What Do I Do if the Deceased Had Unfiled Returns for Several Years Before Death in Canada?

This answer covers Canadian federal tax law, which applies in every province.

You need to make sure the missing returns are filed, along with the final return. If a T1 return for a year before the year of death was not filed, the legal representative must make sure it is filed, and a final return must be filed for every person who dies. Earlier returns already due keep their original filing and payment dates.

As executor you are responsible for ensuring returns are filed and balances owing are resolved. Late returns with a balance owing face a penalty of 5% of the balance plus 1% for each full month late, up to 12 months, and it may be higher if a late-filing penalty was assessed in any of the 3 previous years. Interest compounds daily and also applies to late-filing penalties. The CRA may cancel penalties or interest if a late filing was caused by circumstances beyond your control.

Without a clearance certificate, you can be personally liable up to the value distributed if you distribute property. You can apply only after all returns are filed and assessed and amounts owing are paid or secured. Whether voluntary disclosure helps depends on the facts, so speak with a lawyer or accountant first.