty). But if beneficiaries agree to alter the distribution — for example, one sibling buying out another's share of an inherited house — the portion that deviates from the will is assessed for duty.

Executors need to coordinate the CGT position with the stamp duty position. A property transfer that avoids CGT (because it goes to the named beneficiary) also avoids stamp duty (because it's in conformity with the will). But a sale or redistribution can trigger both.

When to Get ATO Clearance Before Distributing

Before making final distributions to beneficiaries, prudent executors request a "notice of assessment" or clearance from the ATO confirming that all tax obligations of the estate have been satisfied. If the executor distributes all estate funds and a subsequent ATO assessment reveals unpaid tax, the executor can be held personally liable for the shortfall.

The practical sequence:

1. Lodge the deceased's final personal return
2. Lodge all estate trust returns for each financial year the estate was open
3. Wait for all notices of assessment
4. Pay any tax owing from estate funds
5. Only then proceed to final distribution

This clearance process is one reason estate settlement in the ACT commonly takes 9–18 months, even for straightforward estates. The six-month family provision claim window runs concurrently with the tax timeline, but the two don't always align neatly.

Common Mistakes ACT Executors Make with Tax

Mixing pre-death and post-death income. Rental income received before the date of death goes on the final personal return. Rental income received after goes on the estate trust return. The dividing line is the date of death, not the date the rent was due or the date probate was granted.

Forgetting to apply for the estate TFN. Without it, the estate bank account operates under the deceased's personal TFN, which creates accounting problems when the ATO processes returns.

Distributing before assessment. Eager beneficiaries often pressure executors to distribute funds as soon as probate is granted. Executors who comply before receiving ATO clearance take on personal financial risk.

Ignoring super death benefits. Superannuation lump sums paid to non-dependants (adult children, for example) can attract tax at up to 32%. The tax treatment depends on who receives the benefit and whether it's paid from the taxed or untaxed component of the super fund. This is separate from the estate's tax obligations and is assessed against the beneficiary, not the estate.

Getting Help

For straightforward estates — a family home, a few bank accounts, a superannuation balance — many ACT executors handle the tax obligations themselves using myTax or through the deceased's existing tax agent. The ACT Estate Settlement Guide includes a complete tax timeline checklist covering the estate TFN application, return deadlines, and the clearance process specific to Australian Capital Territory estates.

For complex estates involving business interests, multiple properties, or significant capital gains, engaging an accountant experienced in deceased estate taxation is money well spent.

See more Australian Capital Territory guides →