Q: A client passed away in the 2016 financial year. We're sorting out their taxes for that year and need advice on how to handle income from their assets after their death. They owned commercial properties with their wife, but we're not sure if they owned them as joint tenants or tenants in common. If it's joint tenants, does the property automatically go to the surviving spouse? Do we need to file an estate tax return? What if the property hasn't been officially transferred yet? Can a family trust give income to a deceased estate?
A: When someone dies, their share of jointly owned property usually goes to the surviving owner. But for tax purposes, the deceased's income needs to be reported until their death date. After that, any income from the property goes to the surviving spouse. The rules for trusts are different. If the trust deed allows it, income can go to a deceased estate. But for tax purposes, it depends on whether the trust made a family trust election (FTE) and if the specified individual is alive. If the deceased estate can't make an FTE, it may affect how it can use franking credits on dividends.
If you have any questions, feel free to contact Tax Ideas Accountants & Advisers. You can also book an appointment through our live calendar.
