When you die, you are “deemed” to have disposed of all of your assets — just as if you had sold them immediately before you died. This may trigger a gain or loss. If there is a net gain, your estateEstate The total sum of money and property you leave behind when you die.+ read full definition will owe income taxIncome tax A charge you pay based on your total income from all sources. The Canadian government and your province set the rate.+ read full definition. It may also have to pay probateProbate Fees to settle your estate after your death. The probate process includes reviewing your will to ensure it’s valid. Also includes paying any debts and giving your money and property to the beneficiaries you have named in your will.+ read full definition fees.
Learn more about how to reduce the taxes and fees your estate will pay after your death.
When to file a final tax return
A final taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition return covers the period from January 1 up to and including the date of death:
- If the death occurs between January 1 and October 31 — the deadline for filing and paying any tax owing is April 30 of the following year. This is the normal filing deadline.
- If the death occurs between November 1 and December 31 — the deadline is 6 months after the date of the death.
CRA clearance certificate
Before any property can be distributed to the beneficiaries, the executorExecutor Someone you name to carry out the wishes that you set out in your will after your death. May be named by the court if you don’t name one. In Ontario, an executor is called an estate trustee.+ read full definition should obtain a clearance certificate from the Canada Revenue Agency (CRA). This certifies that all final taxes owing have been paid. Learn more about filing a final return.
Before the beneficiaries can receive any property from an estate, the CRA must issue a clearance certificate saying all final taxes owing have been paid.
Tax deadlines for final returns:
- April 30 – if the death occurs between January 1 and October 31
- 6 months after the death – if the death occurs between November 1 and December 31