18.104.22.168 Death of individual
Executor lodges returns early
If an individual (1.1.I.90) in receipt of FTB dies part way through the relevant income year (1.1.R.23) and all the conditions for reconciliation are met before the end of that year, reconciliation will not occur until after the end of the income year.
If the individual did not have a partner during the entitlement period then reconciliation can occur immediately from 1 July of the first lodgement year. If the individual did have a partner, reconciliation occurs after the actual ATI (1.1.A.20) of the partner becomes available.
Example: An individual in receipt of FTB, Mrs Nbebi dies on 1 January. The executor lodges the returns in March and the estate is wound up by the end of April. Mr Nbebi lodges his tax return in August of the first lodgement year and Mrs Nbebi's entitlement is reconciled soon after and can be paid to Mr Nbebi.
If an individual in receipt of CCS or ACCS dies part way through the income year, reconciliation will occur as soon as all usage/attendance information is available, even if this is before the end of the year.
When an individual in receipt of CCS or ACCS dies in these circumstances, CCS and ACCS may be paid to a third party at the Secretary's discretion.
Policy reference: FA Guide 4.6.1 General provisions for making a claim for CSS by fee reduction
Executor fails to lodge returns
For FTB, if the individual dies either during the income year, or the first lodgement year, and the executor of the estate fails to lodge the returns for the income year by 30 June of the first lodgement year then the rules for non-lodgers apply.
Policy reference: FA Guide 6.4.3 Requirement to lodge an income tax return
Income to be used when an individual dies during an income year
Where the individual dies part way through the income year, the actual ATI of the deceased person is annualised for reconciliation purposes to bring it into line with the assessment of all other individuals in receipt of FTB, CCS and ACCS.
The formula for annualising is:
'Income of individual to date of death' means the ATI of the individual up to and including the day before they died. 'Number of days individual was alive during income year' means the number of days up to and including the day before they died.
Example: Mrs Nbebi's ATI up to the day before the date of her death on 1 January 2001 is $15,000. Her annualised ATI for reconciliation purposes is $15,000 × 365 ÷ 184 = $29,755.
Explanation: Only income up to the day before the individual died is included. Even if the deceased individual has income on or after the date of death (e.g. bank interest, dividends, rental income) it is not included in the deceased individual's taxable income. Any income earned on or after the date of death is included in a trust tax return.
Act reference: FAAct Schedule 3 clause 2(2) Adjusted taxable income
Policy reference: FA Guide 22.214.171.124 Reconciliation process, 126.96.36.199 Verification of adjusted taxable income, 188.8.131.52 FTB reconciliation due to maintenance income
Recovery of debts where the individual has died
If a deceased individual has an FTB or CCS reconciliation debt (1.1.D.60) and reconciliation occurred after the estate was disbursed, then the debt should be written off as a legally irrecoverable debt.
Act reference: FA(Admin)Act section 95 Secretary may write off debt
Policy reference: FA Guide 1.1.R.10 Reconciliation (CCS), 7.3 Non-recoverable debts, 184.108.40.206 Legally irrecoverable debts