CRA Clearance Certificate Delayed or Refused in Canada: Options

You applied for a clearance certificate and nothing has arrived, or CRA has said no. Meanwhile, distributing the estate without the certificate can put you at personal risk, so the delay is stressful.

This article walks through what CRA's timelines look like, how to follow up, and the usual ways to unstick a request. Each estate is different, so a lawyer or accountant can help with yours.

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

Why the risk of distributing early is real

A legal representative who distributes property without the certificate is personally liable for the unpaid amounts, limited to the value of the property distributed. The liability applies whether the amounts are assessed before or after the actual distribution, and interest accrues.

Distribution happens when you give up control and transfer the property, and appropriating property for yourself also counts. So waiting is usually safer than handing out assets early.

What the normal timeline looks like

CRA acknowledges the request within 45 days, and assessment can take up to 120 days if all documents are provided. An audit may be needed first. These are CRA targets and can change.

If no certificate has arrived, it was denied, or no officer has contacted you within 120 days, phone 1-800-959-8281 for an individual T1 or trust T3, or 1-800-959-5525 for a corporation T2 or GST/HST.

Common reasons for a refusal or stall

• Required returns are not filed and assessed, or amounts are not paid or secured.
• The request was submitted along with the tax returns, which delays their assessment.
• Documents proving your status as representative are missing.
• The estate cannot cover all tax, interest and penalties owing, in which case the certificate is generally not issued.

A denial states what is missing or what action is required. Read it closely, because it is your roadmap.

Your options

The certificate can issue where the Minister has accepted security for payment, so unpaid tax can be secured instead of paid. The form and amount of acceptable security are not set out, so contact CRA first.

For certain deferred tax, such as tax on deemed dispositions at death, a legal representative may elect to pay in up to 10 equal annual instalments if acceptable security is given, and interest applies while payment is deferred. A partial distribution may also be possible, since a certificate is not needed before each distribution if enough property remains to cover any liability. How much to keep back is a judgement call, so get advice.

What to do next

• Note the date you filed the request and compare it to CRA's timelines.
• Check that every return is assessed and every balance is paid or secured.
• Phone the number that matches the account type if you are past the timeline.
• Keep copies of everything you send CRA.
• Speak with a lawyer or accountant before any distribution.

Frequently asked questions