October 2010 - The Bulletin Magazine

Tax Tips
Death and Taxes
by Ian Hawkins
You should provide CRA with the deceased's date of death as soon as possible. You can contact CRA or
complete the applicable information and send it to your tax services office or tax centre. It is best to seek
professional help as there are too many other things to deal with and cope with. Taxation is the last thing you
want to confront.
Arrangements must be made to stop payments and, if applicable, transfer them to a survivor if any of the
following situations apply:
• the deceased was receiving the goods and services tax/harmonized sales tax (GST/HST) credit;
• the deceased was receiving the working income tax benefit (WITB) advance payments;
• the deceased was receiving Canada Child Tax Benefit (CCTB) payments and/or Universal Child Care
Benefit (UCCB) payments for a child; or
• the deceased was a child for whom CCTB and/or UCCB and/or GST/HST credit payments are paid.
Service Canada should also be advised of the deceased's date of death since OAS and CPP will stop as at the
date of death and arrangements must be made for survivor’s benefit if applicable.
A T1 return must be filed for the deceased up to the date of death. T3 estate returns must be filed subsequently
until the estate is settled. At this time a Clearance Certificate must be obtained from CRA.
There are special rules for property that a deceased person owned before 1972. For details about these rules
and for information about other property such as eligible capital property, resource property, or an inventory
of land, get professional help.
When a person dies, CRA considers that the person has disposed of all capital property right before death. This
is called a deemed disposition. Also, right before death, CRA considers that the person has received the deemed
proceeds of disposition (referred to as "deemed proceeds"). Even though there was not an actual sale, there can
be a capital gain or, except for depreciable property or personal-use property, a capital loss.
For depreciable property, in addition to a capital gain, there can also be a recapture of capital cost allowance.
Also, for depreciable property, instead of a capital loss there may be a terminal loss. These topics are beyond
the scope of the majority of the population. Seek help at an early date and it will take a load of worry off
your mind.
You are the legal representative of a deceased person if:
• you are named as the executor in the will;
• you are appointed as the administrator of the estate by a court; or
• you are the liquidator for an estate in Quebec.
continued on page 28
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