Do You Have to File a Final Tax Return for Someone Who Died in Alberta?

After a death, the paperwork can feel endless. One task that surprises many families is the tax return: the person who died still has a final income tax return to file, even though they are gone.

This article explains who files the return, the due dates that apply in Alberta (the federal rules are the same across Canada), what can happen if it is late, and what to know when no tax appears to be owing.

This article covers the law of Alberta.

Is a final return required, and who files it?

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

What if no tax is owing? The rule is that a final return must be filed for every person who dies, with no exception stated for returns where nothing is owed. Optional T1 returns may reduce or eliminate tax. If you are unsure, ask a lawyer or accountant.

When is the final return due?

For an individual, the return is due on or before April 30 of the following year. The date for a final return depends on when the person died.

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, and payment is on time if received on the first business day after the due date.

Exceptions to watch for

• 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 following the 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 the 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. In that case, 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 returns: a return for rights or things is due by the later of one year after death or 90 days after the Notice of Assessment or Reassessment for the final return.

Late filing, interest, and the estate's own returns

The late-filing penalty on a final return with a balance owing is 5% of the balance owing, plus 1% 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. Unpaid tax bears compound daily interest from the day after the due date until paid in full.

The estate may also need to file a T3 trust return, due 90 days after the trust's tax year-end. A late T3 may attract a penalty of $25 a day, with a minimum of $100 and a maximum of $2,500, even if nothing is owing.

Before distributing property, the legal representative must obtain a clearance certificate. Distributing without one makes them personally liable for the amounts owing, up to the value of the property distributed. The request is made only after returns are filed and assessed and taxes are paid or secured, not together with the returns.

What to do next

• Note the exact date of death, since it decides the deadline.
• Find out whether the person or their spouse or partner ran a business.
• Gather income slips, account statements, and a list of assets with their values at death.
• Confirm who the legal representative is and that they have the authority to file.
• Diarize the filing and payment dates, and ask a lawyer or accountant about any optional returns.

Deadlines are tied to the date of death and can be missed easily during a hard time. If you are close to a due date, getting advice early is usually worthwhile.

Frequently asked questions