Final Tax Return Due Date After Death in Alberta

If you are the executor of someone's estate, one of your first jobs is the final income tax return. The deadline is not the same for every death. It moves depending on the date the person died, and a few special situations change it again.

This article walks through the filing and payment dates, the main exceptions, and what happens if a deadline is missed. These tax rules are federal, so they apply the same way in Alberta as elsewhere in Canada. Your own facts can change the answer, so a lawyer or accountant can confirm your dates.

This article covers the law of Alberta.

Who files, and whether a return is needed

A final T1 return must be filed for every person who dies, and the legal representative of the person who died files it, along with any optional returns. The final return reports the deceased's property, investments and other taxable income, and the legal representative may claim deductions and credits to reduce what the deceased or the estate owes.

The CRA's guidance says a final return must be filed for every person who dies. It does not say the return can be skipped when no tax is owing. Optional returns may also reduce or even eliminate tax, so they are worth discussing with an accountant.

The basic due dates depending on the date of death

The general rule in the Income Tax Act is that an individual's return is due on or before April 30 of the following year. For a death, the date of death decides which deadline you use.

The Income Tax Act says the same thing in legal terms: where someone dies after October of the year, the return is due on the later of the normal filing date and six months after the date of death.

If a due date falls on a weekend or a CRA-recognized public holiday, a return is on time if it is received or postmarked by the next business day. A payment is on time if it is received on the first business day after the due date.

Exceptions that change the date

• Business income: if the deceased or their cohabiting spouse or common-law partner carried on a business, the filing date is June 15 of the year after death for deaths from January 1 to December 15, and six months after death for deaths from December 16 to 31. Payment is still due on the standard payment date, and the later date does not apply if business expenditures were mainly tax shelter investment costs.
• Death early in the year: if the person died on or before the due date of their previous-year return and it was not filed, that return is due six months after the date of death. A surviving spouse's or common-law partner's return follows the deceased's date, but any balance owing on it must still be paid by April 30 to avoid interest.
• Optional return for rights or things: due by the later of one year after death or 90 days after the Notice of Assessment or Reassessment for the final return, with payment generally due April 30.
• Optional returns for a partner or proprietor, and for income from a graduated rate estate, are due on the same date as the final return.

The estate may also need to file a separate T3 trust return, due 90 days after the trust's tax year-end, or the date of final distribution if the trust ceases to exist.

Late penalties and interest

If a final return with a balance owing is filed late, the penalty is 5% of the balance owing, plus 1% of the balance owing for each full month the return is late, to a maximum of 12 months. It may be higher if a late-filing penalty was assessed for any of the three previous years, and interest also applies to the penalty.

Separately, unpaid tax on a deceased person's return bears compound daily interest from the day after the due date until it is paid in full.

A late T3 return may attract a penalty of $25 a day, with a minimum of $100 and a maximum of $2,500, even if nothing is owing.

What to do next

• Write down the exact date of death and work out which deadline applies.
• Find out whether the deceased or their spouse or common-law partner ran a business.
• Check whether the previous year's return was filed.
• Gather slips, statements and records of assets so the return can be completed.
• Diarize the T3 trust return deadline as well.
• If the deadline is close, ask an accountant or lawyer about what can be filed and paid on time.
• Do not distribute estate property until you understand the clearance certificate process, since a legal representative who distributes without one can be personally liable.

Because dates depend on the facts, a lawyer or accountant can confirm which one applies to your estate.

Frequently asked questions