Is an Estate Responsible for Income Tax After Death in Ontario?
Yes, the estate's legal representative has to deal with the deceased's taxes. A final T1 return must be filed for every person who dies.
If death occurs between January 1 and October 31, the final return is due April 30 of the following year, and for deaths between November 1 and December 31 it is due 6 months after the death. If the deceased, or a spouse or common-law partner living with them, carried on a business, the final return is instead due June 15 of the following year for deaths from January 1 to December 15, though payment is still due on the regular date. The estate's T3 return is due 90 days after the trust's tax year-end.
Three optional returns may also apply: rights or things, partner or proprietor, and income from a graduated rate estate. Before distributing property, a legal representative must obtain a clearance certificate (Form TX19), except for interim distributions if enough property is kept to pay any CRA liability, and distributing without one otherwise makes the representative personally liable up to the value distributed. Ask for it only after all returns are assessed, the tax is paid or secured, and proof of your authority has been sent to the CRA.
Key takeaways
- A final T1 return must be filed for every person who dies.
- If the deceased or a spouse or common-law partner living with them carried on a business, the final return is due June 15 of the following year for deaths from January 1 to December 15, but payment is still due on the regular date.
- The estate's T3 return is due 90 days after the trust's tax year-end.
- A legal representative who distributes without a clearance certificate is personally liable for unpaid tax, up to the value distributed, though interim distributions do not need one if enough property is kept to pay any CRA liability.