Accounting for executors & estates.

Questions worth getting ahead of

• Notifying the CRA and getting access to records
• Knowing which returns to file and when
• Reporting registered plans and property at death
• Handling income earned after the date of death
• Getting a clearance certificate before distributing assets

Start by confirming who the legal representative is

The CRA says the legal representative is typically the executor named in the will, and must notify the CRA of that role. Registering for Represent a Client gives online access to the deceased’s tax records, or you can send the documents by mail or fax. If there is no will or executor, you can ask to be appointed for CRA matters using Form RC552 while court appointment is pending. Cancelling or transferring benefit payments is also part of the job. Gather the will, probate documents, recent returns and notices of assessment before you speak with an accountant.

Know which returns are due and when

The CRA says the final return is generally due April 30 of the year after death, or six months after the date of death if death occurred between November 1 and December 31. If the deceased or a spouse was self-employed, the filing date may be June 15, but any balance owing is still due on the usual payment date. Optional returns, such as for rights or things, may reduce tax. A T3 return may also be needed for the estate. Make a calendar of every date early.

Property and registered plans are reported at death

The CRA says the final return reports increases in the fair market value of property, investments and belongings up to the date of death, and capital gains on property deemed disposed of, even if it is not sold. An unmatured RRSP is generally treated as received at fair market value, though a rollover may be available to a surviving spouse or common-law partner. Minimum tax does not apply in the year of death. Bring statements showing values and cost for every account and property.

Income after death may belong on a T3 return

Income the estate earns after the date of death, such as interest, dividends, capital gains or business income, is reported on a T3 Trust Income Tax and Information Return, according to the CRA. That is separate from the final return, so dates matter: slips, interest and rent that arrive after death need to be sorted by when the income was earned. Keep estate bank statements apart from personal ones, and ask whether a T3 is required and how income paid to beneficiaries is handled.

Get a clearance certificate before distributing assets

The CRA says an executor who distributes assets without a clearance certificate may be personally liable for unpaid tax, up to the value distributed. Request it only after returns are filed and assessed and any balance is paid or secured, and not at the same time as filing, which delays assessment. You will need Form TX19, and Form GST352 if the deceased had a GST/HST number, along with the will and a list of assets. Ask what holdback is sensible while you wait.

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