NICK BRUINING Q+A: Clock ticking on sorting out Dad’s estate before Centrelink clips your part-pension

Question

My wife’s father passed away in August 2024, and along with her two siblings, they have inherited his home.

The issue is that no one has done anything since his passing, with each of them named as executors in a will kit he completed a few years ago. To access his bank accounts they needed to apply for probate and this was granted in October.

As we are both on a part-age pension, I am concerned that her share of the property might impact our pension.

Will Centrelink ignore this situation until it is sold and she receives the money?

Answer

No. In fact, this is a complex situation that becomes more difficult the longer it goes on.

Generally speaking, executors have about 12 months to manage the affairs of a deceased estate. That means repaying debts, selling assets, lodging tax returns and making the distributions to the beneficiaries. While it is not enshrined in law, various agencies, including Centrelink, will also respect this “executor’s year”.

Once the 12 months have passed, Centrelink can include the value of the “entitlement” under the means test system.

On that basis, Centrelink may begin assessing your wife’s share (and her siblings’ if they receive Centrelink benefits) of the estate from next month, whether or not she has received any distributions.

It is possible that Centrelink could look at the date of entitlement once they are notified or become aware of any estate distribution, and determine that you were over-paid age pension for a period of time and demand a repayment of the “debt”.

The other issue is that if the sale of the property occurs more than two years after the date of your father-in-law’s death, a special capital gains tax concession will end and the estate may be liable for the liability on the increase in value from the date of death.

Question

I was about to do my income tax return through the myGov portal and was gathering the required information.

I logged onto my superannuation fund’s website and downloaded the transactions for the year. I was very annoyed to see that a $10,000 contribution I had made to the fund was there, but had been processed as non-concessional instead of being a tax-deductible concessional contribution.

Given it is now the new financial year, is there anything I can do?

Answer

All is not lost. Normally when a person makes a contribution to super, the fund will ask or send you a document called a “notice of intent” form. You can download the form yourself by searching for “NAT 71121” on the Australian Taxation Office website.

This is the form used to notify your super fund and the ATO that you intend to claim all or part of the contribution as a concessional, or tax-deductible, contribution.

On some occasions, you may not be in a position to accurately know the amount to be claimed at the time of payment, particularly if you are close to your annual concessional contribution cap or are unsure what compulsory employment super payments will be made.

Part of the NAT 71121 form is a section that allows you to amend a contribution after the contribution has been made. Using this section, you can notify the ATO that your personal contribution of $10,000 is to be fully applied as a concessional contribution.

Importantly, this must be done before you lodge your income tax return for the financial year the contribution was made and before June 30 next year. In simple terms, you can still alter the contribution now before you lodge the return.

You need to send the form to your super fund and, ideally, wait for an acknowledgement that the form has been received and applied. You will be able to confirm this by looking at your super fund statement again, or checking the reported contributions that appear under the superannuation tab on the myGov.au when connected to the ATO.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association.