Administrator or Trustee in Canada: Do You Need a Clearance Certificate?

Not every estate has an executor named in a will. Sometimes a family member applies to the court to administer the estate, or a person acts as trustee of a trust. You may wonder whether you count as a legal representative in the eyes of CRA and whether the clearance certificate is your job.

In general, the answer turns on what you actually do with the property. This article walks through who qualifies, when a certificate is needed, and what to provide if there is no will.

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

Who is a legal representative for CRA?

A legal representative is a person who administers, winds up, controls or otherwise deals with a property, business or estate. Whether someone qualifies depends on the facts. The title you hold is therefore only part of the picture.

The legal representative is typically the executor named in the will. In Quebec, it is the person registered as liquidator. If there is no will or executor, a person who applies to the courts may be appointed administrator under provincial or territorial law.

Why the label matters

A legal representative is jointly and severally liable with the taxpayer for the taxpayer's unpaid amounts under the Income Tax Act, to the extent of the representative's control of the taxpayer's property. Before distributing property, a legal representative other than a trustee in bankruptcy must obtain a certificate from the Minister.

Distributing without the certificate makes the representative personally liable for the unpaid amounts, limited to the value of the property distributed. So an administrator who simply pays out the estate, without a certificate, carries real risk.

Administrators, trustees and corporations

• Administrator with no will: you need the administrator appointment (letters of administration or verification) as part of the clearance package.
• Waiting for a court appointment: you can ask CRA to recognize you for tax matters by submitting Form RC552, but that covers CRA matters only, not other estate duties.
• Estate trusts and other trusts: a certificate is needed when trust or estate property will be distributed.
• Corporations: a certificate is needed on winding up or dissolving and distributing property, while a corporation that keeps operating may need only a comfort letter.

Trust income paid or allocated to beneficiaries is not a distribution of property, so no certificate is needed for it. Whether your particular role qualifies is a fact-based question, so confirm it with a lawyer or accountant.

What the application involves

For estates, trusts and corporations the request is made on Form TX19. Form GST352 is also needed if there is a GST/HST number. For an estate, the TX19 attachments include the following:

• The signed will with codicils, or the administrator appointment if there is no will.
• Proof of your status as legal representative.
• A detailed asset list at the date of death, including jointly held assets and RRSPs/RRIFs.
• A statement of distribution to date and the proposed distribution of any holdback or residual.
• Names, addresses and SINs of beneficiaries of non-cash property.

If there is more than one legal representative, Form AUT-01 for clearance certificates must be signed by all of them.

What to do next

• Confirm your appointment in writing, such as the will or letters of administration.
• Notify CRA of your status and, if needed, submit Form RC552 while awaiting the court.
• File the required returns and wait for the notices of assessment.
• Pay or secure all amounts owing before applying.
• Hold distributions until the certificate arrives, or distribute only what the remaining property safely allows.

If you are unsure whether you qualify, speak with a lawyer or accountant before moving any estate property.

Frequently asked questions