Experiencing the death of a loved one is a difficult thing to go through. Aside from the loss of someone close to you – a family member, friend, co-worker or neighbour, there are plenty of things that need to be dealt with on behalf of the individual’s estate. These include arrangements for a funeral/celebration of life, notifying next of kin, and the list goes on.
Many of our clients ask us what are some the things that you need to do from a tax standpoint. The following is some practical things to do when someone dies.
1/ Determine who is the legal representative.
The legal representative is the person named as the executor in the will. This could be one or more individuals. If there is no will, someone can be appointed as the administer of the estate by a court. This is normally handled by a lawyer on behalf of the estate. The document provided by the court is normally called letters of administration.
2/ Notify the federal government of the death.
Employment and Social Development Canada (ESDC)
This is the government agency that administers the Canada Pension Plan and Old Age Security/Guaranteed Income Supplement. You will need to provide a proof of death and the Social Insurance Number of the deceased individual. A proof of death is either a statement of death issued by the funeral home, or a death certificate issued by the province of territory where the death occurred.
Normally, if you use a funeral home to assist with final arrangement, they will send in this information to ESDC on the taxpayer’s behalf.
Canada Revenue Agency (CRA)
You will need to send the CRA the social insurance number of the person who died, a copy of the death certificate, and a complete copy of the will or other legal document, such as a grant of probate of letter administration showing who is the legal representative.
If there is no will, you can submit Form RC552 – Register as a Representative for a Deceased Person.
These forms can be uploaded to CRA using the represent a client service or by mail to the Authorization Services Unit of the deceased person’s tax centre. In Manitoba, it is the Winnipeg Tax Centre.
3/ Make a list of any Estate Assets.
This is an important step, especially of any of the estate assets need to go through probate. This listing is helpful when discussing estate matters with a lawyer or accountant. If any of the assets are capital property, there may be tax issues that arise upon death. We recommend that you speak with an accounting professional (like us) to determine any tax consequences.
4/ Gather all the tax forms.
We usually recommend waiting for all the tax forms to be received before filing the final tax return. Most receipts are required to be issued by the end of February of the following year. T3 slips from trusts have a March 31st deadline to be filed.
5/ File Tax Returns
If the period when death occurred between January to October 31 of a given year, then the due date is April 30th of the following year. If the death occurred between November 1 and December 31, then the due date is 6 months after the date of death.
Depending on the circumstances a T3 Trust return may need to be file for any income by the estate received after death. These returns are due 90 days after the year end of the Estate.
6/ File Clearance Certificate
Once all the required tax filings are complete and any refunds received balances owing have been paid, then a TX19 tax return Request for Clearance Certificate can be filed with Canada Revenue Agency. This can be filed for the final return to date of death, as well as, for the wind update for any T3 Estate returns. This clearance will be mailed by CRA to the executor.
This is a basic overview of the things to do when someone dies. Further guidance from CRA is here.
If you require further information or questions, please consult a lawyer. And, if you need anything else, please reach out to our office for trusted advice and personal service.