When a person turns 65 years old, below are some of the things to happen: The person loses eligibility for the first home savers accounts scheme; If the person is the oldest person covered by the policy, the private health insurance offset increases; Limitations apply to the contributions that may be made to a regulated superannuation fund;
A work test starts to apply in determining eligibility to claim the superannuation spouse offset for contributions made for the person’s benefit; The person becomes entitled to access superannuation benefits without restriction; The person becomes entitled to make withdrawals from their SHASA account;
If a male born before 1 July 1952, or a female born after 31 December 1948, the person reaches “pension age” and if otherwise eligible may qualify for the low income aged persons rebate;
The person normally cannot be entitled to concessional treatment for genuine redundancy payments or early retirement scheme payments;
The special “bring forward” transitional rule for determining the taxpayer’s non-concessional contributions cap does not apply unless the taxpayer is under 65 in the income year.
The minimum annual drawdown from a superannuation income stream increases, according to the persons’s age on 1 July in the year of payment or on commencement of stream.
WHEN A TAXPAYER DIES, below are the things to consider: The personal representative (eg. executor, trustee) of a deceased is generally required to lodge a “terminal” or “date of death” tax return of the deceased’s income covering the period from the beginning of the financial year up to the date of death;
In the date of death return, the deceased is entitled to the normal tax-free threshold even though the return only relates to part of the year; In the date of death return, expenditure incurred by the representative in relation to the income tax affairs of the deceased is deductible against the deceased’s income.
In the date of death return, medical expenses for which the deceased incurred a liability during their lifetime, but which are actually paid by the representative, are eligible for the medical expenses tax offset;
Tax payable on the basis of the deceased’s date of death return, or in relation to any earlier year for which the personal representative lodges a return, is a liability of the estate once a notice of assessment is served on the representative; During period of administration of the deceased estate, a deceased estate trust should be created and the personal representative is required to lodge trust tax returns for income derived or received by the deceased estate after the date of death.
The trust tax returns must be lodged for the period from the date of death up to the end of the financial year, and thereafter for each financial year;
Income derived by the estate during the period of administration is normally assessable to the estate, not to the beneficiaries, as they are not ‘presently entitled’, After period of administration, the income will be assessable to any beneficiaries that are presently entitled and are not minors. Otherwise it is assessable to the estate.
If you are an executor in a will and unsure what to do, you can consult your accountant or tax agent and don’t wait till the Australian Taxation Office knocks at your door.
Mike Alvarez, a CPA and Registered Tax Agent, is the director of QA Audit and Tax Services Pty Ltd, a CPA Practice. He is also an ASIC registered SMSF Auditor. Telephone 02 9628 2933.
