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How to account for money you inherit

Discussion in 'Accounting, Tax & Legal' started by johnnyb, 19th Oct, 2006.

  1. johnnyb

    johnnyb Well-Known Member

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    16th Aug, 2005
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    Hobart
    Hi All,

    My wife recently inherited an amount of cash after her grandmother passed away. We have never received money in this way so we are wondering how it needs to be reported when we fill out next year's ITRs. Is it income, or is there a "gift" category that you don't pay tax on, is it treated in a special way because it was an inheritance, or do we just ignore it?

    On a related note, we also recieve FTB at the moment - does my wife need to notify the FAO that she has received this money? I guess we should give them a call, but asking here is far less painful so I thought I'd try it first :).

    Thanks.

    John.
     
  2. Glebe

    Glebe Well-Known Member

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    Sydney, NSW
    You should confirm with your accountant but I'm of the opinion that you don't need to advise the FAO or ATO about your windfall:

    Family Assistance Office | What is Taxable Income?

    I'm 99% positive it doesn't constitute income. But I'm just an average Joe not an accountant so it's just my opinion.
     
  3. johnnyb

    johnnyb Well-Known Member

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    Yes, I will definitely double check with my accountant, but thanks for the link - I was lloking for something like that on the ATO website but couldn't find anything.
     
  4. NickM

    NickM Co-founder Staff Member

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    Sydney
    Hi Johnny B
    Should be OK for tax, but your accountant will be able to confirm once he has all the details. If any tax was due, the Estate of the late grandmother should have covered it.

    The only issue i can think of re FAO - is the addiional income that may be generated from the capital sum.

    Good Luck
    Nickm
     
  5. johnnyb

    johnnyb Well-Known Member

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    Thanks Nick. As for additional income, we'll be putting the funds into our PPOR mortgage offset, so nothing to worry about there.
     
  6. julia

    julia Active Member

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    Beachmere Qld
    Johnny,
    It is worth taking the paperwork from the estate with you to the accountant. Occassionally there is a taxable part of the cash you receive. This happens when the solicitor has held the money after it has been allocated to your wife from the estate. Sometimes it has earned some interest.

    Julia
    bantacs.com.au
     
  7. johnnyb

    johnnyb Well-Known Member

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    Hobart
    Thanks for that Julia. It's something I wouldn't have thought of. I don't think it should effect us though, since we did not receive any interest money. I believe the will stated something like "Give Mrs B $X", and that is what we received. If there was any interest from holding the $X then it must have been distributed to some other beneficiary.

    John.

    P.S. I see that you are in Beachmere. Does that mean you work in the Ningi Bantacs office? I have driven past there many times on my way to see my parents on Bribie or my sister at Godwin Beach.
     
  8. julia

    julia Active Member

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    Location:
    Beachmere Qld
    Johnny,

    Used to be there all the time but since 2005 I started travelling around supporting all the BANTACS offices and working on the web site from home. So I am only in the Ningi office now and again. I have lived in the area for over 15 years so I may even know your family.

    Julia