When you are managing the tax affairs of someone who has died, there are important steps to take to notify the Canada Revenue Agency (CRA), represent the deceased taxpayer, and finalize their tax filings.
Contacting the CRA
You should contact the government as soon as possible. This includes steps like cancelling a provincial health card, driver’s license, and applying for Canada Pension Plan (CPP) death and survivor benefits.
From a tax perspective, you should contact the CRA by phone or by mail. If you call CRA Individual Tax Enquiries at 1-800-959-8281, you should make sure you have on hand the person’s:
- Date of death
- Social Insurance Number (SIN)
- Mailing address
- Last tax return or notice of assessment
You should report their date of death and stop any ongoing benefits that may need to be repaid.
There are several other government agencies you should also notify.
Executors and next of kin
To formally represent someone who has died with CRA, you can do so as a legal representative or name an authorized representative. A legal representative is generally the executor of the deceased’s estate named in their will. In Québec, this representative is called a liquidator.
If you want to have online access to the CRA account of the deceased, you have to register for CRA’s Represent a Client service. You can do so with your CRA user ID and password, or with the Interac sign-in service to select a sign-in partner using your online banking.
On the welcome page, select Add Account → Representative Account → Register with Represent a Client → Register Yourself.
Once registered, you can submit documents using the Submit Documents service in Represent a Client. You need to provide a copy of the death certificate and a copy of the will, grant of probate, or letters of administration listing you as executor.
If the deceased had no will, you can fill out and submit Form RC552, Register as Representative for a Deceased Person.
If you would prefer the old-fashioned way, you can also mail or fax these documents to the CRA without registering for Represent a Client. You should send them to the tax centre that serviced the deceased based on their mailing address.
Also read
Income Tax Guide for Canadians
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Once you are authorized as the legal representative, you can appoint an authorized representative, like an accountant or lawyer. You do this from your own Represent a Client portal by entering the social insurance number of the deceased to access their online tax account.
Under the Related Services Section, select Authorized Representative(s), Authorize a New Representative, and follow the instructions. You must provide the representative’s RepID, CRA Business Number, or GroupID to appoint them.
Tax returns
You must file a final tax return up to the date of death reporting income for that year. There is also a deemed disposition of assets at death that may trigger tax on registered accounts like registered retirement savings plan (RRSPs) or registered retirement income funds (RRIFs).
Capital assets like non-registered investments, cottages, and rental properties may also be subject to capital gains tax.
Assets in other countries are also relevant, as Canadian residents are taxed on their worldwide income.
Certain elections may be available to defer tax on death, most notably a spousal rollover that allows assets to pass tax deferred to a surviving spouse or common law partner.
Special, additional tax returns may be eligible to file as well. Notably, a T3 Trust Income Tax and Information Return. These are most commonly filed to report a CPP death benefit or other income earned after death.
Other optional returns like a Return for Rights or Things or a Return for a Partner or Proprietor may also apply.
Clearance certificate
Once the final taxes have been filed and paid for the deceased, you should consider filing for a Clearance Certificate.
This process officially closes their tax account with the CRA. It also gives peace of mind to the executor that they can distribute assets of the estate without the risk of owing additional tax. An executor could be personally liable for this tax, otherwise.
Summary
This is not an exhaustive summary of all the things an executor or next of kin must do when someone dies, but it addresses the main tax considerations.
These steps range from notifying the CRA to stopping some benefits and applying for others. An executor or next of kin needs to file final tax returns and should consider obtaining a Clearance Certificate to avoid personal liability for unpaid taxes.
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