Beneficiaries of a will may also have a tax obligation

If you, as a beneficiary, are presently entitled to income of the deceased estate, that income is assessable in the financial year you became presently entitlement, not in the financial year the amount is received.

Tax Resident beneficiaries

You will need the following information when completing your tax return:

  • your share of trust income to which you are presently entitled
  • the amount of your entitlement that was paid to someone else for your benefit
  • the amount of assessable income
  • your share of franking credits associated with any dividends in the trust distribution

*If you are an Australian tax resident beneficiary, you are entitled to the associated franking credit when the income distribution is included in your individual tax return.

Non-tax resident beneficiaries

If you are a non-tax resident beneficiary, you will also need to know the amount of:

  • interest in your distribution and the withholding tax paid;
  • unfranked dividends in your distribution and the withholding tax paid;
  • franked dividends in your distribution;
  • tax the trust paid on your behalf.

Tax obligations of the estate

Tax payable by the estate is dependent on several factors, such as whether:

  1. beneficiaries are presently entitled;
  2. beneficiaries are resident or non-resident individuals;
  3. legal disabilities of a beneficiary/beneficiaries; or
  4. the estate has been fully administered.

Rights of Beneficiaries

A beneficiary of a will has certain specific legal rights to ensure that their inheritance is duly managed and transferred to them in accordance with the terms of the will.

Section 33Z of the Succession Act (QLD) provides that the following persons are:

  1. a person mentioned in the will, whether as beneficiary or not and whether named or not; or
  2. a person mentioned in any earlier will of the testator as a beneficiary and whether named or not; or
  3. a spouse, parent or issue of the testator; or
  4. a person who would be entitled to a share of the estate of the testator if the testator had died intestate; or
  5. a parent or guardian of a minor mentioned in the will or who would be entitled to a share of the estate if the testator had died intestate; or
  6. a creditor or other person who has a claim at law or in equity against the estate; or
  7. a person who may apply for an order under section 41.

For further information or assistance please contact our office.