Does an executor need CRA clearance before distributing the estate in Ontario?

An executor is not strictly required by law to obtain a CRA Clearance Certificate before distributing an estate, but doing so is the standard and prudent practice. A Clearance Certificate confirms that the deceased's income taxes (including the final return and any applicable trust returns) have been assessed and all amounts owing have been paid or secured.

Without clearance, the executor risks distributing assets only to learn later that CRA has assessed additional taxes, interest, or penalties. If the estate has already been distributed and there is nothing left to pay CRA, the executor can be held personally liable for the outstanding amount — up to the value of what they distributed.

The application for a Clearance Certificate is submitted to CRA after all tax returns have been filed and assessments received. CRA can take several months to issue the certificate. Executors often make an interim distribution to beneficiaries while waiting, holding back a reserve adequate to cover any possible outstanding tax, and make a final distribution only after clearance is received.