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What is the CRA Clearance Certificate and why does it matter?

Writer's picture: Erin Watson, JDErin Watson, JD

In the world of estate administration, one crucial document can make all the difference – the Canada Revenue Agency (CRA) Clearance Certificate.

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Simply put, the CRA Clearance Certificate is a document from the CRA confirming that all taxes owed by the deceased or their estate have been settled up to a specific date. Now, let's dive into why it matters and how it impacts the estate administration process.


Why does the CRA Clearance Certificate matter?


The CRA clearance certificate is important for Estate Trustees because it helps protect them from potential personal liability for any outstanding tax debts when distributing assets to beneficiaries. It ensures that all taxes owed by the deceased or the estate have been paid, giving the trustee peace of mind that they are not personally responsible for any remaining tax obligations.


When to apply for the CRA Clearance Certificate?


Timing is important when applying for a CRA clearance certificate. It is advisable for the Estate Trustee to submit the application only after finishing and submitting all necessary tax returns, making sure to meet tax requirements, and before making any final distributions to beneficiaries. It may take up to 120 days to receive the clearance certificate, so it is crucial to plan in advance.


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Is a CRA Clearance Certificate always required?


Clearance certificates are not always necessary for all estates. If the estate is ongoing or has enough funds to cover tax obligations, there could be some leeway. However, if the Estate Trustee is the sole beneficiary and decides to withdraw funds without a clearance certificate, they should understand that they will be personally responsible for any outstanding taxes.


At E is for Estates, we are well-versed in the complexities of estate administration. We're here to make estate administration not only understandable but also a smooth and worry-free process for you.


erin Watson, Estate Planner, Estate Lawyer, Whitby, ON

For more insights on the CRA Clearance Certificate or any other estate administration matters, reach out to our E is for Estate team.

Erin Watson, J.D. Estate Lawyer, E is for Estates

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