Don't overlook it: Final tax returns and clearance certificates in Canada

Personal representatives ("PR") are often focused on gathering assets and paying routine bills and beneficiaries, but forgetting about taxes can create big problems...including late penalties and personal liability for the PR.

When a person passes away, his/her/their taxes need to be filed with the CRA at least one last time. This is called the final return. It covers the period from January 1 of the year of death up to the date of death (i.e. New Years Day to Date of Death).

The deadline to file with CRA depends on the Date of Death:

• Died January 1 – October 31: File by April 30 (or June 15 if Deceased operated a business) of the next year.

• Died November 1 – December 31: File within 6 months from the date of death.

  
  

NOTE: Final taxes often have to be paid by the normal due date, April 30.

Once the return is filed and any taxes are paid, the PR or the Estate's accountant should request a clearance certificate from the CRA. The certificate confirms that all taxes, interest, and penalties have been paid in full. Without a clearance certificate, the PR could be held personally responsible if taxes are still owing after the Estate is distributed.

TL;DR When someone passes away, their taxes still need to be filed.

PRs should file the final return, pay what’s owing, and get the clearance certificate before paying certain creditors and distributing inheritances. Read the CRA info about it.

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General information only. This isn’t legal advice and reading it doesn’t create a solicitor-client relationship. Laws change and outcomes depend on specific facts. Content is current as of the date posted. External links are for convenience only and aren’t endorsements.