Quick answer: a CRA clearance certificate confirms the Canada Revenue Agency has been paid every dollar of income tax the deceased and their estate owed. Get one before you hand out the inheritance, or you can be held personally liable for the shortfall.
If you are the executor settling the estate of someone who died, here is what that means for you in plain terms.
Key takeaways
- A clearance certificate is a letter from the CRA confirming that all income tax, GST/HST, interest and penalties tied to the deceased or their estate have been paid.
- You request it with Form TX19, Asking for a Clearance Certificate. There is no fee.
- It is not technically forced on you, but distributing the estate without a clearance certificate can leave you on the hook for unpaid taxes.
- The CRA can take up to 120 days to issue it, and only after the tax returns are filed and assessed.
- You apply at the end, after the final returns, just before you distribute the estate to the beneficiaries.
What is a CRA clearance certificate?
A clearance certificate is a document the Canada Revenue Agency issues to the legal representative of an estate or trust. The clearance certificate confirms that the taxpayer, meaning the person who died and their estate, has paid all income tax, GST/HST, penalties and interest owing up to the date the certificate is issued, with no amounts owing left behind. It also covers any outstanding Canada Pension Plan contributions and Employment Insurance premiums. In a few cases the CRA accepts security for an amount instead of payment, and the certificate reflects that.
You may see it called a tax clearance certificate or a certificate of clearance. Canadian tax clearance certificates all do the same job. The form you use to ask for it is the TX19, and the legal representative is the person handling the estate: the executor named in the will, or a court-appointed estate trustee or administrator if there is no will.
When a person dies, their final income tax return still has to be filed and every balance settled before the CRA will sign off on the estate. Estates and testamentary trusts are taxed under their own rules, so a T3 return for the estate often has to be filed too.
Why you need a clearance certificate before you distribute the estate
This is the part most families do not see coming. The Income Tax Act, under subsection 159(2), expects the legal representative to get a clearance certificate before distributing property they control. Subsection 159(3) is where it bites: if you distribute estate assets without one and the deceased or the estate still owes tax, you become personally liable for unpaid tax, up to the value of what you handed out.
What happens if you distribute without a clearance certificate
Read that again, because it is the whole point. The risk lands on you, the executor, not on the beneficiaries. Once the inheritance has gone out and been spent, the CRA can still reassess the final return a year or two later. That reassessment, or a full audit, can land on you for the unpaid taxes.
Here is how that plays out. Margaret is the executor of her late father's estate in Whitby. After the funeral and the final T1 return, she distributes the full $480,000 to her two siblings within a few months. She does not request a clearance certificate. Eighteen months later the CRA reassesses the final return, adjusts the capital gains on the family cottage, and assesses an extra $26,000 in tax, interest and penalties. Her siblings have already spent their shares. Because Margaret distributed the estate without a clearance certificate, the CRA can hold her personally responsible for that $26,000. Getting a clearance certificate from the CRA first would have surfaced the problem before she released a cent.
That is why experienced executors, and any accountant who handles estates, treat the certificate as the final gate before the money goes out.
Who needs to get a clearance certificate?
The clearance certificate is for whoever is winding up and distributing someone else's property. That usually means one of these people.
- The legal representative of a deceased person's estate, which is the executor or estate trustee, also called an estate administrator if there is no will.
- The trustee of a trust that is ending and paying out its property.
- The representative handling the wind-up of a corporation.
For most families this is the executor settling a parent's or spouse's estate. Keep in mind that two tax returns are often in play: the final T1 personal return for the person who died, plus any optional T1 returns for the year of death, and a T3 trust return for income the estate earns after the date of death. One clearance certificate can cover the deceased, their estate, or both, and it confirms their tax obligations and tax liabilities are settled. If the person who died ran a business with a GST/HST number, you also request a separate GST/HST clearance using Form GST352.
Is a CRA clearance certificate mandatory?
Short version: it is not strictly mandatory, but skipping it is a gamble with your own money.
No provincial rule forces an executor to hold a clearance certificate before distributing, and the CRA's own guidance asks you to determine whether you need one. So yes, you can legally distribute assets without it. What you cannot do is escape the liability for unpaid tax under section 159(3): distribute too early and you may be personally liable if something turns out to be owing.
In practice, that is why accountants tell executors to get a clearance certificate before making the final distribution. The only estates where executors sometimes proceed without one are small, simple estates where they are confident nothing is outstanding, and even then, holding back a reserve is the smart play.
How to apply for a clearance certificate with Form TX19
You apply using Form TX19, Asking for a Clearance Certificate. For a deceased person's estate there is no fee. Before you send it, make sure every required tax return is filed and assessed, every balance is paid, and you remit any GST/HST owing, so the estate's tax compliance is complete. The CRA will not issue a clearance certificate while a return is still outstanding.
Send these supporting documents with the completed form, unless the CRA already has them.
- A complete, signed copy of the will, plus any codicils, and the probate documents if probate was granted.
- If there is no will, a copy of the document that appointed you, such as Letters of Administration or a Certificate of Appointment of Estate Trustee.
- Proof that you are the legal representative.
- A detailed list of the deceased's assets at the date of death, including jointly held assets, RRSPs and RRIFs, with the adjusted cost base and the fair market value at the date of distribution.
- A statement of how the estate has been distributed so far.
- A statement of any holdback or proposed final distribution.
- The names, addresses and social insurance number of any beneficiary receiving property other than cash.
You can submit the completed form online through Represent a Client, My Account or My Business Account using the submit documents feature, or by mail or fax to the deceased person's tax services office. If you would rather an estate accountant handle the filing, you can authorize them with Form AUT-01. The full instructions are on the CRA's apply for a clearance certificate page at canada.ca.
When should you apply for a clearance certificate?
Timing trips up a lot of executors. You apply at the end of the estate administration, not at the start. The order looks like this:
- File and pay the final T1 return for the person who died.
- File any T3 trust returns for income the estate earned after the date of death.
- Pay every balance and wait for the CRA to assess the returns.
- Request the clearance certificate.
- Make the final distribution once the certificate arrives.
Request the clearance certificate as soon as the income tax returns for the final tax year are assessed. Apply too early, before assessment, and the CRA simply sets the request aside until the filings catch up.
How long does it take to receive a clearance certificate?
The CRA's service standard is up to 120 days from the date it receives your completed request and all of the supporting documents. That clock only starts once everything is in. If the file triggers an audit or a reassessment of one of the returns, it takes longer.
Build that wait into your timeline and tell the beneficiaries about it early. The 120 days is the single most common reason an estate stays open longer than the family expected, and a heads-up prevents a lot of frustrated phone calls. You should not make the final distribution until you receive a clearance certificate.
Can the executor make an interim distribution before the clearance certificate?
Yes, with care. You are allowed to make an interim distribution before the clearance certificate is issued, and many executors release part of the estate early so beneficiaries are not waiting a year for everything.
The safe approach is to hold back a reserve large enough to cover any possible tax, interest and penalties, then distribute the rest. Keep the final distribution until the clearance certificate is in your hands. That reserve is exactly what protects you if the CRA reassesses after the fact.
Clearance certificate vs probate and Estate Administration Tax
People mix these up constantly. They are three separate things, run by two different governments, and you may deal with all three in the same estate.
| Item | What it is | Who runs it | Cost |
|---|---|---|---|
| CRA clearance certificate | Confirms the estate's income tax and GST/HST are paid, and protects the executor from personal liability | Canada Revenue Agency (federal) | No fee |
| Certificate of Appointment of Estate Trustee (probate) | Court order confirming your legal authority to act for the estate | Ontario Superior Court of Justice | Estate Administration Tax applies |
| Estate Administration Tax (EAT) | Ontario tax on the value of the estate that goes through probate | Ontario government | Nil on the first $50,000, then $15 per $1,000 |
For Ontario estates, the EAT is nil on the first $50,000 of the estate's value, then $15 for every $1,000 above that, which works out to about 1.5 per cent. An estate worth $50,000 or less pays no EAT, though you still file an Estate Information Return within 180 days of the certificate being issued. The takeaway: the clearance certificate is the federal tax step, while probate and the Estate Administration Tax are the provincial court step. If you are planning ahead, good estate planning can shrink both the tax bill and the probated value.
Do non-residents selling property need a clearance certificate?
There is a second, unrelated clearance certificate. When a non-resident of Canada sells taxable Canadian property, such as real estate, they apply for a clearance certificate under section 116 of the Income Tax Act so the buyer is not left withholding tax on the sale. That is a different process from the estate clearance certificate covered here. If you are an executor for an estate that includes a non-resident beneficiary, or property sold by a non-resident, flag it to your accountant early, because it changes the filing and the timing.
Get the TX19 filed right the first time
Settling an estate is a heavy job to carry while you are also grieving. We help executors and estate trustees across Durham Region, from Oshawa and Whitby through Ajax, Pickering and Clarington, file the final returns, handle the T3 trust return, and get the clearance certificate filed correctly the first time. See how our estate and post-mortem tax service works, or get ahead of it with estate planning.
If you are an executor wondering what to do next, book a free 15-minute call and we will map out the returns, the timeline and the TX19 for your situation.
This article is general information, not tax or legal advice. Estate tax depends on the specific facts of each estate. Confirm the current CRA forms and timelines, and speak with a CPA or an estate lawyer, before you distribute any assets.
