TRUST & ESTATE TAX RETURN
Our team of trusts and estates professionals have over 35 years of experience dealing with the final tax returns of deceased individuals.
When someone passes away, the CRA deems all of their assets disposed of on the day of death at fair market value. The deemed asset disposition may result in income taxes and there are strategies to minimize this event. Typical assets that may need to be reported are the primary residence, rental real estate, business assets, RRSP and RRIF investments, mutual funds and marketable securities.
Filing of Tax Returns
Executors will need to file a final tax return for the deceased by April 30 or if the date of death occurs after October, the final tax return is due 6 months after the date of death. The executor is charged with dealing with the deceased’s assets and will report the realized disposition of the assets on a Testamentary Trust tax return. The Testamentary Trust will be required to file a tax return within 90 days after the anniversary of the date of death. The return will report any income earned during the period. There may be an opportunity to allocate out any income earned to the beneficiaries depending on the terms of the Will.
Should you be acting as Executor or Administrator of an Estate, you may wish to apply for a Clearance Certificate. The Clearance Certificate confirms that an Estate has paid all amounts of tax and let’s the Executor/Administrator distribute assets without the risk of being personally responsible for amounts the deceased may owe.
A trust is a legal entity that can be set up to help in achieving your estate planning goals. There are several different types depending on the purpose and timing of when they are set up. We work with your lawyer to establish the ideal trust for your situation. Often we can reduce estate taxes or inheritance taxes using a structure involving one or more trusts.
Family Trusts – These can be used to distribute income from a private corporation among family members. These structures have worked well in the past, but the new proposed legislation is challenging them.
Testamentary Trust – This type of trust is automatically created upon the death of an individual in Canada. There may or may not be a necessity to file returns for a testamentary trust. It is best to contact us so we can discuss your particular situation.
Alter Ego Trust – can be used to segregate certain assets to be left to specific beneficiaries of the trust. This can be a very powerful tool as any assets held by an alter ego trust are outside of the will and the estate.
Other Trusts – There are a multitude of trusts that can be set up depending on your personal situation. Let’s have a discussion if you think a certain structure is right for you and your family.
Our services include:
- Preparation of T3 tax returns, T3 Summary and T3 Supplementary
- Dealing with Canada Revenue Agency (CRA) (e.g. Audits, correspondence, questions, etc.)
- Reviewing correspondence from CRA and advising on appropriate reply
- Tax planning
- Estate planning
- Coordination with lawyers to establish trust
- Reporting foreign assets
- Assisting non-resident trusts to file Canadian tax return(s), as required
Call Wescan Accountant in Hamilton at 905 388 1567 to set up your initial consult.