The loss of a loved one is a difficult time. As unfortunate as these circumstances are, it is necessary to settle the affairs of the deceased person. One item of particular importance is the deceased final tax return.
The Canada Revenue Agency (CRA) has set up very specific processes and procedures that are required to be followed. Any error will create delays in the processing of the deceased final return. On a daily basis, CRA receives an incredible volume of letters and packages. Because of this, it is very important to send the correct documents and mail to the correct CRA office location.
The documents to send CRA consist of;
T1013 – This form gives the Executor(s) listed on the will, authorization to complete the deceased final tax return. The Executor(s) will need to sign the form as the legal representative of the deceased.
Death Certificate – Executor is authorized to apply for the death certificate. There is a link providing a fillable form and costs for processing. Click here for link.
Will – Last Will and Testament showing Executor and any other instructions left by the deceased.
Cover letter – The document provides specific instructions for CRA to perform. The letter must state clear instructions requesting authorization to complete the final tax return and to add the Executor(s) to the deceased file.
It can take up to 8 weeks after CRA receives the package before they even begin the process. Any errors CRA encounters with the package will create delays in processing the package.
Banka & Company, CPA has expertise and can take care of the deceased final tax return. Especially if the tax return is complicated with investments, capital gains, property, etc. We can be the Executor(s) advocate when dealing with CRA too.
The purpose of applying for a clearance certificate is to have documentation from CRA stating all taxes owing on an estate have been paid.
There is no law in Canada stipulating it is necessary to apply for a clearance certificate; however, as the Executor(s) the clearance letter provides the reassurance no money is owing to CRA. If the Executor(s) does decide to go ahead and distribute the estate to the beneficiaries, they may learn later that taxes are owing and the Executor(s) might be responsible for paying them unless a clearance certificate has been issued.
CRA Guides and Forms
CRA has an online guide called T4011 – Preparing Returns for Deceased Person provides detail steps necessary to complete the form. Click here for the link
A clearance certificate is an additional form to complete after filing a final tax return. There are specific steps that are required when requesting a tax clearance certificate. Banka & Company, CPA personnel are familiar with CRA processes and procedures and know the right way and the right time to request clearance certificates.
Before applying for a Clearance Certificate you will need
- Final tax return for the deceased and their estate
- Final CRA Notice of Assessment
TX19 is a CRA “Asking for a Clearance Certificate” form you can print out to complete also available as a fillable online form. Click here for the link.
Send the form to the local office along with a copy of all probate documents and a statement of proposed distribution.
It could take several months to receive a tax clearance certificate from CRA. In the interim you can distribute the bulk of estate but keep enough money to pay the taxes and any future expenses that might appear.
Banka & Company, CPA has assisted many of our clients when going through this difficult time when a loved one passes on. If you are feeling overwhelmed and uncertain of the necessary steps that need to be taken for a final tax return or Clearance Certificate, allow us to help you through these processes.