The final T1: everything up to the moment of death
The executor's first return is the deceased's last: a T1 covering January 1 to the date of death, including salary, dividends and, for an unincorporated business, the business income earned up to that day. It also carries the item that usually dominates the tax bill, the deemed disposition of capital property: the deceased is treated as having sold the business shares, or the business assets of a proprietorship, at fair market value immediately before death, unless they roll to a surviving spouse. Why that gain is worth planning around, rather than just reporting, is the subject of double taxation on private company shares at death.
The deadline depends on the date of death. For deaths from January 1 through October 31, the final return is due April 30 of the following year; for November and December deaths, it is due six months after the day of death. Where the deceased or their spouse carried on an unincorporated business, the filing deadline extends into mid-June, though any balance owing is still due at the end of April.
The final return is also where the liquidity question surfaces, because the deemed disposition is taxed without any sale proceeds. For the portion of the bill that traces to the deemed dispositions there is an election to pay by annual instalments, up to ten, with acceptable security posted with CRA and interest running. Executors holding shares of a valuable company and very little cash should raise this election early, since arranging the security takes longer than filing the form.
One optional return can cut real tax here: the rights-or-things return. Amounts the deceased was owed but had not received, declared but unpaid dividends, unpaid salary, matured but uncollected amounts, can be reported on a separate return that gets its own run through the graduated brackets and its own credits. It is due at the later of one year after death and 90 days after CRA assesses the final return, and for a business owner with a declared dividend outstanding it is frequently worth filing: run through its own brackets, that dividend can land in a lower bracket than the final return would have charged.
The estate's T3, and why the graduated rate estate designation matters
Everything the estate earns after death goes on a different return entirely: the estate is a trust, and it files a T3 for income such as dividends the company pays the estate, portfolio income, and post-death business income if the estate carries on a proprietorship. The first T3 is where the executor designates the estate as a graduated rate estate, and that designation is worth real money: it gives the estate graduated tax brackets instead of top-rate taxation for up to 36 months, it allows a non-calendar year-end chosen by the executor, and it is a precondition for the subsection 164(6) loss carryback. There is only one graduated rate estate per person, so estates with multiple wills coordinate the designation.
Two housekeeping points keep the T3 side clean. The estate needs its own trust account number from CRA before anything can be filed, which is requested early because it takes time, and the designation choices in the first return are close to permanent: miss the graduated rate estate designation there and the benefits, including the 164(6) window, are hard to recover.
Each T3 is due 90 days after the estate's year-end, and the T3 slips to beneficiaries run on the same 90-day clock, so the allocation decisions, who is paid what income and when, are made before the year-end rather than at the filing deadline. Income the estate pays or makes payable to beneficiaries is generally deducted from the estate's income and taxed in their hands instead, which means the estate also issues T3 slips to beneficiaries and files the related summaries. Choosing the estate's first year-end is a planning decision, not an administrative one: it sets the 164(6) window, the timing of slips, and which year beneficiaries pick up the income.
The business itself keeps filing as if nothing happened
Death does not touch the corporation's own compliance calendar. The T2 is still due six months after the corporate year-end with tax payable earlier, HST returns and payroll remittances continue on their usual cycles, and T4 and T5 slips still go out on time. The risk is not the rules changing; it is that the one person who handled all of this has died. Whoever now runs the company, a new director the estate appoints, inherits responsibility for remittances immediately, and missed payroll or HST remittances create personal liability for directors. Getting CRA authorization in place for the estate's representatives, so the accountant can actually speak to CRA on each account, is unglamorous and urgent.
The company also owes paperwork about the deceased personally: a final T4 or T5 for any salary or dividends paid in the year of death, issued on the normal slip deadlines. Where the deceased was the only director, the successor inherits the remittance exposure from the day of appointment, so the first internal control in these files is simply confirming that source deductions and HST are being remitted on time, every period, before any planning conversation starts.
If the business was an unincorporated proprietorship, the split works differently: income to the date of death belongs on the final T1, income after death belongs to the estate on the T3, and the HST account and business registrations need to be moved or closed depending on whether the estate continues or winds down the operation. An estate that keeps a business trading for months needs bookkeeping through the administration period, which is exactly the kind of continuity our Ongoing Financial Partnership exists to carry while the estate work runs alongside.
The elective filings that change the tax bill
The mandatory returns report the tax; the elective filings reduce it, and each has a deadline that will not wait for probate. The subsection 164(6) loss carryback is the big one for an estate holding private company shares: the corporation redeems the estate's shares within the estate's first taxation year, the redemption produces a capital loss, and the executor elects to carry that loss back against the deemed gain on the final return. The election is filed with the estate's first T3, together with an amended final T1, and it is only available to a graduated rate estate, which is one more reason the designation and the year-end are chosen deliberately.
Alongside it sit the T2054 election, filed by the corporation whenever a capital dividend moves tax-free money to the estate, with sizing that interacts with the loss carryback through the stop-loss rules, covered in how capital dividends work after a shareholder dies, and the spousal rollover choices made on the final return, where the executor can elect out for particular shares to use losses or exemptions today. Which combination wins is the route-planning exercise in post-mortem tax planning for private company owners; the point here is that every route ends in specific forms on specific dates. Every election is also prepared against the same share valuation and the same account schedules, which is why estates run that reconstruction once, at the start, and let each filing draw on it.
Probate, the Estate Information Return, and the clearance certificate
Ontario adds its own layer. If the estate applies for a certificate of appointment, probate, it pays estate administration tax on the value of the estate passing under the will: nothing on the first $50,000 and roughly 1.5% above it. Business owners frequently sign dual wills so that private company shares pass under a secondary will that is never submitted for probate, keeping the company's value out of that calculation, so the first question is which will governs the shares. Within 180 days after the certificate is issued, the estate must also file an Estate Information Return with the Ontario Ministry of Finance setting out the values behind the application; it is an Ontario filing, separate from anything CRA sees.
The last piece of paper protects the executor personally. Before the final distribution, the executor requests a clearance certificate from CRA confirming that the deceased's and the estate's taxes are paid; distribute without it and the executor can be personally liable for tax found owing later. It is requested after the returns are filed and assessed, which in practice makes it the closing milestone of the whole sequence. The request is often staged, one certificate covering the deceased's returns to death and another covering the estate's own years, and partial distributions are sometimes made earlier with holdbacks sized to the remaining exposure; the certificate is what lets the last dollar leave without the executor personally guaranteeing it.
Source: Ontario — Estate Administration Tax.
The calendar on one page, and what changes the workload
Here is the whole sequence with its clocks, which is usually what an executor pins to the wall:
| Filing | What it covers | Due |
|---|---|---|
| Final T1 | Income to the date of death, plus the deemed dispositions | April 30 of the following year, or six months after death for November and December deaths |
| Rights-or-things return (optional) | Amounts owed but unpaid at death | The later of one year after death and 90 days after the final return is assessed |
| Estate T3 | Income the estate earns after death; carries the graduated rate estate designation and the 164(6) election | 90 days after the estate's chosen year-end, each year |
| Corporation's T2, HST, payroll | The company's own compliance, unchanged by the death | The company's normal deadlines, without pause |
| Estate Information Return (Ontario) | The values behind the probate application | 180 days after the estate certificate is issued |
| Clearance certificate request | CRA confirmation before the final distribution | No fixed date; requested once returns are assessed, before distributing |
How heavy this gets depends on a handful of facts: whether the business is incorporated or a proprietorship the estate must run; whether probate is needed at all, or dual wills keep the shares out of it; whether the graduated rate estate designation and year-end were chosen with the 164(6) window in mind; whether a redemption, pipeline or hybrid plan adds elections and amended returns; and whether the company's books were current at death, because every valuation and election stands on the bookkeeping underneath it. Two more multiply everything: a business the estate must actively run, with staff and inventory, and any plan that spans two estate year-ends, which doubles the T3 cycle and the slip runs.
An executor does not need to know these forms; they need one advisor tracking all of them against one calendar. That is what our post-mortem practice does, working beside the estate lawyer as the business estate planning CPA Ontario executors bring in when a company is the main asset. A free 15-minute discovery call will map your estate's actual filing list and flag anything whose deadline is already running.
