Highlights

  • The government plans to double the limit for estate-related expenses from a deceased person's account from $15,000 to $30,000.
  • The reform would expressly allow court filing fees to be paid from the deceased person's account.
  • Treasury opened consultation on 23 October, and the government intends to implement the reforms from later this year.
  • Until any change commences, the existing $15,000 limit continues to apply to payments for funeral and estate costs.

"Reduce administrative and financial burdens for families at a difficult time." That is the government's stated aim for a change announced on 23 October by Treasurer Jim Chalmers and Assistant Treasurer Daniel Mulino. The limit for deceased persons' estate-related expenses, which includes funeral costs, would double from $15,000 to $30,000. It is a proposal, not yet law, but the government says it intends to implement it from later this year. For families facing a funeral bill while a loved one's accounts are frozen, the detail matters.

What the government has announced

The change forms part of a financial-sector deregulation package that the government says will cut red tape by $780 million a year across financial services. The Treasurer's media release lifts the limit for "deceased persons' estate-related expenses" from $15,000 to $30,000, including funeral expenses. The reform will also "expressly provide for the payment of court filing fees from an account".

Status: a proposal under consultation

Nothing has taken effect yet. The release lists two consultations, one on the Banking Regulations 2026 (c2026-816568) and one on implementing parts of the better regulation measures (c2026-813364). It does not say which covers the deceased-estate change, and it gives no closing dates. Sunsetting banking regulations will be remade before they expire on 1 April 2027.

Why the limit matters

When someone dies, their bank accounts are generally frozen until the bank is satisfied about who is entitled to the money. For larger estates, that often means waiting for a grant of probate or letters of administration, which can take months. Funeral directors usually want payment much sooner, so families can end up paying from their own pockets and seeking reimbursement later.

A higher limit means more of those immediate costs could come straight from the account, and covering court filing fees could help executors pay for a probate application. The release does not say how many families would be affected or what they would save.

A worked example

Suppose Mei's father dies leaving $85,000 in a savings account. The funeral costs $14,500 and other estate-related expenses, including the probate court filing fee, come to $9,000, a total of $23,500. Under the current $15,000 limit, $8,500 would have to be found elsewhere until the estate is administered. Under the proposed $30,000 limit, the full $23,500 could be paid from the account, leaving $6,500 of headroom under the cap.

Either way, the remaining balance stays part of the estate and passes under the will or intestacy rules. How a bank applies the limit, and which documents it asks for, will depend on the final rules and its own processes.

The tax jobs that follow a death

A bigger withdrawal limit does not change an executor's tax duties. The executor or administrator, known as the legal personal representative, is usually responsible for lodging the deceased person's final individual tax return, often called a date of death return, covering income from 1 July up to the date of death. If the estate earns interest or rent after the death, a trust tax return for the deceased estate may also be needed.

Funeral costs are generally not tax-deductible, either for the deceased or for the family members who pay them. Super is handled separately, because it generally does not pass under a will, and the ATO has reminded fund trustees to encourage members to check their death benefit nominations.

A separate Treasury exposure draft of minor and technical tax amendments would also remove a statutory declaration requirement for transfers of government stock held by deceased estates. Like the withdrawal limit, it is a proposal whose wording could change after consultation.