Final Tax Return for a Deceased Person, Prepared for Executors
When someone dies, their executor becomes responsible for the final tax filings. Bestax prepares the final T1, any optional returns and the estate’s T3, and requests the CRA clearance certificate, so the estate can be distributed without leaving the executor exposed.
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Who We Help After a Death
The legal representative, usually the executor named in the will, files the deceased person’s returns and pays any tax owing from the estate before it is distributed. These are the people and situations we most often work with.
- Executors and liquidators handling an estate for the first time.
- Surviving spouses or common-law partners who inherit property, RRSPs or RRIFs.
- Estates that hold a home, a cottage, rental property or investments with unrealized gains.
- Families where the person had business income or owned shares of a private corporation.
- Estates where the person had not filed for one or more years before death.
- Executors who need a clearance certificate before distributing the estate.
The executor works with the estate lawyer on probate and the will, and with us on the tax. Distributing property before the tax is settled can make the executor personally liable for it.
Once the final return is filed, the estate’s own income is reported on our T3 Trust Return Filing service. For wider planning, see Estate & Trust Tax Services.
What Our Final Return Service Covers
From notifying the CRA to the clearance certificate, we prepare each tax filing the estate needs, in the order it needs them.
- Notifying the CRA of the death and setting up the executor as the legal representative.
- The final T1 return, reporting income from January 1 to the date of death.
- The deemed disposition of capital property at death, and the spousal or common-law partner rollover where it applies.
- Optional returns for rights or things, business income and testamentary trust income, where they reduce the tax.
- Any prior-year returns that were not filed before the death.
- The estate’s T3 returns afterwards, and the clearance certificate request on Form TX19.
How Death Is Taxed in Canada
Canada has no inheritance tax, but the deceased is treated as having sold their capital property at fair market value immediately before death. Gains on investments, rental property and private company shares are taxed on the final return, unless the property passes to a surviving spouse or common-law partner, or a qualifying spousal trust, where it can roll over at cost.
RRSPs and RRIFs are generally included in income on the final return at their value at death. Where they pass to a surviving spouse or common-law partner, or in some cases a financially dependent child or grandchild, the amount can be taxed in the beneficiary’s hands or transferred to their own plan instead.
The final return is due April 30 of the following year, or six months after the date of death if death occurred between November 1 and December 31.
Optional returns can report certain income separately, so some personal credits can be claimed again and more income is taxed at lower rates.
The clearance certificate is requested on Form TX19 once all the returns have been assessed.
Distributing property before receiving the clearance certificate can leave the executor personally liable for unpaid tax.
Where the deceased or their spouse had self-employment income, the final return deadline moves to June 15, or six months after death for deaths late in December.
Returns After a Death and When They Are Due
The date of death decides each deadline, and several returns can be due for the same person.
| Return | What it covers | Due date | Notes |
|---|---|---|---|
| Final T1 return | Income from January 1 to the date of death, and the deemed disposition | April 30 of the next year; six months after death if death was in November or December | June 15 instead where there was self-employment income, for most dates of death |
| Prior-year T1 not yet filed | The year before death, if it was not filed | Generally six months after the date of death | Applies when death occurs early in the year, before the usual filing date |
| Rights or things return | Amounts owed to the person at death but not yet paid, such as declared dividends | The later of one year after death or 90 days after the final return’s assessment | Optional; some credits can be claimed again |
| Estate T3 return | Income the estate earns after the date of death | 90 days after the estate’s tax year end | Can be designated a graduated rate estate |
| Clearance certificate (TX19) | Confirms all tax owing has been paid | Before the estate is distributed | Requested after all returns are assessed |
The payment date for a balance owing can come before the filing date, so we confirm both at the start of the file.
What We Need to Prepare the Final Return
We know this list arrives at a difficult time. We start with what you have and help you request the rest.
Many slips are issued in the year after death, so some figures come in over several months. We plan the filing around them.
- The death certificate or funeral director’s proof of death, and the will.
- The deceased person’s last tax return and notice of assessment.
- Slips and statements for the year of death, including pension, CPP, OAS and investment income.
- RRSP, RRIF and TFSA statements, with the named beneficiaries.
- Purchase details and values at death for property, investments and private company shares.
- Records of any business, rental or self-employment income.
Our Final Return Process for Executors
Notify and register
We help you notify the CRA and Service Canada and set you up as the legal representative.
Gather the records
We list the slips, statements and values needed, and request what the family cannot find.
Plan the returns
We decide which optional returns, rollovers and elections lower the total tax.
Prepare and file
We prepare the final T1 and any optional or prior-year returns, review them with you and file them.
Estate T3 returns
We file the estate’s T3 for income earned after death, with the graduated rate estate designation where it applies.
Clearance and close
Once everything is assessed, we request the clearance certificate so the estate can be distributed.
Why Executors Choose Bestax
The right order
Notify, file, obtain clearance, then distribute. We set out the sequence in writing at the start.
Every return considered
We check whether optional returns or rollovers can lower the tax before the final return is filed.
Patient with families
We explain each step plainly and work at a pace the family can manage.
Lawyer kept in the loop
Bestax does not handle probate or give legal advice. We share figures with your estate lawyer so tax and probate move together.
Through to clearance
We stay with the file from the final return to the clearance certificate, not just the first filing.
Related Bestax Services
Estate & Trust Tax Services for estate planning and trust tax work as a whole.
Personal Tax Returns for the surviving spouse’s return after a rollover or RRSP transfer.
Trust Fund Accounting to keep the estate’s accounts while it is administered.
Catch-Up Bookkeeping when past years have to be rebuilt before they can be filed.
What Our Clients Say
After years of DIY tax filing, I decided to work with professionals, and I’m glad I chose Bestax. Their team corrected years of minor errors and even identified deductions I had missed. The savings more than paid for the service.
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Frequently Asked Questions
If the person died between January 1 and October 31, the final return is due April 30 of the following year. If they died between November 1 and December 31, it is due six months after the date of death. Different dates apply where the person or their spouse had self-employment income.
No. Instead, the deceased is treated as having sold their capital property at fair market value just before death, and any gain is taxed on the final return. Property left to a surviving spouse or common-law partner can usually pass at cost, deferring the tax.
Its value is generally included in income on the final return. If it passes to a surviving spouse or common-law partner, or in some cases a financially dependent child or grandchild, the amount can be taxed in their hands or transferred to their own plan instead.
They are separate returns for certain types of income, such as amounts owed to the person but not yet paid at death, business income from a fiscal period that had not ended, or income from a testamentary trust. Filing them can allow some personal credits to be claimed again and lower the total tax.
It confirms that the deceased’s and the estate’s tax has been paid. If you distribute the estate without one, you can be held personally liable for any tax the CRA later assesses, up to the value of what you distributed.
If the estate earns income after the date of death, the executor files a T3 return for the estate each year until it is wound up. Our T3 Trust Return Filing service covers those returns.