The estate’s tax and property papers · A guide published by Dotto
Schedule 6 of 6 · Closing the file
When a deceased estate can be finalised
Legal Aid NSW says the person’s debts must be paid before beneficiaries receive anything. With the debts paid, an estate is ready for its final distribution once its tax affairs are finished and the time the law allows for claims has run; in New South Wales, Legal Aid NSW says that after a grant of probate or letters of administration the estate should not be distributed until at least six months after the death. The ATO says finalising an estate typically takes 6 to 12 months, sometimes longer, and expects every tax obligation to be met or fully provided for before the last of the assets is handed out.
General information, not legal or tax advice. The ATO’s page on confirming tax obligations is the official reference for the tax side. For the estate itself, the Supreme Court, public trustee or legal aid service in the state where the person lived can explain the rules, and a lawyer can advise on one estate.
6.1The tax checklist
The ATO treats a deceased estate’s tax affairs as finished when every box below can be ticked.
- The date of death return, and any earlier returns that were outstanding, have been lodged and finalised.
- Anything else the person had to lodge, such as business activity statements, has been submitted and finalised.
- The estate has stopped earning taxable income, and its last trust return, if one is needed, has been lodged and finalised.
- Every tax liability has been paid.
- Any problem found in the person’s tax affairs has been reported to the ATO and dealt with.
- Credits owed to the person or to the estate have been claimed.
- Business registrations held by the estate, such as an ABN, GST or PAYG withholding, have been cancelled.
The person’s tax and the estate’s tax are tallied separately, but the ATO counts both as debts of one estate, and a refund on one side can be set against a debt on the other to reach the net position. The ATO also asks to be told when an estate has no more returns to lodge after its third income year.
6.2Why the order matters
An executor who finalises the estate without paying the tax owing may be personally liable for it, up to the value of the estate’s assets they held or should have held. The ATO’s practical compliance guideline PCG 2018/4 describes when an authorised executor of a less complex estate can finalise without that worry, and without waiting for the ATO’s period for amending the person’s income tax assessments to end, provided there is no fraud or evasion.
| Condition | What it asks |
|---|---|
| Authority | The executor or administrator holds probate or letters of administration. |
| The person’s last 4 years | They didn’t carry on a business, weren’t assessed on a share of a discretionary trust’s net income, and weren’t a member of a self-managed super fund. |
| What the estate holds | Only shares in public companies or similar widely held interests, super death benefits, Australian real property, and cash, cash investments and personal belongings such as cars, jewellery and home contents. |
| Size and destination | Total market value at the date of death under $10 million, with nothing meant to pass to a foreign resident, a tax-exempt entity that isn’t a deductible gift recipient, or a complying super entity. |
| Obligations | All of the person’s tax obligations have been met. |
| No notice from the ATO | The executor hasn’t been told of an ATO claim against the estate, or of a plan to review or audit the person’s affairs. |
The guideline covers the person’s own tax only. It doesn’t reach the estate’s tax for the period after the death.
Example, following the pattern of the ATO’s own
A person dies leaving a home, listed shares and a bank account, all well under $10 million, after years on a pension with no returns required. Their executor obtains probate, finds no date of death return is needed, and lodges a non-lodgment advice on 15 October 2026.
In the ATO’s example, six months pass after the non-lodgment advice without any word from the ATO about reviewing the person’s affairs, and the ATO then treats the executor as having no notice of a claim. Following that pattern here, six months runs to 15 April 2027, after which the executor could distribute without risk of being personally liable for the person’s tax, so long as every condition above holds.
6.3The clocks state law sets
Tax is one clock; each state’s succession law runs others, and they differ. Two examples:
Victoria
Before applying for a grant, the applicant publishes an advertisement on the Supreme Court’s website and must wait at least 15 days before filing. The Probate Office’s usual review takes 5 to 10 working days once an application is filed, though as at October 2026 the Court notes it is running behind that. Victoria Legal Aid says a testator’s family maintenance claim, the Supreme Court process for challenging a will by someone the will-maker had a moral duty to provide for, must be made within six months of the grant.
New South Wales
Legal Aid NSW says a legacy, meaning a gift of money in the will, must be paid within 12 months of the death, or the beneficiary can claim interest, at 2% above the cash rate the Reserve Bank last published before 1 January of the year the interest starts. It also suggests the executor get a written receipt when a legacy is paid.
6.4If the estate can’t pay its debts
Where an estate doesn’t hold enough to cover what it owes, the ATO says the executor is generally not required to make up the shortfall personally. Each state and territory has rules for running an insolvent estate and paying its creditors, and an executor or a creditor, the ATO included, can apply to have a bankruptcy trustee appointed. The executor has to tell the ATO the estate’s financial position, and the Australian Financial Security Authority publishes information on insolvent deceased estates. If the person was bankrupt when they died, the bankruptcy generally carries on.
6.5After the final distribution
A testamentary trust created by the will isn’t closed with the estate: it carries on, with its own returns. For the estate itself, finalising is the last line of the inventory. The papers before it start with the date of death tax return.