When Is a Deceased Person's Final Tax Return Due in Ontario?

If you are the estate trustee for someone who died in Ontario, the tax return is one of the first deadlines you will face. A final return must be filed for every person who dies, and it reports income and property gains up to the date of death. Missing the date can cost the estate money.

The right date depends on when the person died and on a few facts about their family and finances. This guide walks through the basic rule, the common exceptions, the optional returns, the estate's own T3 return and the penalties for filing late.

The basic rule for the final T1 return

For a death between January 1 and October 31 inclusive, the final return and any balance owing are due April 30 of the year after the death. For a death between November 1 and December 31 inclusive, they are due 6 months after the death, on the same calendar day.

The legal representative is usually the executor named in the will. To deal with CRA, they send a copy of the death certificate or a funeral director's statement of death, and a complete copy of the will naming the executor. If there is no will or executor, Form RC552, Register as Representative for a Deceased Person, is used.

Exceptions that change the date

• Business run by the deceased or their spouse or common-law partner: the final return is due June 15 of the year after the death for deaths between January 1 and December 15 inclusive, and 6 months after the death for deaths between December 16 and 31. Any balance owing must still be paid by the regular payment due date, and the later filing date does not apply if the business's expenditures were mainly for tax shelter investments.
• Death before the previous year's return was filed: that unfiled return is due 6 months after the date of death, on the same calendar day, because the due date is the later of the normal date and the day 6 months after the death.
• The surviving spouse or common-law partner's own return: it is due on the later of their normal due date and 6 months after the death, but any balance owing must still be paid by April 30 to avoid interest.

For a survivor, the April 30 payment date applies even when their filing date is later. Check the dates that apply to the year of death.

Optional returns and their deadlines

Beyond the final return, the representative may be able to file optional returns. Filing them can lower total tax because certain credits and deductions can be claimed more than once or split between returns, and each return starts again at the lowest tax brackets.

• Rights or things: the representative can elect to report these on a separate return. Examples include salary and vacation pay for pay periods that ended before death but were paid after it, and dividends declared before death but not received. The return must be filed by the later of one year after the date of death and 90 days after CRA sends the Notice of Assessment or Reassessment for the final return, and any balance owing is due on the same date as for the final return.
• Partner or proprietor return: this applies when a business fiscal year does not end on December 31. It follows the final return's filing and payment dates.
• Graduated rate estate income return: this reports income received from another person's graduated rate estate, usually on a T3 slip. It also follows the final return's dates.

If the representative transfers a right or thing to a beneficiary before the election deadline, the election does not apply to it, and the beneficiary includes the amount in their own income when they receive it.

The estate's T3 return

A T3 Trust Income Tax and Information Return is generally filed for the estate if it realizes any gain or receives any payments after the death. A return may not be needed if the estate was distributed right after the death and earned no income before then.

The T3 return and any balance owing are due no later than 90 days after the trust's tax year-end. A graduated rate estate can choose a non-calendar year-end, up to one year after the date of death. If the estate is wound up, its tax year ends on the date of the final distribution of assets, and the final T3 return and any balance are due no later than 90 days after that date.

Late filing, interest and paying the tax

The late-filing penalty is 5% of any balance owing, plus 1% of the balance for each full month the return is late, up to 12 months. CRA also charges compound daily interest on unpaid amounts from the day after the due date until the balance is paid. For a late T3, the alternative penalty is $25 a day for each day the return is late, with a minimum of $100 and a maximum of $2,500.

Balances owing to CRA are paid out of the estate's assets. The representative's duties include paying taxes, bills and other debts before distributing what is left. A representative who distributes property without a clearance certificate can be personally liable for unpaid amounts, up to the value of the property distributed.

What to do next

• Note the exact date of death and work out which deadline applies.
• Find out whether the deceased or a spouse or common-law partner ran a business, and whether last year's return was filed.
• Gather the death certificate and a copy of the will so you can deal with CRA.
• List income received after death that may qualify for an optional return.
• Set aside estate funds to pay any balance owing by the payment date.
• Speak with a lawyer or accountant if the dates are unclear or the estate is complicated.

Frequently asked questions