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Questions and answers about What to do when someone has died
Can I deduct funeral expenses, probate fees, or fees to administer the estate?
Who reports a death benefit that an employer pays?
Who reports amounts an employer pays for vacation and unused sick leave?
Why do I have to return the deceased person's GST/HST credit?
Can I deduct funeral expenses, probate fees, or fees to administer the estate?
No. These are personal expenses and cannot be deducted.
Who reports a death benefit that an employer pays?
That depends on who received the death benefit. A death benefit is income of either the estate or the beneficiary who receives it. Up to $10,000 of the total of all death benefits paid (other than CPP or QPP death benefits) is not taxable. If the beneficiary received the death benefit, see line 130 in the General Income Tax and Benefit Guide or the guide that came with the beneficiary's return. If the estate received the death benefit, see the T4013, T3 - Trust guide.
On what return do I report Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) death benefits for the estate of the deceased?
A CPP or QPP death benefit can be reported either on the tax return of the recipient beneficiary of the deceased person's estate, or on a T3 Trust Income Tax and Information Return, for the estate of the deceased. If the estate then pays the death benefit to the beneficiary, a T3 slip will be issued in the beneficiary's name. The amount of the CPP or QPP death benefit is shown in box 18 of Form T4A(P), Statement of Canada Pension Plan Benefits. Do not report the amount on the deceased's return. Unlike a death benefit that an employer may pay to the estate or to a named beneficiary, this benefit is not eligible for the $10,000 death benefit exemption. You have to report all other CPP or QPP benefits on the deceased's return. For details see line 114 - CPP or QPP benefits.
Who reports amounts an employer pays for vacation and unused sick leave?
Vacation pay is income of the deceased person and can be reported on a return for rights or things. Payment for unused sick leave is considered a death benefit and is income of the estate or beneficiary who receives it. For details, see IT508R, Death Benefits.
The deceased had investments in a Tax-Free Savings Account (TFSA). Who reports any income earned in the TFSA?
When the holder of a deposit or an annuity contract under a TFSA dies, the holder is considered to have received, immediately before death, an amount equal to the fair market value (FMV) of all the property held in the TFSA at the time of death. As a result, no income should be reported by the deceased on the final return or any optional returns. After the holder’s death, the annuity contract is no longer considered a TFSA and all earnings after the holder’s death are taxable to the beneficiaries in the year they receive this income. For more information, see Information Sheet RC4466, Tax-Free Savings Account (TFSA).
If the deceased person was paying tax by instalments, do I have to continue making those instalment payments?
No. The only instalments we require are those that were due before the date of death but not paid.
Why do I have to return the deceased person's GST/HST credit?
Since the payments are an advance on purchases for the current calendar year, you have to return GST/HST credit payments that were paid to the deceased after his or her death. If the deceased was single and the estate is entitled to the payment, another cheque will be issued to the estate. However, the cheque that was issued to the deceased person must be returned to us before we reissue the payment to the estate. For more information, see GST/HST credit.