Accounting Advice for Dealing with Estates

Accounting Advice for Dealing with Estates

Dealing with tax filings after a loved one is deceased is essential. And we understand that you
are already having a difficult time coping with the loss of someone you loved. That is why
Michael Evans is here to assist you with everything from start to end while dealing with
Canada Revenue Agency (CRA).

At first, tell CRA about the death

When the death occurs, you need to notify CRA about it. You can reach them by any one of
the following methods:

 Call CRA at 1-800-959-8281Or you can fill out this form to update the deceased
person's records and send it to the tax centre.

In case the deceased was receiving any of the following payments and benefits, they must
be stopped or transferred to the spouse, if possible.

 Goods and Services Tax, GST/HST credit, Canada Child Benefit (CCB), Canada
Workers Benefit (CWB) advance payments, and Covid 19 benefits.

You would also need to inform the Canada Service about the date of the death. You can call
them at 1-800-622-6232 to receive further information or find their nearest centre.

Note- If there are any tax instalments left after the death, they don't need to be paid. But in

case of any due instalments that are not paid needs to be taken care of.

Filing Necessary Tax Forms

Various required tax forms must be filled and completed before the due date. CRA ensures
that there is no payment due for any individual. So, it is essential to fill in these forms to avoid
any penalties.

These are some of the required forms you need to ensure filing before the due date-

1. Final Returns can be filed electronically through the EFILE service or on paper. These

returns should include all the income-related information of the deceased from January 1 to
the date of their demise. If the deceased received any income after their death, that is also to
be reported to the CRA.

2. A T1255 needs to be filled by the spouse or the common-law partner to define and

designate the owner's property (demised) as the Principal Residence if already not supplied
by the owner. CRA perceives that any property belonging to the deceased has been disposed
of at fair market value upon their death if it has not been registered before their death. They
call this deemed disposition.

Although, once the assets are settled and go to the beneficiaries, they have to pay a capital
gain tax to the CRA. A Capital gain tax is calculated by deducting the fair market value from
the rate of the asset when it was bought or acquired.

Note: You cannot deduct personal expenses like probate fees, funeral expenses, or fees to

administer the estate.

Due Dates for Filing the Previous Year Return and the Final Return?

For filing the Previous Year Returns, must pay the tax within six months of the person's death
given the person has died in the year 2022, on or before the personal tax return's filing date.
The date for filing the T1 form for 2021 will be the same for the spouse or the common-law
partner living with the person who died. If in case of any remaining balance on behalf of the
spouse are still to be paid on or before April 30, 2022. Otherwise, CRA will apply interest
charges on the balance still due.

The due dates for filing Final Returns depend on the time of the year a person dies. You can
check them here.

If you fail to file your returns before the due date, CRA will charge penalties for late filing- 5%
on the remaining balance and additional 1% for every month that the return is late.

So, it's for the best that you file the returns on or before the due date to avoid any penalties.
Then you won't be charged even if you haven't paid the total balance amount all at once.

Clearance Certificate

Before distributing any property of the estate, it is necessary to get a clearance certificate.
This certificate will be proof that the deceased doesn't owe any amount or due balance to the
CRA. This falls under the legal representative's duty to make sure that the deceased has paid
tax for all the tax years until the year of death. Otherwise, the legislative representative will
be responsible for paying all the amount liable to the CRA.

We at Michael Evans provide Tax Accountant in Pickering and Ajax. We help you save tax and
file personal and corporate taxes in time to avoid penalties, among many other services. If
you need assistance regarding tax services in any of these locations, we are here to offer you
all the Accounting and Tax Services and the Online Tax Services. Feel free to call at 905-420-
9637 or mail us at [email protected].