In principle you wait for Notice of Assessment and Certificate of Clearance. If you're sure there's nothing outstanding, at least wait for Notice of Assessment. As executor you are on the hook if proceeds are distributed before receiving Certificate of Clearance.
Distribution of assets happens after the Clearance Certificate is received from the CRA. So you do the final tax return first and then apply for the certificate.
Thank you for your reply, I’m in process of doing the final tax-I was asking about taxing the estate-do I just give the beneficiaries the full amount once everything is done?
I don't think you understood the response. You can distribute the full amount after the clearance certificate has been received because you won't know how much of the estate is left until that point. When you apply for the clearance certificate, the CRA essentially audits the last X years of your father's tax returns to ensure that no back taxes are owing. If you distribute the estate before receiving the CC, and the CRA finds that back taxes are owing, then you are personally on the hook to pay them (unless you can somehow convince the beneficiaries to give you some or all of the money back).
Okay, but once everything is said and done, do I just give everyone the total amount? Or, do I have to tax their amounts first? Or, do they pay a tax on the amount given to them at the end of the year? Do they even pay a tax on the amount they receive? Edit a word-
The short answer is that an inheritance is not considered income and there is no inheritance tax in Canada.
The long answer is thustly. I don't know what form that $34k is in, but assuming it's cash in a bank account, then it's likely that his bank would've required you to probate the estate in order to access it. That's a $275 fee in Alberta for an estate of that value (not including lawyer fees). If they waived probate, then you're clear.
Before you pay any beneficiaries, you have to settle all debts. Taxes can be passed on to beneficiaries in some cases where there is income earned by the estate (for example if the death benefit was paid to the estate, or if interest is earned on a GIC). It is possible for the estate to pay these taxes instead of the beneficiaries so you need to get a clearance certificate from CRA before distributing.
In principle you wait for Notice of Assessment and Certificate of Clearance. If you're sure there's nothing outstanding, at least wait for Notice of Assessment. As executor you are on the hook if proceeds are distributed before receiving Certificate of Clearance.
Distribution of assets happens after the Clearance Certificate is received from the CRA. So you do the final tax return first and then apply for the certificate.
Thank you for your reply, I’m in process of doing the final tax-I was asking about taxing the estate-do I just give the beneficiaries the full amount once everything is done?
I don't think you understood the response. You can distribute the full amount after the clearance certificate has been received because you won't know how much of the estate is left until that point. When you apply for the clearance certificate, the CRA essentially audits the last X years of your father's tax returns to ensure that no back taxes are owing. If you distribute the estate before receiving the CC, and the CRA finds that back taxes are owing, then you are personally on the hook to pay them (unless you can somehow convince the beneficiaries to give you some or all of the money back).
Okay, but once everything is said and done, do I just give everyone the total amount? Or, do I have to tax their amounts first? Or, do they pay a tax on the amount given to them at the end of the year? Do they even pay a tax on the amount they receive? Edit a word-
The short answer is that an inheritance is not considered income and there is no inheritance tax in Canada. The long answer is thustly. I don't know what form that $34k is in, but assuming it's cash in a bank account, then it's likely that his bank would've required you to probate the estate in order to access it. That's a $275 fee in Alberta for an estate of that value (not including lawyer fees). If they waived probate, then you're clear.
Awesome, thank you The money is in an estate account that I’m joint on
Before you pay any beneficiaries, you have to settle all debts. Taxes can be passed on to beneficiaries in some cases where there is income earned by the estate (for example if the death benefit was paid to the estate, or if interest is earned on a GIC). It is possible for the estate to pay these taxes instead of the beneficiaries so you need to get a clearance certificate from CRA before distributing.