Tax Tip 316: What TFNs are Needed after Death?

Discussion in 'Accounting & Tax' started by Terry_w, 13th Oct, 2020.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Different Tax File Numbers or TFNs are needed when someone dies.

    The deceased will need to do their tax return up to the date of death (LPR does it on their behalf) with the TFN of the deceased being used.

    The estate will need one. The executor or Administrator will need to apply to the ATO for a new TFN.

    The trustee of any trust will need one. Once the administration is complete the assets will then be held on trust. Often the executor becomes the trustee at this point and they will need a different TFN if assets are being held until children reach a certain age for example. The trustee could also be someone completely different to the executor.


    Example

    Homer dies 1 Jan.

    His will appoints an executor

    The house he owns goes into a trust until his son Bart reaches 24 next year.


    Homer will lodge his date of death tax return under his own tax file number.

    The executor applies for a TFN for the estate and lodges a tax return from the date of death to the end of the financial year and the following financial year as the estate is administered. Then the house is transferred to another person who will hold the property on trust for Bart until he reaches the age of 24.

    The trustee of the trust applies for a TFN for the trust, after the executor finishes their duties administering the estate.

    Next year Bart will take legal ownership of the property and he will have his own TFN.
     
    SatayKing likes this.
  2. SatayKing

    SatayKing Well-Known Member

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    Have to give Homer a thumbs up for lodging a tax return after his death.

    How did he do it?

    By changing his name to Lazarus.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    that is the responsibility of the executor and one of the reasons why I would never be an executor other than for very close family
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A deceased estate may not "need" a new TFN and lodge a return. It depends what its income is. If its got tax credit a return for under $18K of income may be sensible (to get a refund of these credits). A deceased estate with property will need to lodge.

    Wise to seek tax advice following death and this can be given advice. One complication can be that on death the tax agent will be removed and will need executor authority to re-register and then consider a decaesed estate TFN etc.

    One of the easiest ways to have a tax return rejected is to lodge the date of death return with "Mr" in the title. It cant have Mr, Mrs etc and must instead be "Ef" (Executor For).....And when its a deceased estate return the name changes again to Estate of the Late Home Simpson with the name of the executor added to the cover elsewhere.
     

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