Credits and Deductions on a Final Return for the Deceased in Canada

A final return covers only part of a year, so many executors assume every credit is cut back to match. That is usually not how it works, and missing a credit can mean paying tax the estate did not owe.

This article walks through the main credits and deductions an executor can look at on a final T1 return in Canada, where the limits are, and what to gather before you or an accountant prepare it.

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

Most credits are not prorated for the year of death

The credits on lines 30000 to 30450 and line 30500, which include the age amount, can be claimed in full on each return filed, not prorated for the year of death.

There is one exception. If the deceased was resident in Canada for only part of the year, the personal amounts are prorated by days of Canadian residence divided by days in the year. That is a different situation from simply dying part way through the year.

The disability amount (lines 31600 and 31800) has a cap. The total claimed across all returns for the person cannot exceed the allowable amount for the calendar year.

Medical expenses

Medical expenses on the final return can cover any 24-month period that includes the date of death, as long as they are not claimed elsewhere. Because that period can reach both before and after the date of death, look at receipts from before death as well as bills paid by the estate afterward.

The claim is the amount above the lesser of $2,834 or 3% of net income (line 23600) from all returns filed for the year of death, for the 2025 tax year. These dollar figures are indexed each year, so check the figure for the year of death. Receipts must be attached, and expenses can be split across returns.

If the deceased paid expenses for a dependant who died in the year (other than a dependent child under 18), those go on line 33199. A refundable medical expense supplement of up to $1,504 may be available if there is an amount on line 21500 or 33200.

Donations

Donations on the final return are limited to 100% of net income on line 23600. Eligible gifts in the year of death plus unclaimed gifts from the prior 5 years count toward the claim. Any excess can be claimed on the previous year's return, up to 100% of that year's net income.

Gifts made by will and designation donations are deemed made by the estate at the time the property transfers to the donee. The estate may be able to carry such a gift back to the final return if conditions are met, including that the gift is made within 60 months after death. Donations cannot be carried forward from a final return to a T3. On a T3, the estate's donation claim is limited to 75% of the trust's net income, plus 25% of taxable capital gains and recaptured CCA from the gifted property.

Splitting claims across optional returns, and what is not deductible

Optional returns, such as the rights or things return marked "70(2)", can reduce or eliminate tax, but they are only available for eligible income and time periods. The saving usually comes from claiming certain credits and deduction amounts again on the separate return.

There is a ceiling. The total of the claims across the final and optional returns cannot be more than what would have been allowed if only the final return were filed.

What to do next

• Confirm you are the legal representative and have notified the CRA of your role.
• Collect medical receipts for a 24-month period that includes the date of death.
• List donation receipts for the year of death and the prior 5 years.
• Gather information slips such as the T4, T5, T4A(P) and T4(OAS).
• Ask an accountant whether an optional return could lower the total tax.

If the situation involves a business, a disability claim or a large estate, a lawyer or accountant can confirm which claims apply.

Frequently asked questions