As executor, what taxes do I need to file?

As executor, you're responsible for filing tax returns for your uncle. Depending on the mix of assets, you may also have to file taxes for the estate itself. Getting the taxes right is crucial. If you distribute the estate without proper clearances, you could be out-of-pocket for any taxes owing.

First, you may need to file your uncle’s final personal tax return. This covers income your uncle earned from January 1 (on the year he died) to the date of his death. It's due six months after death or April 30 of the following year, whichever is later. The final return must report:

• Income he received or earned up to his death. Even if the cheques arrived after he passed away, any wages he earned must still be included in his final return.

• The full value of any RRSPs or RRIFs (unless left to a spouse or certain dependents).

• Any capital gains from property he held to make money. If your uncle held shares or a rental property, the tax office may charge tax as if he sold the assets on the day he died.

It’s a good idea to check whether the deceased was up-to-date on their tax filings. If not, you may have to file any prior year tax returns as well. If the estate earns income after your uncle died, you need to file an estate return called a T3. This covers income earned from the date of death until you finish distributing the estate.

To avoid personal liability, get a tax clearance certificate

Before you distribute the estate to beneficiaries, get a tax clearance certificate from the Canada Revenue Agency. This confirms all taxes have been paid or assessed. You apply for this after filing the tax returns and receiving notices of assessment. It typically takes six weeks to six months to get the clearance certificate.

This step is important. If you distribute the estate without getting clearance and it turns out more taxes are owing, you're personally responsible for paying them. 

Getting help

If you find the tax concepts confusing, you're not alone — these are genuinely complex rules, and getting professional help is a reasonable choice. If you're not confident about handling them yourself, hire an accountant who has experience with estate tax returns. The cost is a legitimate estate expense that you can pay out of estate assets. (If the estate is small, it's worth factoring that in when deciding how much help to get.)