Doing Taxes for Someone Who Died — Montreal CPA Firm Near You: Executor Responsibilities, Final Returns, Estate Tax, and Clearance Certificates

When someone dies, their tax obligations do not disappear. The Canada Revenue Agency (CRA) requires a final series of tax filings and administrative steps to settle the person’s financial affairs. These rules apply whether the deceased had a simple tax situation, owned a business, held investments, received benefits, or maintained Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs). Executors, administrators, family members, or legal representatives must complete these steps correctly to avoid delays, reassessments, and unwanted tax liability for the estate.

Settling tax accounts after a death involves notifying the CRA, filing multiple possible returns, reporting income and capital gains, transferring or winding down registered plans, closing business accounts, and applying for a clearance certificate before distributing assets. The CRA brochure “Doing Taxes for Someone Who Died” outlines the basics, but executors often require more guidance, especially in cases involving businesses, multiple beneficiaries, foreign assets, or complex investments. This guide provides a complete overview of what to do and when, ensuring compliance and protecting the executor from liability.

Legal and Regulatory Framework

The Income Tax Act outlines the responsibilities for filing tax returns after death. An executor or legal representative must file the deceased person’s final T1 General return for the year of death, reporting income from all sources up to the date of death. In some cases, additional returns may be required, including a “Rights or Things” return, a T3 Trust Return for the estate, and optional returns for business income or capital property.

Executors must also notify the CRA of the date of death. This cancels ongoing benefit payments, prevents overpayments, and updates CRA records. If benefits continue after the date of death, they must be repaid. CRA authorization rules require executors to provide legal proof of authority, such as a will, probate documents, or letters of administration, before accessing tax records or filing returns on behalf of the deceased.

Registered plans such as RRSPs, RRIFs, and TFSAs have specific rules upon death. RRSPs may transfer to a spouse or financially dependent child under special conditions. TFSAs can be transferred to a spouse as a successor holder or beneficiary. If no eligible beneficiary exists, the values may become taxable to the estate. Business accounts such as GST/HST, payroll, and business numbers must be closed or transferred.

A clearance certificate is required before distributing estate assets. Without it, the executor may be personally liable for unpaid taxes.

Key Court Decisions

Courts have consistently ruled that executors have a legal duty to settle tax affairs accurately and in good faith. In decisions involving estate administration, judges have affirmed that executors may be held personally responsible for tax debts if they distribute assets prematurely. Courts have also clarified that income earned after the date of death belongs to the estate and must be reported separately on a T3 Trust Return.

Cases involving RRSP rollovers, property transfers, and capital gains upon death reinforce the importance of accurate valuation and proper reporting. Jurisprudence highlights that the CRA’s assessments are presumed correct unless the executor can prove otherwise with documentation. These rulings emphasize the importance of seeking professional advice when dealing with complex returns, multiple properties, or disputed beneficiary claims.

Why CRA Targets This Issue

The CRA monitors estate-related filings closely because errors are common and estate taxes can be significant. Common issues that trigger CRA reviews include:

• failure to report all income up to the date of death
• missing returns (especially Rights or Things or estate T3)
• improper RRSP or RRIF reporting
• unreported capital gains on property transfers
• business accounts not closed or transferred
• missed benefit repayments
• improper valuation of investments or assets
• executor filing without proper authorization
• distributing the estate before receiving a clearance certificate

Because the CRA can reassess estate returns for several years, proper documentation and timely filing are essential.

Mackisen Strategy

Mackisen supports executors and families through each step of the tax settlement process. Our approach begins with confirming the date of death and notifying the CRA to stop benefits and update records. We then obtain proper authorization for the executor or representative, allowing us to access CRA information, slips, and account history. This ensures all income—employment, pension, investment, rental, business, or exempt amounts—is accurately captured.

We assist with the final return, determine whether additional returns are required, identify opportunities for income splitting, rollover options for RRSPs or RRIFs, and calculate capital gains triggered by death. For individuals with businesses, we help close GST/HST, payroll, and business accounts, and prepare final business statements. For estates receiving income after death, we prepare T3 Trust Returns and help the executor manage trust obligations.

For estates involving multiple properties, foreign accounts, or complex investments, we ensure accurate valuation and documentation. Most importantly, Mackisen prepares and submits the clearance certificate request so the estate can be distributed safely without risk of future tax liability.

Real Client Experience

An executor contacted us after receiving repeated CRA letters requesting missing returns for a deceased parent. Mackisen obtained authorization, pulled all CRA documents, filed the final return, prepared a Rights or Things return, and corrected benefit overpayments. The executor received a clearance certificate and distributed the estate without further issues.

Another client inherited a property that triggered significant capital gains. We calculated the fair market value at the date of death, corrected prior-year business losses, and reduced the estate’s tax bill substantially.

A family dealing with an estate that included RRSPs, a TFSA, and a small business required guidance. Mackisen coordinated RRSP rollovers, closed GST and payroll accounts, filed final business statements, and ensured all CRA requirements were completed before distribution.

In northern regions, we assisted families whose loved ones received northern deductions and benefits, ensuring the final return was accurate and eligible future credits for survivors were preserved.

Executors with no accounting background often rely on our team to avoid penalties and ensure compliance, especially when multiple filings and government agencies are involved.

Common Questions

What returns must be filed when someone dies?
A final T1 return plus possibly a Rights or Things return, business returns, and a T3 estate return.

Do I need to notify CRA of the death?
Yes. You must call the CRA with the date of death and provide documentation.

Who can access the deceased’s CRA account?
An authorized executor or legal representative with proof of authority.

What happens to RRSPs and TFSAs?
RRSPs may be taxable unless transferred to eligible beneficiaries. TFSAs can transfer tax-free to a spouse as a successor holder.

Do businesses need to be closed?
Yes. GST/HST, payroll, and business numbers must be closed or transferred.

What is a clearance certificate?
A document confirming all taxes are paid. Executors must obtain one before distributing assets.

What happens if benefits were overpaid?
Overpayments must be repaid by the estate.

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 optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.