An estate is a new taxable entity created when an individual passes away and their assets don’t roll seamlessly to a spouse or beneficiary. There are complex rules involved, but we can help the executor navigate them. A T3 Return needs to be filed for the taxable income of the estate.
The first step is filing the final personal tax return for the deceased. This is a normal return for the calendar year up to the date of death. Any assets owned by that person are deemed to have been ‘sold’ or collapsed at their fair market value on the day they passed away. If those assets are jointly owned with a spouse, the tax is typically lower and an estate return may not be required.
Another service we provide is the filing of an application for Clearance Certificates which reassure an executor that CRA is satisfied with the final personal return and/or the estate return(s). Once a Clearance Certificate is received, it is unlikely that CRA will go after the executor for more income tax so the estate can be fully disbursed in accordance with the Will.