Executor of Deceased Taxpayer

Definition and duty of an executor

Under the Inland Revenue Ordinance, an executor of a deceased taxpayer includes administrator, other person administering the estate of a deceased person and a trustee acting under a trust created by the last will of the author of the trust.

An executor has the duty to handle the tax affairs of the deceased taxpayer, including the submission of tax returns, supplying information and settlement of tax bills that are payable and recoverable out of the deceased person's estate. For ascertainment of the proper tax liabilities of the deceased, an executor, where appropriate, should keep all records relating to the income, expenditure, allowances and vouchers required to substantiate tax deductions of/for a deceased taxpayer. If the deceased taxpayer had any income chargeable to tax, the executor must write to inform the Department within one month after cessation of the deceased taxpayer's income sources. He should supply the personal particulars of the deceased taxpayer, including the date of death, particulars of the relevant income sources of the deceased and a copy of the death certificate, if available. The contact address and day-time contact telephone number of the executor should also be provided.

Once the executor receives the deceased's Tax Return - Individuals which is normally addressed as "Mr. B, the Executor of the Estate of the late A (name of the deceased), he should report the relevant income earned by the deceased in the return. (Note: When the executor completes the deceased's tax return, he must not declare any of his own income or claim under the deceased's tax return. The executor should sign on the deceased's tax return in the capacity of "The Executor of the Estate of late A ".)

Apart from reporting the income and settling the tax liabilities of the deceased taxpayer, usually the executor has to apply to the Estate Duty Office for a Certificate of Receipt of Estate duty or a Certificate of Exemption from Estate Duty. For further information, click here.

Reporting salaries income of the deceased

The executor should report the deceased’s income from employment for the period from 1 April of the relevant year of assessment to the date of death of the deceased taxpayer. Any amount accrued to but not yet received by the deceased, such as accumulated leave pay and end of year bonus, must be included.

Reporting profits from business of the deceased

	(1)	Sole-proprietorship business

		The executor should declare the assessable profits and supply other relevant information for the period from the commencement date of the latest accounting period to the date of death of the deceased taxpayer in the deceased's tax return.

	(2)	Partnership business

		If the executor does not wish to elect Personal Assessment on behalf of the deceased taxpayer, there is no need to furnish any information relating to the deceased's share of profits in any partnerships in the deceased's tax return.

Reporting income from properties of the deceased

An executor is required to report the rental income derived from the deceased taxpayer's property until the legal title of the property is transferred to the beneficiary. Details are as follows:

(1)

Income from solely owned properties

Before the beneficiaries of the estate can be properly ascertained, the executor should report ALL rental income from the solely owned properties in the deceased’s tax return. The executor will receive two tax returns for the same year of assessment during which the deceased passed away. Both returns will be addressed to him as “Mr. B, the Executor of the Estate of the late A” and he should report the rental income of the deceased’s taxpayer as follows:


In the 1st tax return * :	income from 1 April of that year of assessment to the date of death
In the 2nd tax return # :	income from the date after death to 31 March of next year of assessment

	*	The 1st tax return means the return that normally bears the identity card number of the deceased taxpayer as part of the file reference.
	#	The 2nd return bears a reference number starting with ZZ and followed by 7 digits. Tax returns will be issued under this file reference until the deceased's ownership has changed to a new owner.

(2)

Income from jointly owned properties / properties held by owners as tenants-in-common

Upon the deceased's share of ownership has changed to the surviving owners, the Department will open a new Property Tax file to distinguish the new ownership from the old one and to handle tax affairs relating to the surviving owners.

If the executor does not wish to elect Personal Assessment on behalf of the deceased taxpayer, there is no need to furnish any information relating to the jointly owned properties/properties held by owners as tenants-in-common in the deceased's tax return.

Election for Personal Assessment

An executor can elect Personal Assessment on behalf of the deceased for the period up to the date of death by simply completing Part 6 - "Personal Assessment" in the Tax Return - Individuals. If the deceased was a married person, his/her spouse should also sign on the return.

Time limit for issuing assessment

Tax assessments in respect of any period up to the death of a deceased taxpayer should be made within one year from the date of death of the taxpayer, or within one year from the date of filing of any affidavit required under the Estate Duty Ordinance (Cap.111), whichever is the later.

Any tax overpaid by the deceased taxpayer will be refunded but the tax refund cheque will not be released to the executor until a Letter of Indemnity has been provided to this department and the sanction of the Estate Duty Office is in place.

Liability of an executor

Penalty will be imposed on the executor if he has furnished incorrect tax return or information relating to the tax liabilities of the deceased and which may result in an undercharge of tax. The penalty imposed is personal to the executor.

Monetary penalty in the form of Additional Tax may also be imposed on the executor if the deceased taxpayer has, during his or her lifetime, furnished incorrect tax return or information that results in an undercharge of tax. However, the monetary penalty imposed in the said circumstances will only be recovered as a debt due from and payable out of the deceased person's estate.

Related information and pamphlets

If you would like to read the following pamphlets for more information:-


	(1)	How should the executor report the income earned by a deceased taxpayer before death and rental income derived from the deceased's properties, please click here.

	(2)	A brief guide to Personal Assessment (whether tax may be reduced through election for personal assessment), please click here.

A pamphlet on "How to Apply for Estate duty Clearance" and a booklet entitled "Probate Registry" (published by the Judiciary) can also be obtained from this department's Estate Duty Office on 5/F.