Estate Taxes and Terminal Tax Return Help for Executors
Support with terminal T1, T3 estate returns and CRA clearance certificates for executors.
Filing taxes after a death can feel overwhelming. Greg Cowan CPA helps executors handle the final tax return, estate tax returns, and clearance certificate so CRA is satisfied and beneficiaries receive the right amount.
What is a terminal (final) tax return?
A terminal tax return, also called the T1 final return, is the last personal income tax return filed for someone who has died in Canada. It reports all income from January 1 of the year of death up to the date of death, including employment, pensions, investments, capital gains, RRSP/RRIF income, and other taxable amounts.
Why estate taxes and the terminal return matter
Protecting the executor
The executor (or estate trustee) is responsible for filing taxes for the deceased and the estate, paying any final tax, and obtaining a clearance certificate before distributing assets. Doing this incorrectly can expose the executor to personal liability if CRA later assesses more tax.
Maximizing what goes to beneficiaries
The way income, capital gains, and deductions are reported on the final tax return and any estate or trust returns can significantly affect how much tax the estate pays. Proper planning and elections can reduce estate tax and leave more for beneficiaries.
Less stress during a difficult time
Clear guidance on which returns are required, what information is needed, and when to file helps families move through death and estate taxes with less confusion and fewer surprises from CRA
Estate tax services and trust tax services
Executors and estate trustees who need help filing taxes for someone who has died.
Families dealing with estates that hold investments, real estate, private company shares, or trusts.
Includes
Preparation and filing of the T1 final (terminal) return for the deceased, including income, capital gains and registered plans triggered at death.
Preparation of T3 estate and trust returns when required, reporting estate income and distributions to beneficiaries.
Estate and trust tax advice, including available elections and planning opportunities, and calculation of tax reserves so the executor knows how much to hold back before distributions.
Help responding to CRA questions and follow‑up, and preparing and submitting the clearance certificate request package once all T1 and T3 returns have been filed and assessed
FAQs
Who is responsible for handling the tax affairs of someone who has died?
The legal representative—usually the executor named in the will, an administrator appointed by a court, or a liquidator in Quebec—is responsible for the deceased’s tax affairs. This person must file all required returns, pay taxes from estate funds, and make sure tax matters are settled before assets are distributed.
What is the “final” or “terminal” tax return?
The final or terminal T1 return is the last personal income tax return filed for the person who has died. It reports all income and deemed capital gains from January 1 of the year of death up to the date of death, and any tax owing must be paid from the estate before distributions.
Are there other tax returns that may need to be filed for the deceased?
Yes. In some cases, additional optional T1 returns can be filed for specific types of income, such as unpaid employment income, rights or things, or certain business or partnership income. These extra returns follow special rules and deadlines but can sometimes lower the overall tax by allowing more deductions and credits.
What is a T3 Trust Income Tax and Information Return, and when is it required?
A T3 Trust Income Tax and Information Return is used to report income that the estate or a trust earns after the date of death, such as investment or rental income. It is generally required when the estate earns income or makes distributions to beneficiaries, and it covers the estate’s tax year rather than the calendar year.
What are the deadlines for filing the final and other returns?
The deadline for the final T1 return depends on when the person died, but it is usually the following April 30 or six months after the date of death. Optional T1 returns generally share the same due date, while the T3 estate return is due 90 days after the end of the estate’s chosen tax year, which can be up to one year long.