When it comes to wills, the laws are different in each Australian state and territory. But, they are somewhat uniform, and you can expect pretty much the same process, no matter where you live.
If you are the executor of a will, it is important that you hire an accountant to take care of the estate taxes. You are responsible for making sure that all inheritance laws are followed. Often, many of these laws can be confusing, especially when it comes to the inheritance tax and capital gains tax, which is why you need accountants to help. Here is some information on how inheritances are taxed.
Tax on the Inheritance Itself
When a person dies, it is not unusual for their estates to still earn income. For instance, they may have had unpaid wages owed to them, earning interest on money in bank accounts, shared dividends, or monies earned through the sale of their home and other assets. All of this income is taxable, and these taxes must be paid. No taxes are paid on anything that has already been previously taxed.
As the executor, you are responsible for taking care of the taxes, unless it has been arranged that the beneficiaries will take care of the taxes. Either way, it will be necessary to hire an accountant to make sure that everything is done correctly, especially if there is any confusion as to what has been paid and what has not.
Capital Gains Tax
You will also be responsible for the capital gains tax. This tax is applied when assets are transferred from the deceased’s estate, which is considered to have taken place on the day of their death. Generally, capital gains include shares in stocks, investments, and property, and any of these things that change ownership are subject to capital gains tax.
There is an exception to this rule. If the assets were given to a beneficiary or anyone who is acting as a legal representative for the deceased, of if they are passed from that representative to the beneficiary, they are not subject to capital gains tax. But, if they are passed to someone who is a foreign resident, or to a charity or another entity that is exempt from taxes, the capital gains tax will need to be paid.
This is sometimes very confusing, and all the more reason why you need to hire an accountant to help you. Talk to local resources such as KAMP Business Accountants to get a handle on how to accomplish your task as executor of the will.Read More