Apply for a Clearance Certificate — Montreal CPA Firm Near You: Protect Yourself Before Distributing Estate Assets

A clearance certificate is one of the most important documents an executor, liquidator, trustee, or legal representative must obtain before distributing estate or corporate assets. It confirms that all tax obligations—income tax, GST/HST, interest, and penalties—have been paid or that the CRA has accepted security for the unpaid amount. Without this certificate, the executor may be personally liable for any taxes the deceased, estate, trust, or corporation still owes.

For many legal representatives, this is the final and most critical step in estate administration. Understanding when to apply, how to prepare the request, what documents are needed, and the CRA’s processing times ensures you close the estate properly and protect yourself legally.

Why You Need a Clearance Certificate

A clearance certificate from the CRA confirms that:

• All amounts of income tax, GST/HST, penalties, and interest owing up to the date the certificate is issued have been paid in full, or

• The CRA has accepted security (such as cash or bond) for outstanding amounts.

Once you obtain the clearance certificate:

• You may distribute assets without personal liability

• The CRA’s claim for tax debts transfers to the estate, trust, corporation, or beneficiaries

• Financial institutions and lawyers involved in estate settlement may request the certificate before finalizing distributions

Without a clearance certificate, if you distribute property to beneficiaries and later CRA identifies unpaid taxes, you—as executor—can be held personally responsible up to the value of the assets you distributed.

Executors, liquidators, and trustees must therefore treat the clearance certificate as a mandatory protection step.

Distributing Assets Without a Clearance Certificate

If you distribute assets before receiving a clearance certificate and taxes are later found to be owing, CRA can:

• Reassess the estate

• Demand repayment directly from the executor

• Hold the executor personally liable up to the value of the assets distributed

• Prevent final closure of the estate

• Create legal and financial disputes among beneficiaries

In practice, distributing assets without a clearance certificate is one of the most common—and most costly—executor mistakes. Even if you “think” all taxes are paid, CRA’s formal confirmation is required.

When to Apply for a Clearance Certificate

A major rule:
Never submit a clearance certificate request at the same time you file the Final Return or T3 Return.
The CRA will not assess the request until the returns are processed, causing significant delays.

You should apply only after:

1. All required returns have been filed, including:

   • Final T1 Income Tax and Benefit Return

   • Any optional T1 returns

   • Any prior-year returns

   • T3 Trust Returns for the estate

   • Corporate returns (if applicable)

2. You have received Notices of Assessment for all filed returns.

3. All balances owing are paid or secured, including:

   • Income tax

   • GST/HST

   • Penalties

   • Interest

4. There are no unresolved:

   • Adjustment requests

   • Objections

   • Appeals

   • Taxpayer relief requests

Only when all matters are settled should you apply for the clearance certificate.

Prepare Your Request

The CRA requires a complete package of forms and supporting documents. The contents vary depending on whether you are applying for a clearance certificate for:

• An estate of someone who died

• A corporation

• A trust

• A GST/HST account

Though the exact lists differ by situation, the CRA typically requires:

• A completed clearance certificate application form

• A copy of the death certificate (for estates)

• A copy of the will, probate documents, or letters of administration

• A complete list of assets and liabilities at the date of death

• A list of assets distributed prior to your request (if any)

• Trust deeds or corporate resolutions (if applicable)

• All tax slips and related documentation

• Supporting schedules for capital gains and deemed dispositions

• Proof of payment for all balances owing

• Contact information for the legal representative

• Your RepID if applying through Represent a Client

Preparing an accurate and complete package reduces the risk of delays.

Send in Your Request

You may submit your completed clearance certificate application by:

Online

Using one of CRA’s secure portals:

• Represent a Client

• My Account

• My Business Account

This is the fastest and most efficient method. Documents can be uploaded through the “Submit Documents” service.

Mail or Fax

You can also submit your request by mail or fax to the appropriate CRA tax services office.

If submitting additional documents in response to CRA requests, include a cover page with:

• Name of the clearance certificate dispositions officer

• The tax services office handling your file

• The deceased’s SIN or trust/corporate account number

• Your name and role as legal representative

Clear labelling ensures your documents reach the correct department.

Processing Times

After submitting your request:

• The CRA will send an acknowledgement letter within 45 days.

• A full assessment can take up to 120 days, assuming all documentation is complete.

• If issues arise—such as missing information, unusual transactions, or complex estates—CRA may conduct an audit before issuing the certificate.

• If your request is denied, CRA will explain what is missing or what further steps are required.

  • Once corrected, you may reapply.

• If 120 days pass without contact from a clearance certificate officer, you should contact CRA to follow up.

Timelines vary significantly, but well-prepared applications receive faster decisions.

After You Receive a Clearance Certificate

Once CRA issues a clearance certificate and all known information is verified:

• You may distribute assets safely

• You do not carry personal liability for past taxes

• The responsibility for unpaid or later-assessed tax amounts shifts to:

  • The estate

  • The trust

  • The corporation

  • The beneficiaries or recipients of the property

This protects you as executor and formally closes the deceased’s tax obligations for the period covered by the certificate.

If New Assets Are Discovered Later

If you find additional assets or property after receiving a clearance certificate:

• You must apply for a new clearance certificate before distributing those newly discovered assets.

• This may involve:

  • Filing amended T1 or T3 returns

  • Reporting additional capital gains

  • Paying further balances owing

You must contact the tax services office that handled your original request for guidance.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or finalizing estate taxes and clearance certificates, our expert team ensures precision, transparency, and protection from audit risk.

If you are settling an estate or winding down corporate affairs, Mackisen will prepare the clearance certificate application, gather all documents, reconcile assessments, and deal with CRA on your behalf—ensuring the estate is closed safely and you are fully protected.