What Is a CRA Clearance Certificate and Who Needs One in Canada?
This answer covers Canadian federal tax law, which applies in every province.
A CRA clearance certificate is a confirmation from the Canada Revenue Agency that an estate, trust or corporation has paid all income tax, GST/HST, interest and penalties owed when it was issued, or that the Minister has accepted security for payment. For an estate, it is the document that tells you the deceased's tax debts are dealt with before you hand out the assets.
Under section 159(2) of the Income Tax Act, a legal representative must obtain the certificate before distributing property in their possession or control. A legal representative is someone who administers, winds up, controls or otherwise deals with a property, business or estate, and whether you qualify depends on the facts. The certificate covers income taxes, interest, penalties, CPP contributions and EI premiums. If the deceased had a GST/HST number, a GST/HST certificate is also needed.
The certificate mainly protects you. Once it is issued, liability for any remaining tax rests on the estate, trust, corporation, beneficiaries or others who received the assets, rather than the representative. Without it, you can be personally liable for unpaid amounts, up to the value of the property you distributed.
Key takeaways
- A clearance certificate confirms that the tax, interest and penalties owed were paid, or that the Minister accepted security, when it was issued.
- Under section 159(2) of the Income Tax Act, a legal representative must obtain the certificate before distributing property in their possession or control.
- Distributing property without the certificate can make you personally liable for unpaid amounts, up to the value of what you distributed.
- If the deceased had a GST/HST number, a GST/HST certificate is also needed, and Form GST352 is used for it.