- The due date for the final return depends on the month of death, and the payment date is the same.
- On death, the person is treated as having sold their property at fair market value, which can create a capital gain reported on the final return.
- Distributing estate assets before getting a CRA clearance certificate can leave the executor personally liable.
When someone dies, their income tax filing does not stop. The executor or legal representative generally has to file a final return for the year of death and deal with any tax owing before the estate is wrapped up. It is a lot to take on while you are also grieving.
This article walks through the main deadlines, the returns that may be needed, how capital gains and registered plans such as RRSPs and RRIFs are treated, and what to do before you hand out any money to beneficiaries. Income tax on a death is federal, so the same Canada Revenue Agency rules apply in Saskatchewan. The details of a particular estate can change the answer, so a lawyer or accountant can confirm your situation.
This article covers the law of Saskatchewan.
Deadlines for the final return and payment
The due date depends on when the person died. If death was between January 1 and October 31, the final return is due April 30 of the following year. If death was between November 1 and December 31, it is due six months after the date of death.
Any tax owing is due on the same date as the return. If the return is filed late and a balance is owing, a penalty applies of 5% plus 1% for each full month late, up to 12 months.
There is an exception for self-employed people. If the deceased or their spouse ran a business, the filing date may be June 15 of the following year for deaths between January 1 and December 15, but the payment is still due on the regular date.
Which returns may be needed
The final return (a T1) covers the deceased's income up to the date of death. Income the estate earns after death is separate and is reported on a T3 trust return. A graduated rate estate can choose any year-end up to one year after death.
| Return | What it covers | Key timing |
|---|---|---|
| Final T1 return | Income of the deceased up to death | April 30 of the following year, or six months after death if death was November 1 to December 31 |
| T3 trust return | Income the estate earns after death | Due 90 days after the estate's year-end |
Capital gains on death
On death, the person is treated as having sold all of their property just before death at fair market value. Any capital gain or loss is reported on Schedule 3 of the final return. This is a federal income tax on the deceased, not an inheritance tax.
There are important exceptions. Property passed to a surviving Canadian-resident spouse or common-law partner, vested within 36 months, may not result in a gain or loss on the final return, and the legal representative can elect out of that treatment. Gains on a principal residence may be wholly or partly exempt, but the home must be designated using Schedule 3 and Form T1255.
RRSPs and RRIFs
The fair market value of an unmatured RRSP at death is included in the deceased's income on the final return, on line 12900. For a RRIF, the amount goes on line 13000.
If the RRSP is transferred to the spouse's RRSP by the end of the year after death, the amount is not included in the deceased's final return. The spouse reports it and deducts the transfer. A decline in value after death can be deducted if the plan is fully paid out by the end of the following year, using Form RC249.
An RRSP or RRIF with a named beneficiary passes outside probate, but that does not remove it from the tax return.
Before you distribute and what to do next
Getting a CRA clearance certificate before you distribute assets matters because the tax risk sits with you as the legal representative. If a legal representative distributes assets before getting a CRA clearance certificate and tax is still owing, they can be held personally liable up to the value of what was distributed. Form TX19 requests the certificate only after returns are filed, notices of assessment are received and tax is paid. Assessment can take up to 120 days.
Final distribution of the estate cannot happen until the clearance certificate is received.
- Note the date of death and work out the filing and payment deadline.
- Gather income slips, investment statements and records of property owned.
- Find out whether the deceased or a spouse ran a business.
- Identify any RRSP or RRIF and who is named as beneficiary.
- Get values for property, including a home, for the capital gains calculation.
- File the returns, pay the tax, and wait for the notices of assessment.
- Request the clearance certificate before making final distributions.
- Talk to an accountant or lawyer if the estate is complex or may be insolvent.
Frequently asked questions
When is the final tax return due if the person died in December?
For a death between November 1 and December 31, the return is due six months after the date of death. Payment of any tax owing is due on the same date.
Is there an inheritance tax in Saskatchewan?
The tax on death is a federal income tax on the deceased's final return, not an inheritance tax. It arises because the person is treated as having sold their property at fair market value just before death.
Can I be personally responsible for the deceased's unpaid tax?
Yes, in some cases. If you distribute assets before getting a CRA clearance certificate and tax is still owing, you can be held personally liable up to the value of the assets distributed.
Does the estate file a separate return for income earned after death?
Yes. Income the estate earns after death is reported on a T3 trust return, separate from the final T1 return.
Sources
- Court of King's Bench – Probating an Estate — sasklawcourts.ca
- Canada Revenue Agency – Clearance certificate — canada.ca
- Canada Revenue Agency – Filing and payment due dates (someone who died) — canada.ca
- Canada Revenue Agency – Capital gains (someone who died) — canada.ca
- Canada Revenue Agency – Examples: death of an RRSP/RRIF annuitant — canada.ca
- Canada Revenue Agency – Report income (someone who died) — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a wills & estates question
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