Retirement or Death of a Business Owner or Partner — Montreal CPA Firm Near You: How to Handle CRA Business Accounts, GST/HST, Payroll, Sole Proprietorships, Partnerships, and Corporations

When a business owner retires or passes away, the tax consequences extend far beyond personal returns. The structure of the business—sole proprietorship, partnership, or corporation—determines what happens next. CRA business accounts may need to be closed, updated, transferred, or maintained depending on the situation. Failure to follow proper procedures can result in payroll discrepancies, GST/HST problems, delays in estate administration, or personal liability for unpaid business taxes.

This guide provides a complete overview of CRA requirements when a business owner or partner retires or dies, including how to close business numbers (BNs), update ownership information, handle GST/HST and payroll accounts, and determine the impact on partnerships and corporations.

Legal and Regulatory Framework

When a business owner retires or dies, their CRA business accounts must be reviewed and updated to reflect the change in ownership. CRA rules vary depending on business structure:

• Sole proprietorships: The business ends when the owner dies; all CRA business accounts must be closed once final returns are filed.

• Partnerships: Outcomes depend on the partnership agreement. Some partnerships automatically dissolve; others continue.

• Corporations: A corporation continues to exist regardless of the death or retirement of a shareholder unless formal steps are taken to dissolve or restructure it.

The Canada Revenue Agency requires that business numbers, GST/HST accounts, payroll (RP) accounts, and corporate information be kept up to date. CRA also requires that final returns be filed and amounts owing be paid before accounts are closed.

Key Court Decisions

Courts have repeatedly held that business tax obligations survive the retirement or death of owners and partners. Decisions emphasize that:

• Sole proprietorships do not legally survive the death of the owner; the estate must wind them down.

• Partnerships depend entirely on the partnership agreement; court rulings often uphold the agreement’s terms.

• Corporations are separate legal persons and continue despite shareholder changes.

Courts have also confirmed that estates and legal representatives may be held liable if business accounts are not closed properly or if payroll/GST obligations are ignored.

Why CRA Targets This Issue

The CRA monitors changes in business ownership because:

• Final payroll remittances must be made

• GST/HST accounts must be closed or transferred

• Partnerships must correctly report ownership changes

• Corporations must file final returns for retiring or deceased shareholders

• Estate filings depend on correct business information

• Unreported changes can trigger compliance reviews

Failure to update CRA business accounts often results in:

• Penalties for unfiled GST/HST or payroll returns

• Incorrect assessments

• Delays in selling or transferring the business

• Problems issuing T4 slips or T5s

• Additional tax owed by the estate or business

Mackisen Strategy

Mackisen assists business owners, estates, liquidators, and partners in correctly handling CRA business obligations after retirement or death. Our approach:

• Review business structure and determine what actions are required

• File the Final T1 return for a sole proprietor

• Close business numbers (BN) and CRA accounts once final filings are processed

• Assist with payroll remittances and issuing final slips

• Prepare partnership ownership change filings or dissolve the partnership if required

• Update CRA records for corporations, including directors, shareholders, and officers

• File corporate returns for the year of death or retirement

• Coordinate GST/HST and payroll account closures

• Prepare Form RC4111 to notify the CRA of a death

We ensure all accounts are closed with zero balances and that CRA records reflect new ownership structures or dissolutions.

Real Client Experience

A sole proprietor passed away without clear records. Mackisen filed the Final Return, submitted payroll remittances, closed the GST/HST account, and communicated with CRA to close the BN. This allowed the estate to obtain a clearance certificate.

A partnership faced uncertainty after a partner retired without notice. Mackisen reviewed the partnership agreement, determined continued operation was allowed, updated CRA partner information, and ensured no new BN was required.

A corporation with a deceased shareholder needed help restructuring shares. Mackisen worked with the executor to transfer shares properly, filed corporate information updates, and coordinated payroll and GST filings.

A retiring business owner needed to wind down operations while avoiding penalties. Mackisen closed CRA accounts, reviewed compliance, and ensured no outstanding payroll or GST/HST liabilities remained.

Common Questions

What happens to a sole proprietorship when the owner dies?

It ends. A Final T1 return must be filed, and once all amounts owing are paid, the BN and all CRA business accounts must be closed.

Does a partnership end when a partner dies or retires?

It depends on the partnership agreement. Many agreements specify continuation rules; others dissolve automatically.

Does a corporation end when a shareholder dies?

No. Corporations survive shareholders. The estate or surviving shareholders must update CRA records if ownership or directors change.

Do I need a new BN if a partnership adds or loses partners?

Not always. Many partnerships continue under the same BN unless the agreement or business structure changes.

Do CRA business accounts need to be closed immediately?

They should be closed once final returns are filed and all remittances and GST/HST filings are complete.

Can payroll and GST/HST accounts remain open?

Only if the business continues. Otherwise, CRA expects them to be closed.

What forms help with notifying the CRA?

Form RC4111 (Notify the CRA of a Death) and the relevant ownership or BN change forms.

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.

If you are dealing with the retirement or death of a business owner or partner, Mackisen can help you file all required returns, close business accounts, update CRA records, and protect the estate or business from penalties and liabilities.