What is a Clearance Certificate and why might you need one?

Posted on December 28, 2011 by admin | Posted in Tax Tips

A clearance certificate is issued by the CRA (Canada Revenue Agency) following a request by a deceased taxpayer’s legal representative. The clearance certificate states that all taxes, CPP contributions, EI premiums, and any related interest and penalties for which the deceased taxpayer is liable, have been paid. Distribution of the estate assets can only safely occur after the legal representative obtains this necessary certificate.

As a legal representative (estate trustee), if you distribute property without a clearance certificate, you will be liable for any taxes subsequently determined to be owing to the CRA. Although the liability cannot be more than the value of the property you distributed, the beneficiaries may be unwilling or unable to give the assets back to you to assist in paying any additional tax liability.

For assistance with clearance certificates or any other matters pertaining to the taxation affairs of a deceased taxpayer, please contact your local DJB office.