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Delean: Inevitable questions about death and taxes


Nobody likes waiting for an estate to be settled, but there are steps to be followed and potential problems ahead if you don’t.

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Death and taxes are often mentioned together. Like just now. Here are couple of recent reader questions that made the link.

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Q: I am liquidator of my late mother’s estate. I filed income tax returns with Canada Revenue Agency and Revenu Québec in 2020, the year following her death in 2019. They were late, partly due to the COVID crisis, and I ended up paying a large amount of interest. I then had an accountant do the final returns, which also ended up being late. I finally received a clearance certificate from CRA and disbursed most of the funds.

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I realize I probably should have gotten one from Revenue Quebec as well but so far have not. Do I still need to apply for the clearance certificate or not? Can I appeal the interest penalties, given the particular circumstances? I have been dealing with this for over two years and would like to be done with it once and for all.

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A: Nobody likes waiting for an estate to be settled, but there are steps to be followed and potential problems ahead if you don’t. On its website, Revenu Québec states specifically that a certificate from the provincial tax department is required for the distribution of a deceased person’s property, and it must be notified (by completion of form MR-14 A) that you intend to do it. Since you’ve already done it, you don’t need the certificate, but a liquidator who proceeds without obtaining it could be held personally liable for any amounts owed for up to four years after the date of distribution.

The tax departments are prepared to listen to requests to waive interest or penalties during the pandemic years, so by all means appeal the charges if you feel the circumstances did not allow for timely filing.

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Q: I am a Canadian citizen, living in Canada, who in 2021 inherited from my late brother a house in Greece. Do I have to declare it on my income tax returns?

A: You won’t be taxed on it in 2021 — inheritances are not taxable in Canada. What you do with the house will determine whether you have to declare it as a foreign property holding on your taxes.

If it’s a personal-use property that will generate no income, you’re not required to report it. If you rent it out more than half the time, and its fair market value exceeded $100,000 (Canadian) at the time you inherited it, you are required to disclose it to the tax department and file form T1135 with your federal return.  If you sell the property later, it could be subject to capital gains tax for any appreciation in value as of 2021, unless you designate it as your principal residence. If you rent it out, the income will need to be reported on your Canadian tax returns.

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Q: I’ve been doing the income-tax returns for my father-in-law for the last 15 years. He passed away in late January. My wife is liquidator for the estate. How many tax returns am I supposed to file for him?

A: You have his federal and provincial returns for 2021, federal and provincial returns for 2022, and final returns (possibly many) for the succession from the date of his death to the settlement of his estate (which could take a few years). You can use 2021 tax forms for his 2022 returns and estimate his income in the absence of tax slips.

The Montreal Gazette invites reader questions on tax, investment and personal-finance matters. If you have a query you’d like addressed, please send it by email to Paul Delean at gazpersonalfinance@hotmail.com

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