Clearance Certificate from CRA
Path to Secure Estate Asset Transfers with a Clearance Certificate
What is a Clearance Certificate
Estate Settlement
Settles estate tax liabilities before asset distribution.
Certification
Verifies CRA's review of the deceased's tax affairs and outstanding obligations
Protection
Offers legal protection to executors from personal liability for estate taxes
Asset Transfer
Frequently needed by institutions and asset holders to prevent tax issues during asset transfer to beneficiaries
How to Obtain Clearance Certificate
Gather information about the deceased person's tax details and estate.
Complete Form TX19, available on the CRA's website, providing estate information.
Attach supporting documents, such as the will, asset list, and legal papers.
Submit the application, along with documents, to the CRA by mail.
Allow time for the CRA to review the application, which may take several weeks.
Address any outstanding tax liabilities by making payments or providing security.
Once the CRA is satisfied, they will issue the clearance certificate, confirming the estate's tax affairs are settled.
The executor can distribute the remaining assets to beneficiaries
How long does it take to receive a clearance certificate?
Our evaluation process, provided all the required documentation is submitted, may span a maximum of 120 days. Nevertheless, in specific cases, the CRA might require conducting an audit prior to granting the clearance certificate.
What happens after I am issued a Clearance Certificate?
After obtaining a clearance certificate, the responsibility for any outstanding tax liabilities under the Income Tax Act or Part IX of the Excise Tax Act is transferred to the estate, trust, corporation, beneficiaries, or other individuals who have received the distributed assets.
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Frequently Asked Questions (FAQs)
A clearance certificate is an official document issued by the Canada Revenue Agency (CRA) that certifies that all taxes, interest, and penalties owed by a deceased person, their estate, or trust have been paid, or that sufficient security has been provided to cover the outstanding amounts. It allows the estate’s legal representative to distribute assets to beneficiaries without the risk of being personally responsible for unpaid amounts the estate might owe to the CRA. When the legal representative has a clearance certificate on hand, the liability for unpaid tax falls on whoever receives the distributed assets.
Do not apply for a clearance certificate at the same time as you file the tax returns as it will delay the process. The legal representative should apply for a clearance certificate after all of the necessary returns have been filed and assessed and all taxes have been paid.
To apply for a Clearance Certificate, you need to complete and submit Form TX19, “Asking for a Clearance Certificate,” to the CRA. You must include all required supporting documents.
The supporting documents include:
- Copy of the decedent’s will
- Document showing you as the legal representative
- Listing of the assets owned by the deceased at the date of death and their adjusted cost base and fair market value at the date of distribution
- Statement showing the distribution of the estate’s assets to date
- Statement showing the proposed distribution of the estate’s remaining assets
- Information of beneficiaries of property other than cash
The processing time can vary and depends on the complexity of the estate and the completeness of the application. It can take up to 120 days to receive a clearance certificate.
CRA does not charge a fee for issuing a clearance certificate
Failing to obtain a clearance certificate before they distribute assets will result in the personal liability of the estate’s executor or trustee for any unpaid taxes, interest, or penalties. It may also prevent the distribution of assets to beneficiaries because the lawyer or financial institution often wants to see the clearance certificate.
Outstanding tax debts or disputes with the CRA will delay the issuance of a clearance certificate. It’s important to work with the CRA to resolve these issues before proceeding with the clearance certificate application.
The legal representative should apply for another clearance certificate before distributing the newly discovered property. They should contact the regional tax services office where they originally filed the clearance certificate application.