Does a Clearance Certificate Cover GST/HST and Payroll in Canada?

If the person who died ran a business, you may be looking at more than one CRA account: income tax, GST/HST, payroll and perhaps others. As executor, you want to know whether one clearance certificate closes them all, or whether you need to deal with each account separately.

This article explains what the certificate is described as covering, how GST/HST is handled, and why payroll and other accounts are worth confirming directly with CRA. It is general information, not advice on your particular estate.

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

What the certificate is meant to confirm

A clearance certificate confirms that an estate, trust or corporation has paid all income tax, GST/HST, interest and penalties owed at the time it was issued, or that the Minister has accepted security for payment. The certificate covers income taxes, interest, penalties, CPP contributions and EI premiums.

It matters because a legal representative who distributes property without the required certificate is personally liable for the unpaid amounts, limited to the value of the property distributed. Interest accrues on that liability.

A legal representative is a person who administers, winds up, controls or otherwise deals with a property, business or estate, and whether someone qualifies depends on the facts. It is typically the executor named in the will; in Quebec, it is the person registered as liquidator.

GST/HST: a certificate of its own

Estates need a certificate when distributing assets if the deceased had a GST/HST number. Excise Tax Act s. 270(3)-(4) requires a representative to obtain a GST/HST certificate before distributing property or money, failing which they are personally liable up to the value distributed.

The forms depend on what accounts exist. For an estate, the request is made on Form TX19, and Form GST352 is also needed if there is a GST/HST number. If the only issue is GST/HST, use Form GST352 alone.

Payroll and other program accounts

The certificate is described as covering income tax, CPP contributions, EI premiums, interest and penalties, and GST/HST has its own form. Whether payroll source deductions or other program accounts are dealt with in the same process is not something you should assume.

If the business had employees, ask CRA directly how the payroll account will be treated before you distribute anything. An accountant or lawyer can also help you list every account the business held and confirm each one is in order.

Getting the estate ready to apply

CRA does not issue the certificate for an estate unless the required returns are filed and assessed and all amounts are paid or secured. Do not submit the request with the tax returns, as that delays their assessment.

• The required returns are filed and notices of assessment received.
• Any requested reassessments are received.
• Income taxes, CPP contributions, EI premiums, interest and penalties are paid or secured.
• Legal documents proving your status as representative are submitted.

If the estate cannot cover all tax, interest and penalties owing, the certificate is generally not issued.

For an estate, the request needs attachments such as the signed will with codicils and probate documents (or the administrator appointment if intestate), proof of your status as representative, a detailed asset list at the date of death, and a statement of distribution to date and the proposed distribution of any holdback or residual. You can submit online through Represent a Client or your own My Account, or mail or fax the regional tax services office.

What to do next

• List every CRA account the deceased or the business held, including GST/HST and any payroll account.
• Confirm that all returns for each account are filed, and keep the notices of assessment.
• Ask CRA how payroll and any other program accounts will be handled in the clearance process.
• Prepare Form TX19, and Form GST352 if there is a GST/HST number.
• Hold off on distributions until the certificates arrive, or speak to a lawyer about a partial distribution with a holdback.

CRA acknowledges the request within 45 days, and assessment can take up to 120 days if all documents are provided, though an audit may be needed first. A denial states what is missing or what action is required, and you can reapply once the issues are resolved. If new assets are discovered after a certificate is issued, you must obtain another certificate before distributing them.

If no certificate has arrived, it was denied, or no officer has contacted you within 120 days, follow up by phone. For GST/HST and corporation accounts the number is 1-800-959-5525, and for an individual T1 or trust T3 it is 1-800-959-8281.

Frequently asked questions