Tax Tips and Pits – Dealing with the CRA after losing a loved one

Although when a loved one passes the last thing you want to think about is paperwork, it's important to notify the proper authorities.

Although when a loved one passes the last thing you want to think about is paperwork, it’s important to notify Canada Revenue Agency (CRA) and Service Canada of the death so that any credits being paid to the deceased will be redirected to a surviving spouse, and any benefit due to the surviving spouse or dependent is paid. Forward a copy of the Death Certificate and a complete copy of the Will.

Regarding personal tax, the due date for the final or terminal tax return varies depending on the date of death. A death occurring between January 1 and October 31 is filed April 30 of the following year – the normal tax filing date. A death between November 1 and December 31 has a file date extended to six months after the date of death.

At tax time, if the date of death was in the prior calendar year, the type of return to file is a “terminal” return, and indicate as such along with the Executor information.  So a death in 2013 means the return filed in 2014 is the terminal return.

If however the death occurs in the current calendar year and before April 30 (the tax due date), the return being prepared is not the terminal return. It’s a “regular” return with the date of death and Executor information entered, and the return signed by the Executor.

In other words, a taxpayer who passed away in January 2014 has a regular 2013 tax return filed by April 30, 2014.  The taxpayer is reported as deceased on the regular return, and it is not reported as the terminal return.  The terminal tax return is due by April 30, 2015.

When it comes to signing authority, if a surviving spouse is not the Executor they can’t sign.

If there is more than one Executor named in the Will, it is advisable to have all sign applicable documents if at all convenient. This is a necessity if the term “and” is used between the names of the Executors.

And if you think it doesn’t matter who signs a deceased taxpayer’s return because it’s going to be e-filed, sorry, the return, whether regular or terminal, must be mailed and CRA looks for the signature of the Executor. It’s best to again send a copy of the Death Certificate and Will.

Regarding the actual tax prep – be thorough.  Ascertain all relevant tax slips before filing the terminal return.  Don’t rush the final tax preparation process.  A slip that shows up after filing may dictate amending and re-filing the terminal return – a tedious process.

Finally, after the terminal return is filed with CRA and any taxes due are paid, a request by the Executor for a Certificate of Clearance is needed to officially wrap up the estate.  This is a basic form available on-line.  Once requested, be patient.

This will likely take some time as the taxman searches all nooks and crannies in Canada to ensure the deceased taxpayer has paid everything in full – death and taxes, two certainties in life.

Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.JBSbiz.net.

 

Just Posted

Time to talk turkey

Five food safety tips for the holidays

What you see …

If you have a recent photo to share email it to editor@trailtimes.ca

Creston-area rail siding, site of 1910 disaster

Place Names: McNeillie Siding, Savalpee Port, Mud Landing, Nelway and more

Smoke Eaters struggles continue heading into tough stretch

Thompson: ” … home games closing out the pre-holiday schedule will showcase some real talent.”

Snowstorm called for the Kootenays

FortisBC advises electric customers to prepare for storm-related outages

Trudeau to make it harder for future PM to reverse Senate reforms

Of the 105 current senators, 54 are now independents who have banded together in Independent Senators’ Group

Man dies after falling from B.C. bridge

Intoxicated man climbed railing, lost his balance and fell into the water below

B.C. animation team the ‘heart’ of new ‘Spider-Man: Into the Spider-Verse’

The animators, largely based in Vancouver, ultimately came up with a creative technique that is drawing praise

Light at the end of the tunnel for UN climate talks

Meeting in Katowice was meant to finalize how countries report their emissions of greenhouses gases

Janet Jackson, Def Leppard, Nicks join Rock Hall of Fame

Radiohead, the Cure, Roxy Music and the Zombies will also be ushered in at the 34th induction ceremony

Supreme Court affirms privacy rights for Canadians who share a computer

Section 8 of the Charter of Rights and Freedoms protects Canadians against unreasonable search and seizure

B.C. fire chief pleads with Ottawa for traumatic stress support

Campbell River fire chief Thomas Doherty presented concerns to federal government

21 detained before Paris protests as police deploy in force

There was a strong police presence outside the central Saint Lazare train station, where police in riot gear checked bags

ICBC to apply for 6.3% hike to basic insurance rates

Crown Corporation said it will be submitting its next basic rate application to the British Columbia Utilities Commission Friday

Most Read