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Tax Implications After A Death

Dealing With Someone's Taxes After They Have Passed Away

Date: January 2014

After someone’s death members of the family will have to take care of tax payments the decedent owe to the Canada Revenue Agency (CRA).

There are a few things you should know about taxes in case of someone’s death.

  1. Fill out a tax return – Filling out of tax return should be performed once a death has occurred. Use T3 Trust Income Tax and Information Return to declare income gained after the person’s death. The decedent’s official representative should declare his earnings received from January 1 to the day of his death. Keep in mind the deadline for submitting tax return and avoid late filling.

  2. Look through Chart 1 - Returns for the year of death, which includes all possible earnings, credits and withholdings and find out, which type of return should be used to claim them.

  3. Go to optional returns to declare the decedent’s earnings. In order to cut the decedent’s taxes you may apply for particular credits a few times, claim a tax credit calculated for a certain type of income or divide specific amounts between the tax returns.

  4. Goods and services tax/harmonized sales tax (GST/HST) – If CRA was not informed about its client’s death, the decedent may be paid GST/HST credits after his death. In this situation you’ll have to contact or visit the tax centre that covers your region or territory, report about tax payer’s death, indicate the date of his death, make sure that CRA updated the decedent’s profile and return the credit payments.

  5. Canada child tax benefit (CCTB) and Universal child care benefit (UCCB) – In case of benefit receiver’s death the relatives should inform CRA with a written notice. It should be sent to the tax centre that covers your region or territory. One month after an eligible child’s death you no longer have the right to receive CCTB and UCCB payments. In order to inform CRA and officially eliminate amounts credited go to “End care of child” or use a contact number 1-800-387-1193 to make sure that CRA updated the decedent’s information.

  6. Deemed disposition of property – When dealing with disposition of property you may get into a very complicated tax situation.

For Official Representatives

You can be called a decedent’s official or legal representative in case of being mentioned in his will as a testamentary executor, assigned with property administrator rights by a court or entitled to liquidate the property in Quebec.

Clearance certificate is a document confirming the complete clearance of tax payments a person is obliged to make. Before taking control over the property an official or legal representative should be provided with a tax clearance. In order to get one make sure that CRA has received all the tax amounts the decedent had to pay.