Final return of a deceased person

When an owner dies, the estate that sells or winds up the business meets this return. The CRA says the legal representative must file a final T1 Income Tax and Benefit Return to report the deceased person’s property, investments and other taxable income, and may file other optional T1 returns if the person had eligible income. The CRA adds that the legal representative is typically the executor named in the will.

What it reports

The CRA says that if no optional returns are filed, all income earned up to the date of death goes on the final return, even if received later. It also says to calculate taxable capital gains and losses for all belongings, property and investments, which are deemed to be disposed of, even if they were not sold on the date of death. The CRA says income the estate earned after death, including business income after the date of death, goes on a T3 Trust Income Tax and Information Return.

What to ask

• Who the legal representative is, and what proof of authority they hold
• Whether the business interest is part of the deemed disposition on the final return
• Whether optional returns are being filed (a tax adviser should confirm)

See taxes when an owner dies and the estate sells and deemed disposition on death.