What Is a Clearance Certificate and Do I Need One as an Executor in British Columbia?
This answer covers the law of British Columbia.
Yes, you should generally apply for a CRA clearance certificate before you distribute estate assets, because it is what protects you from personal responsibility for the deceased's tax. A clearance certificate confirms that the estate has paid the income tax and GST/HST, interest and penalties it owed, or that the Minister has accepted security, which lets the legal representative distribute assets without personal responsibility for those amounts.
If you distribute without one and tax is owing, the representative can be held personally liable for outstanding tax balances, up to the value of the assets distributed. You request the certificate on Form TX19. Wait until the required returns are filed and assessed, and expect to provide the signed will or administrator appointment, a list of assets at death, a statement of distributions made and proposed, and details of beneficiaries receiving non-cash property. The CRA sends an acknowledgement within 45 days, and the assessment can take up to 120 days.
There are exceptions. If the deceased or business had a GST/HST account, Form GST352 must be completed together with Form TX19, and a separate certificate is needed for any trust. A lawyer or accountant can confirm how this applies to your estate.
Key takeaways
- A clearance certificate confirms the estate has paid the income tax and GST/HST, interest and penalties it owed, or that the Minister has accepted security.
- Distributing without one can leave the representative personally liable for outstanding tax, up to the value of the assets distributed.
- You request it on Form TX19 once the required returns are filed and assessed, and the CRA acknowledges within 45 days and may take up to 120 days to assess.
- Add Form GST352 if there was a GST/HST account, and expect a separate certificate to be needed for any trust.