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Death & Estate Taxes in Ottawa
When someone dies, their legal representative must file a final tax return. If the death occurred between January 1 and October 31, the final return is due April 30 of the following year. If the death occurred in November or December, it's due six months after the date of death. Income the estate earns after death is reported separately on a T3 return.
Nour & Daniels Tax guides Ottawa executors and families through every step: the final return, estate returns, and the clearance certificate that protects you before anything is distributed. You handle your family. We'll handle the CRA.
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Know Your Dates
Estate tax deadlines at a glance
These are the deadlines an executor or legal representative needs to know. Each one is verified against canada.ca.
| Obligation | CRA deadline |
|---|---|
| Final return, death January 1 to October 31 | April 30 of the following year. |
| Final return, death November 1 to December 31 | Six months after the date of death. |
| T3 estate return | 90 days after the trust's year-end. For a graduated rate estate, the first year-end can be any date within one year of death. |
| Clearance certificate (Form TX19) | Not a dated deadline, but it should be obtained before estate assets are distributed. Without it, the executor can be personally liable for unpaid tax up to the value distributed. |
| Late-filing penalty (final return) | 5% of the unpaid balance plus 1% per full month late (max 12 months). |
| T3 late-filing penalty | $25 a day, with a minimum of $100 and a maximum of $2,500. |
A father dies March 12, 2026. His final return is due April 30, 2027, with his regular 2025 return still due on its normal date. A mother dies November 20, 2026. Her final return is due May 20, 2027, six months after death, not April 30. The November date catches many families off guard because it arrives earlier than they assume.
The Final Return
The final return reports all income the person earned from January 1 up to the date of death. It's also where Canada settles its tax, because there is no inheritance tax here. Instead, the deceased is treated as having disposed of their property at death, and the resulting tax belongs to the final return.
- Deemed Disposition: Investments, property, and belongings are treated as disposed at death even if nothing was sold, and one half of any resulting capital gain is taxable on the final return. (Source: CRA: reporting income for someone who died)
- RRSPs and RRIFs: Remaining amounts are generally included in income on the final return, though transfers to a surviving spouse or certain beneficiaries may defer that tax. We work through the options before anything is filed.
- Optional Returns: The CRA permits separate optional returns for certain types of income, which can reduce the overall tax by using some credits more than once. Most families never hear about these. We check every time.
Estate & Trust Returns (T3)
Income the estate earns after death, such as interest, dividends, or rent collected before assets are distributed, is reported on a T3 Trust Income Tax and Information Return, separate from the final return.
- Graduated Rate Estate (GRE): A properly designated estate is taxed at graduated rates rather than the top rate for up to 36 months after death. The designation and the choice of the first year-end, which can be any date within one year of death, are decisions worth getting right early. (Source: CRA: what returns to file)
- What Lands on the T3: Investment earnings after death, including growth in what was a TFSA, CPP death benefits not reported by a beneficiary, and business or rental income the estate continues to receive.
- Deadlines With Teeth: The T3 is due 90 days after the trust's year-end, and the late penalty runs $25 a day to a maximum of $2,500. We put the dates on the calendar the day we're engaged.
Executor & Clearance Certificate Support
Being named executor makes you the CRA's point of contact for someone else's taxes, often while you're grieving. The single most important protection you have is the clearance certificate, and the single biggest mistake we see is distributing the estate without one.
- Form TX19 Clearance Certificate: This certificate confirms the CRA has received all amounts owing. Distribute the estate without it and you can be personally liable for unpaid tax, up to the value of what was distributed. We prepare the request once every return is assessed. (Source: CRA: deadlines for someone who died)
- The Unfiled Years Problem: Executors often discover the deceased was behind on tax filings. Those years must be brought current before the estate can close. Our back taxes service handles exactly this.
- CRA Correspondence: We communicate with the CRA on the estate's behalf, from notices of assessment to follow-up requests, so you aren't decoding tax letters in a difficult season.
Planning Ahead for Your Own Estate
The tax bill at death is largely determined by decisions made years earlier. A modest amount of planning now can spare your family complexity, delay, and tax later.
- Know Your Exposure: We estimate what the deemed disposition would mean for your situation today, so the number isn't a mystery to your family later.
- Structure and Beneficiaries: How accounts are registered and who is named on them changes what lands on the final return. We review it as part of our tax planning service.
- Business Owners: Shares of a private corporation add a layer to estate tax that is best addressed while you're alive and well. Our corporate tax accountants work on both sides of that picture.
How It Works
How we support an estate, start to finish
Every estate is different, but the path through the tax side follows the same five steps:
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A calm first conversation
We learn the situation, confirm who the legal representative is, and tell you exactly which deadlines apply to your dates. No jargon, no pressure.
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Map the returns
We determine what needs filing: the final return, any optional returns that could reduce tax, prior unfiled years, and whether a T3 estate return is required.
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Prepare the final return
Income to the date of death, the deemed disposition of property, RRSPs and RRIFs, and every credit the deceased was entitled to in their last year.
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Handle the estate's returns
We advise on the graduated rate estate designation, choose the first year-end deliberately, and file the T3 returns until the estate is wound up.
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Clearance certificate, then closure
Once everything is assessed, we prepare the TX19 request so you can distribute the estate without personal risk, and we stay available until the file is fully closed.
Be Prepared
What to gather as executor
Bring what you can find. Estates are rarely tidy, and we can retrieve much of the tax history directly from the CRA as the estate's representative.
- Death certificate
- Will and any codicils
- Probate documents, if probate has been granted
- The deceased's last filed return and notice of assessment
- Tax slips received for the year of death
- Investment statements showing values at the date of death
- Real property details, including purchase records where available
- RRSP, RRIF, and TFSA statements
- Estate bank account records, if one has been opened
- Any CRA letters addressed to the deceased or the estate
An executor wraps up her late brother's estate and distributes everything to the beneficiaries without requesting a clearance certificate. The CRA later reassesses a return and finds tax owing. Because no TX19 certificate was obtained, she can be held personally liable for that tax, up to the value of what she distributed. The certificate exists precisely to prevent this, which is why we treat it as the finish line of every estate engagement.
Help Centre
Questions? Answers.
When is the final tax return due after someone dies?
If the death occurred between January 1 and October 31, the final return is due April 30 of the following year. If the death occurred between November 1 and December 31, it's due six months after the date of death. Any balance owing follows the same timing. (Source: CRA: filing deadlines for someone who died.)
Is there an inheritance tax in Canada?
No. Canada does not tax beneficiaries on what they inherit. Instead, the tax is settled on the deceased's final return: the person is treated as having disposed of their property at death, and one half of any resulting capital gain is taxable there. Beneficiaries generally receive what's left after the estate settles with the CRA. (Source: CRA: reporting income for someone who died.)
What is a clearance certificate and do I need one before distributing the estate?
A clearance certificate, requested on Form TX19, is the CRA's written confirmation that all amounts the deceased and the estate owed have been paid or secured. Distributing estate assets without one leaves the executor personally liable for any unpaid tax, up to the value of what was distributed. It should be the last step before final distribution, after every return has been filed and assessed.
What is a graduated rate estate?
A graduated rate estate (GRE) is a designated testamentary estate that is taxed at graduated rates, like an individual, instead of the top marginal rate, for up to 36 months after death. The estate's first year-end can be set at any date within one year of death, and choosing it deliberately can affect how income is taxed across years. (Source: CRA: what returns to file.)
What returns might need to be filed for someone who died?
At minimum, a final T1 return covering January 1 to the date of death. Beyond that: any prior-year returns that were never filed, optional returns for certain income types that can reduce the overall tax, and a T3 return for income the estate earns after death. Which ones apply depends on the estate, and mapping that out is the first thing we do.
What happens to RRSPs and TFSAs when someone dies?
Remaining RRSP and RRIF amounts are generally included in income on the final return, which can create a significant tax bill in the year of death. Transfers to a surviving spouse or certain eligible beneficiaries may defer that tax. A TFSA itself isn't taxed at death, but investment earnings after the date of death are taxable to the estate. The right handling depends on the beneficiary designations, so we review them before filing anything.
The person who died hadn't filed taxes in years. What now?
This is more common than most executors expect, and it must be resolved because the CRA won't issue a clearance certificate while years are missing. We reconstruct the missing returns from CRA records and available documents, file them, and then proceed with the estate normally. Our back taxes service covers this exact situation.
You don't have to figure this out alone
Tell us where things stand, even if the answer is "I don't know where to start." We'll map the deadlines, the returns, and the steps, and carry the tax side from there.
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