All About Estates


Last time, I wrote about filing deadlines for terminal returns and how these deadlines need to be respected to avoid penalties and interest on taxes owing. What if you don’t have sufficient information to file and the deadline is looming?

As executor to an estate, you might encounter a situation where there is not sufficient information available to file an accurate return and make a reasonable estimate of the taxes payable. For instance, tax slips could have gone astray in the mail due change of addresses and the originating institution cannot get the information to you in time. Or there could have been distributions of mixed capital and income during the year of death for which you are still waiting on the specific details to characterize for taxes. Or simply waiting on details on certain distributions to determine whether they are taxable or not. I personally faced a problem similar to the above last year. It is actually easier than you might think.

If this situation arises, try filing an “estimate” terminal return based on the information you have by the filing-due date. With the estimate terminal return, include a letter informing CRA that the return is being filed with incomplete information and that you intend to file an adjusted return as soon as the missing information is available. It is likely the estate will not avoid interest on any additional taxes payable resulting from an adjustment but at least, the penalty for late filing has been avoided (which we did in my situation) which might be considerable more than any interest owing.

About Steven Frye
Baker Tilly WM LLP is a leading, independent audit, tax, and business advisory firm based in Vancouver and Toronto, serving clients across Canada. Drawing on well-trained teams across a variety of disciplines, we ensure the alignment of our professional’s skills and experience with client requirements, resulting in exceptional service and business outcomes.