- A legal representative must obtain a clearance certificate from the Minister before distributing property under their control, and distributing without one can make the representative personally liable up to the value distributed.
- You apply with Form TX19 only after all returns have been filed and assessed and the taxes, CPP, EI, interest and penalties have been paid or secured, not at the same time as the returns.
- Once a clearance 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, but the certificate covers only amounts owing when it was issued.
If you are the executor, or estate trustee, of an Ontario estate, you may feel pressure to hand out the inheritance quickly. Before you do, there is a federal tax step that protects you personally: the CRA clearance certificate.
This article explains why the certificate matters, when and how to ask for it, what to send, and what to do if the estate cannot get one. It is general information, and an estate's tax situation can be complicated, so a lawyer or accountant can confirm how it applies to you.
Why the certificate matters
Under Income Tax Act s. 159(2), 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.
If you distribute without one, s. 159(3) makes you personally liable for the unpaid amounts, up to the value of the property you distributed. The Minister can assess you at any time.
In practical terms, a gift to a beneficiary that turns out to leave tax unpaid could become your own debt, so the certificate is how you close that risk.
When to apply
Timing is the part people get wrong. You file Form TX19, Asking for a Clearance Certificate, after all returns have been filed and assessed and the taxes, CPP, EI, interest and penalties have been paid or secured. Do not send the request at the same time as the returns.
That usually means the final return and any T3 returns for the estate are done first. Each return needs to be assessed before the request goes in.
How to apply and what to send
Estates registered for GST/HST also file Form GST352 along with Form TX19. For an estate, the request package 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 distributing the rest.
- The names and tax numbers of beneficiaries receiving non-cash property.
CRA acknowledges the request within 45 days, and the assessment can take up to 120 days if the documents are complete. Missing documents can slow things down, so check the list before you send.
What the certificate does and does not do
Once 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 you as representative.
The certificate covers only amounts owing when it is issued. If more assets are found later, you need another certificate before distributing them.
The certificate does not mean that nobody else can ever be liable. Recipients of RRIF amounts, for example, are jointly and severally liable with the deceased for part of the deceased's tax for the year of death under s. 160.2(2), so CRA can collect that tax from the recipient. Whether someone else is exposed depends on the facts, and a lawyer can confirm.
Limits, alternatives and next steps
| Situation | What generally applies |
|---|---|
| Insolvent estate | A certificate generally cannot be obtained if the estate lacks enough assets to pay all the tax, interest and penalties owed to CRA. |
| Large tax from deemed dispositions at death | You can elect under s. 159(5), and give security acceptable to the Minister, to pay that tax in up to 10 equal consecutive annual instalments. |
For the instalment option, the first instalment is due on the normal payment date and each later one on the anniversary of that date.
- File the final return and any estate T3 returns, and wait for assessments.
- Pay or arrange security for the balances owing.
- Gather the documents for the request, then file Form TX19 (and Form GST352 if the estate is registered for GST/HST).
- Hold distributions until the certificate arrives.
- Speak with a lawyer or accountant if the estate may be insolvent or you are unsure what is owing.
Frequently asked questions
Can I make a partial distribution before I get the certificate?
The rule requires a certificate before distributing property under your control, and distributing without one can leave you personally liable up to the value distributed. If you are considering an early payment, get advice first.
Do I send Form TX19 with the tax returns to save time?
No. The request is made after all returns have been filed and assessed and the amounts owing are paid or secured, and it should not be sent at the same time as the returns.
How long does CRA take to issue a certificate?
CRA acknowledges the request within 45 days, and the assessment can take up to 120 days if the documents are complete.
What if I find another asset after the certificate is issued?
The certificate covers only amounts owing when it was issued, so you need another certificate before distributing the newly found assets.
Sources
- Income Tax Act, s. 160.2 (Justice Laws) — Justice Laws (federal)
- Income Tax Act, s. 159(2) (Justice Laws) — Justice Laws (federal)
- CRA – Apply for a clearance certificate — canada.ca
- CRA – Clearance certificate: Before you apply — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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