How do I file a final tax return for someone who died?

What does the final return report?

The final T1 reports the income the person earned in the year, up to the date of death. It also reports the deemed sale at death. The law treats capital property as sold at fair market value immediately before death, though nothing was sold.

A few items often make this the largest tax bill of a lifetime:

• The full value of a RRIF is income on the final return. This does not apply if it passes to a spouse or partner, or in some cases to a dependent child or grandchild.
• The deceased's share of property held jointly with a child is included in the deemed sale.
• Capital cost allowance claimed on a rental can come back as fully taxable income.
• The principal residence exemption can shelter the home. The designation is made on Schedule 3 with Form T1255.

When is the final return due?

The deadline depends on the date of death and whether there was business income.

• Death from January 1 to October 31, no business income: file and pay by April 30 of the following year.
• Death from November 1 to December 31, no business income: 6 months after the date of death.
• Death from January 1 to December 15, where the deceased or spouse had a business: file by June 15 of the following year. The balance is still due April 30, or 6 months after a death from November 1 to December 15.
• Death from December 16 to 31, with business income: 6 months after the date of death.
• An unfiled return for the year before death is due 6 months after the death. This applies if the death came on or before its normal due date.

Which optional returns can lower the tax?

The rules allow separate returns for certain income. Each one gets its own basic personal credits and starts again at the lowest tax rates. These returns are optional, but they can save thousands of dollars.

• Rights or things: amounts owed to the deceased but unpaid at death, such as declared but unpaid dividends or pension arrears. File by the later of one year after the death and 90 days after the final return is assessed.
• Business income for the period from the business year end to the date of death.
• Income from the deceased's interest in someone else's graduated rate estate.

What credits and claims should you look for?

The final return gets the full basic, age and other personal amounts, even for a death early in the year. Minimum tax does not apply to the final return or to any optional return.

Medical expenses paid in any 24 month period that includes the date of death can be claimed. The attendant care limit doubles from $10,000 to $20,000 in the year of death. You can also look back 10 years for credits that were never claimed.

Funeral costs, the probate fee and a family executor's pay are not deductible on any return.

What to do before you file

Register with CRA as the legal representative. Send the death certificate or the funeral director's statement of death, with a full copy of the will or the grant. CRA quotes about 28 business days.

Value everything at the date of death. Fair market value is not the property tax assessment or a realtor's verbal opinion. For the home, ask for a written appraisal.

Related questions

Who pays the tax on the final return?

Unless the will says otherwise, the tax is paid from the residue, before specific gifts. So the person who receives the residue can end up bearing the tax on a cabin left to someone else.

Can the tax at death be paid over time?

Yes. The tax from the deemed sale at death and from rights or things can be paid over time. You can elect up to 10 equal yearly instalments on Form T2075. CRA must accept the security you give, and charges interest at its prescribed rate, which was 7% throughout 2026.

Where does a refund on the final return go?

A refund on the final return is paid by cheque to the estate.

Drawn from Legacy Planning in Care, Chapter 20. The final returns and the estate's tax, by Derik Godbout, PBA, CEA, DMA. Reviewed October 2026. General information, not advice for your situation; rules and amounts change, so confirm current figures before you act.

Go deeper: Event 12: Death, Executor Advisory & Final Tax Planning

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