The tax rates that apply to income a deceased estate declares depend on the period of time after the person’s death.
First three income years
For the first three income years, the deceased estate income is taxed at individual income tax rates, with the benefit of the full tax-free threshold, but without the tax offsets (concessional rebates), such as the low-income tax offset. No Medicare levy is payable.
You cannot extend this concessional period of three tax years.
Example: Joan passed away on 5 April 2014.
The first tax year for Joan’s estate will cover the period 6 April 2014 to 30 June 2014.
The second tax year will be from 1 July 2014 to 30 June 2015.
The third tax year will be from 1 July 2015 to 30 June 2016.
If Joan’s deceased estate earned taxable income of $18,200 or less during these years, there is no tax payable.
If the administration of the deceased estate is completed in the same income year as the date of death, a trust tax return for the deceased estate is not required, providing:
- no beneficiary is presently entitled to any of the estate’s income, and
- the taxable income of the estate is below the tax-free threshold.
Fourth income year and later
For deceased estates that continue to be administered beyond the third year, the following tax rates apply (for 2018-19 year, no Medicare levy payable):
|Deceased estate taxable income (no present entitlement)||Tax rates|
|$0 – $416||Nil|
|$417 – $670||50% of the excess over $416|
|$671 – $37,000||$127.30 plus 19% of the excess over $670
If the deceased estate taxable income exceeds $670, the entire amount from $0 will be taxed at the rate of 19%
|$37,001 – $90,000||$7,030 plus 32.5% of the excess over $37,000|
|$90,001 – $180,000||$24,255 plus 37% of the excess over $90,000|
|$180,001 and over||$57,555 plus 45% of the excess over $180,000|