During the stages of administration of a deceased estate, a beneficiary may become presently entitled to the income. It is important to recognise this to determine who is responsible for the payment of income tax on that income. This paper covers the various stages of administration, including:

• Who pays the tax?

• Can a beneficiary be presently entitled to estate income prior to the estate being fully administered?

• What if payments of income are paid to the beneficiaries whilst the estate is in administration?

• When is a deceased estate fully administered?

• Does the estate have to be wound up for beneficiaries to be presently entitled to the income?

• How is the income of a deceased estate taxed in the income year it is fully administered?

• Deceased estates and CGT assets:

  • When does a beneficiary have absolute entitlement?

  • CGT event E5 and the Division 128 exclusion

  • The fungible asset test

• The taxing of the deceased estate:

  • For the first three income years after death

  • More than three years after death

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