CRA Clearance Certificate: What an Ontario Estate Trustee Needs

If you are an estate trustee in Ontario, the day you hand out the estate's money can feel like the finish line. For tax purposes, it is also the moment your own personal risk is highest, because the Canada Revenue Agency (CRA) can still come looking for tax the deceased or the estate owed.

A clearance certificate is the tool designed to deal with that risk. This article explains what it is, when it is needed, how Form TX19 works, and what timing to plan around before you distribute.

What a clearance certificate is and why it matters

Under the Income Tax Act, every legal representative other than a trustee in bankruptcy must obtain a certificate from the Minister before distributing property under their control. The certificate confirms that all tax amounts have been paid or that security has been accepted.

The reason is personal liability. A legal representative who distributes property without a clearance certificate is personally liable for the unpaid amounts, up to the value of the property distributed, and the Minister can assess the representative at any time.

In Ontario, the estate trustee's duties include winding up the deceased's affairs and paying taxes, bills and other debts before distributing what is left. The certificate is how you confirm the tax part of that job is done.

What changes once the certificate is issued

After a certificate is issued, liability for unpaid tax rests on the estate, trust, corporation, beneficiaries or others who received the distributed assets, and no longer on the representative.

The protection has limits. The certificate covers only amounts owing when it is issued, and if more assets are found later, another certificate is needed before distributing them.

How to request it: Form TX19

You request a certificate by filing Form TX19, Asking for a Clearance Certificate. It is filed after all returns have been filed and assessed, and after the taxes, CPP, EI, interest and penalties have been paid or secured. Estates registered for GST/HST also file Form GST352.

Do not send the request at the same time as the returns. Those returns typically include the deceased's final return and any T3 returns for the estate, so the certificate is usually one of the last steps.

For an estate, the request includes the following:

• A signed copy of the will, or the administrator's appointment if there is no will.
• Proof of your status as legal representative.
• A list of assets with their date-of-death values.
• A statement of distributions already made.
• A proposed plan for the rest of the distribution.
• The names and tax numbers of beneficiaries receiving non-cash property.

How long to wait

CRA acknowledges the request within 45 days, and the assessment can take up to 120 days if the documents are complete. Incomplete documents can add time, so a careful first submission matters.

Because of this, many trustees plan on several months between filing the last return and distributing the final share. Whether a partial distribution is safe before then depends on the facts, since distributing without a certificate carries the personal liability described above. A lawyer or accountant can help you judge how much to hold back.

Situations that need extra care

• Insolvent estate: a clearance certificate generally cannot be obtained if the estate does not have enough assets to pay all the tax, interest and penalties owed to CRA.
• Large tax on death: the legal representative can elect, and provide security acceptable to the Minister, to pay tax from deemed dispositions at death in up to 10 equal annual instalments.
• Assets found later: a further certificate is needed before distributing them.

If the estate may not cover its debts, get advice before paying beneficiaries or other creditors. The order in which debts are paid in an insolvent estate is a legal question that depends on the facts.

What to do next

• Confirm all returns (final T1, any T3 and any GST/HST) are filed and assessed.
• Pay the tax, interest and penalties, or arrange security.
• Gather the will or appointment, proof of status, asset values and distribution plan.
• File Form TX19 (and GST352 if registered), separately from the returns.
• Hold back enough of the estate until the certificate arrives, and talk to a lawyer or accountant if the estate is large or short of funds.

Frequently asked questions