T5 of Estate Bank Account after Final Returns have been filed and Notice of Assessments Received | Income tax filing | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

sp_Feed Topic RSS sp_TopicIcon
T5 of Estate Bank Account after Final Returns have been filed and Notice of Assessments Received
April 17, 2023
9:55 am
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

Hello Everyone,

My mom passed away in 2021 and I did her final returns in 2022 and got her assessments back (we're in Quebec). There's still some money in her Estate bank account and it generated a T5 slip for 2022. Box 13 amount is $179.49 and there's a number in Box 25 - 05478 without a decimal ($54.78 maybe?).

I'm wondering what to do with this T5, can I take in on my tax returns?...I'm the Liquidator of the Estate. That would be easiest for me, I'm using TurboTax Home and Business. I'd rather not have to re-submit her returns.

April 17, 2023
11:24 am
Norman1
Member
Members
Forum Posts: 6860
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

T5 slip Box 25 is taxable eligible dividends. That doesn't makes sense for a bank account! Bank accounts usually pay interest and not dividends.

You would not resubmit her returns. You would request an adjustment to her return using form T1-ADJ.

April 17, 2023
11:38 am
AltaRed
BC Interior
Member
Members
Forum Posts: 2967
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

It seems to me this new T5 is a 2022 tax year item, not 2021 as the OP did tax returns for last year. How can you do a T1-ADJ on a 2022 tax return if one has not yet been filed?

From my perspective, this T5 would technically be on a T3 trust return with either income tax paid via a T3 tax return or a T3 tax slip be generated from the trust to the beneficiaries to pass through the T5 income to beneficiaries to put on their individual T1 tax returns. Am I missing something?

April 17, 2023
11:53 am
Norman1
Member
Members
Forum Posts: 6860
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Ah! If the T5 slip is for taxation year 2022 and an estate return for 2022 has not been filed yet, then one needs to file a T3 return for 2022 with the T5 slip.

Keep in mind the "final return" is the final return for the deceased only. Income earned after date of death is reported by the estate on its own T3 returns.

April 17, 2023
11:53 am
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

Thanks for the replies. It's tax year 2022. It's a Bank of Montreal 'Super Saver' savings account that generated the tax slip. It's not really my mom's income at this point.

I should have moved the money elsewhere (going to do that this week) but first my dad went in 2020, then my mom went in 2021 and I was a bit numb from all the notaries and estate stuff so I just left it there.

I just spoke to my banking dude and he said it's happened before and that I should get permission from CRA to take the tax slip on my returns.

April 17, 2023
12:08 pm
AltaRed
BC Interior
Member
Members
Forum Posts: 2967
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

I suspect CRA may not care as long as someone pays the taxes but don't be surprised if doing so fouls up your NOA, etc.

OTOH, it would not be hard to populate a fillable PDF type of T3 testamentary or GRE trust return with one data entry. https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t3ret.html

Added anecdote: Always move funds to estate bank accounts that do not pay interest and this problem will not arise.

April 17, 2023
12:16 pm
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

Added anecdote: Always move funds to estate bank accounts that do not pay interest and this problem will not arise.

Now I know that, lol.

Honestly, I didn't make much money last year and they aren't going to get any revenue from this anyway, I just don't want them coming after me with fire and brimstone. I got in trouble with slips before once and it snowballed into a big mess.

That "T3 testamentary or GRE trust return", is that something I can do in TurboTax?

April 17, 2023
12:39 pm
AltaRed
BC Interior
Member
Members
Forum Posts: 2967
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

No. T3 trust returns are different than T1 trust returns. Besides, there is no need to do so. There is virtually nothing to filling out that fillable PDF T3 trust return that I provided a link too (done it myself easily enough). One T5 entry for income and off to the tax calculation line.

April 17, 2023
1:20 pm
Norman1
Member
Members
Forum Posts: 6860
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

AltaRed said
…
Added anecdote: Always move funds to estate bank accounts that do not pay interest and this problem will not arise.

Don't do that before looking at the amount of funds involved.

One relative was given that advice. Close to $1 million in cash in the estate. Bank would have loved having those funds in a non-interest paying account!

In the brokerage account, the funds could easily earn $2,500+/month of interest in one of those brokerage ISA's. It will be months before the deceased's final return and first estate return could even be filed!

A second estate return the following year isn't going to cost $2,500 to prepare.

April 17, 2023
1:41 pm
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

We're talking about $40,000.00 in a savings account.

The T3 thing looks too clever for me πŸ™‚

I think I'm just going to put it on my own returns and let them ask me 'where did this come from?' and I'll tell them and say 'was I not supposed to do that?...I'm the Liquidator' πŸ™‚ It doesn't matter if the NOA gets delayed, I don't have anything coming from them anyway.

Sound good? πŸ™‚

April 17, 2023
2:23 pm
AltaRed
BC Interior
Member
Members
Forum Posts: 2967
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

Your call. I have never tried it.

April 17, 2023
2:34 pm
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

I'll sleep on it for a couple of days. I'm meeting my bank dude to move the money on Wednesday, I'll decide after that.

I'll post back the outcome so others can learn from my mistakes or success πŸ™‚

April 17, 2023
2:56 pm
Norman1
Member
Members
Forum Posts: 6860
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

You actually didn't make a mistake.

The final T1 return covers up to date of death. The first estate T3 return covers from date of death and onward. Bank accounts are frozen once bank learns of death, often until the will is probated.

So, it is unlikely you would be able to move the money out on the date of death.

The T5 slip goes on an estate's T3 return. Executor is the trustee of the estate but is not the estate. So, any T3, T5, and other slips from the estate accounts never go on the executor's personal T1 tax return.

April 17, 2023
3:08 pm
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

I've got though the probate part in 2022 and disbursed funds already, just not all of it...thought it would be okay to leave it there but didn't anticipate the interest income hassle is all.

April 17, 2023
4:59 pm
AltaRed
BC Interior
Member
Members
Forum Posts: 2967
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

DaveX64 said
I'll sleep on it for a couple of days. I'm meeting my bank dude to move the money on Wednesday, I'll decide after that.

I'll post back the outcome so others can learn from my mistakes or success πŸ™‚Β Β 

Personally, I wouldn't value a bank dude's opinion on estate tax matters for a nickel so if you want to 'wing it', go ahead.

It might take you 30-60 minutes to do a T3 estate tax return using the fillable PDF with most of that time entering structural data on Page 1.

Hint: Select GRE estate mechanism since this is a one time deal and it will have a lower tax rate. https://www.omh.ca/articles/testamentary-trusts-and-graduated-rate-estates.html

April 17, 2023
5:13 pm
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

@AltaRed: Not to impugn your advice, it just seems a lot for $179 of interest. Ya, I know bank dude isn't an expert but he did mention this has happened before at his bank and they wound up just adding the T5 to their returns.

I'll sleep on it and look at it with a fresh brain in a couple of days.

April 17, 2023
5:38 pm
Bill
Member
Members
Forum Posts: 3956
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

What name is in the Recipient's Name box of the T5?

If this income was earned after date of death then it's the estate's income. Did you establish a date that the estate terminated or is it still active (appears to be based on fact there's still $40K earing a bit of interest in an estate account)?

Based on the amount I'd do nothing with it. It seems you didn't file an estate return, it's not your income, so I'd just wait and see if they ever ask about it and then just do what they say at that point. I'm guessing their computer won't flag such a small missing T5 if made out to an estate they've never received a tax return from, it's a few bucks of tax, though I could be wrong.

I had a similar experience involving an estate, with paying a large amount of interest personally on a T5 that had a different name on it and CRA went after the named T5 entity for the interest anyway and ignored the fact I'd paid tax on it already on my own return (and on a higher marginal rate), even after they had originally told me ahead of time that would be ok to do. It took me months before they finally straightened things out, hence my suggestion not to report this small amount, let them come after you if they ever find it. Can you distribute the remaining funds, as it appears this will happen again with a 2023 T5?

April 17, 2023
5:46 pm
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

@Bill: Yes, I'm going to empty out the account on Wednesday, should have done it before now. My mom's debts are settled...they ended in 2021 so any interest earned in 2022 belongs to the beneficiaries of my mom's estate.

Edit: The name in the Recipients Name box is the Estate of my Mom.

April 17, 2023
5:59 pm
AltaRed
BC Interior
Member
Members
Forum Posts: 2967
Member Since:
October 27, 2013
sp_UserOfflineSmall Offline

Bill said
Based on the amount I'd do nothing with it. It seems you didn't file an estate return, it's not your income, so I'd just wait and see if they ever ask about it and then just do what they say at that point. I'm guessing their computer won't flag such a small missing T5 if made out to an estate they've never received a tax return from, it's a few bucks of tax, though I could be wrong.

I had a similar experience involving an estate, with paying a large amount of interest personally on a T5 that had a different name on it and CRA went after the named T5 entity for the interest anyway and ignored the fact I'd paid tax on it already on my own return (and on a higher marginal rate), even after they had originally told me ahead of time that would be ok to do. It took me months before they finally straightened things out, hence my suggestion not to report this small amount, let them come after you if they ever find it. Can you distribute the remaining funds, as it appears this will happen again with a 2023 T5?Β Β 

I would go this way, i.e. not file a T3 trust return and see if CRA comes calling rather than do something totally erroneous like put it on the Executor's return. Chances are it is not worth it for CRA to chase 15%(?) tax on $179, and yes, it will happen yet again for 2023 YTD.

April 17, 2023
6:19 pm
DaveX64
Member
Members
Forum Posts: 9
Member Since:
April 17, 2023
sp_UserOfflineSmall Offline

Yes, I'm kinda liking Bill's suggestion πŸ™‚

Please write your comments in the forum.