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Email this8:56 am
November 21, 2015
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Does anybody have any CRA experience with this?
CRA: “When someone dies, their legal representative must file a Final T1 Income Tax and Benefit Return, called the Final Return, and can file other Optional T1 returns if the person who died had eligible income”, defined as “Bond interest earned but not received before death and not previously reported in income, where you can only report income that was earned but not received before the individual died”.
Example: A joint ‘Jim’ with ‘Judy 2Y GIC was opened in July 2023. Jim dies on December, 31st 2024. Interest from July 2023 to July 2024 is reported on 2024 Final T1.
Interest for (Aug, Sep, Oct, Nov, and Dec) of 2024 was earned by Jim, but not received, as it will be paid in July 2025 and thus was reported on Optional T1 for 2024, as per the CRA note above.
Interest from Jan 2025 to July 2025 will be reported by Judy on the 2025 T1.
By the way, as of today, Sep 2025, still awaiting the ‘Notice of Assessment’ for 2024, filed in April 2025, with target day defined as ‘needs more time’.
6:57 pm
December 18, 2024
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1. I hope you are waiting for an NOA in the mail. Once death is reported you wound be able to log onto the deceased CRA account.
2. There are a few ways to go depending upon the size of the estate. Do you have to do probate?
3. Are you aware of all types of income that need to be reported?
4. You may have to get a CRA trust account.
5. Keep in mind you may have to apply for 2 clearance certificates.
My wife and I did probate but hired a good tax preparer that is an accountant as well.
Where do you live and where did the deceased live?
10:04 am
November 21, 2015
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Thank you for responding.
Yes, Judy can log into the deceased CRA account. No probate, as the only assets were a few, deposit insurance covered, big joint GICs. The FIs, upon receiving the Notice of Death, all removed the deceased name from the JTWROS. In July the GIC's matured and cheques were issued in Judy's name.
My question, a least I think that's the question, is using the Optional T1 to lessen the tax, utilizing the personal exemption of the Optional T1. Because the CRA bulletin specifies the use of Optional T1 for "bond interest".
10:18 am
December 18, 2024
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I guess calling CRA would be a waste of time, according to the news. If you are in the greater Vancouver area in BC, I can give you a name of an accountant tax preparer. She saved us quite a few thousand dollars.
10:32 am
October 27, 2013
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julio said
My question, a least I think that's the question, is using the Optional T1 to lessen the tax, utilizing the personal exemption of the Optional T1. Because the CRA bulletin specifies the use of Optional T1 for "bond interest".
The Optional T1 is, I assume the 'Rights and Things' T1 option? If so, I used it in the past in my mother's estate to claim the last month's OAS and CPP which had been earned but not paid at DOD (date of death). It can be rightfully used for semi-annual bond coupon interest that would be due as well.
It is not clear to me it can be used for accrued GIC interest (to the end of 2023 in your example) since a GIC is not a bond and none of the CRA materials I ever found specifically say 'term deposits' qualify. This https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/it212r3/archived-income-deceased-persons-rights-things.html is the most detailed of the materials I have found.
Other than phoning CRA and asking to speak to an agent in the Estates department who would (should) be better qualified than the regular front line agents, I would be tempted to try the 'Rights and Things' optional T1 return for that accrued GIC interest. The most I think CRA would likely do is reject it and add it on to the ordinary T1 Final. That all said, in the linked material, there is this quote which 'favours the taxpayer'
3. Where there is genuine doubt about whether income earned before a taxpayer's death is a periodic payment or a right or thing, its treatment is generally resolved in favour of the taxpayer. As a consequence, the legal representative may report the income in question under subsection 70(1) or under subsection 70(2). In the latter case, depending upon the timing, an election under that provision may be made, or if the income has been transferred to beneficiaries, subsection 70(3) applies instead of subsection 70(2) (see 20 and 25 below).
I would suggest doing this only if the difference is material enough to be worth it, worth it being 'in the eyes of the beholder'. I wouldn't do it for a matter of a few hundred dollars of tax but it is the Executor's decision on whether to take that on or not.
12:45 pm
April 6, 2013
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julio said
My question, a least I think that's the question, is using the Optional T1 to lessen the tax, utilizing the personal exemption of the Optional T1. Because the CRA bulletin specifies the use of Optional T1 for "bond interest".
It works the same way for bonds and GIC's.
I used to think the accrued but unpaid interest was a right for this purpose. But, one executor I helped said his accountant said no.
The explanation was something like the deceased usually does not have a legal right to receive the accrued GIC/bond interest before date of death. Earning the interest or income for accrual reporting purposes doesn't mean one has also earned the legal right to receive the interest.
That's likely why IT-210R2 (Income of Deceased Persons -- Periodic Payments and Investment Tax Credit) does not include interest accrued on unmatured investments or bond coupons that have not matured yet as a right or thing:
Accrued interest
¶ 2. If a deceased taxpayer owned a term deposit or other similar investment on which interest was payable periodically, interest accrued from the last date on which interest was payable up to the date of death would be included in income for the year of death under paragraph 70(1)(a). However, if the taxpayer also had on hand a matured investment (such as a matured Treasury Bill or uncashed matured bond interest coupons) at the date of death, any interest that was owing to the deceased taxpayer on the matured investment immediately before the date of death would be considered a right or thing for the purposes of subsection 70(2) to the extent the amount was not included or required to be included in the deceased's income for the year or a preceding year. For information about the tax treatment of "rights or things," refer to the current version of IT-212, Income of Deceased Persons -- Rights or Things.
Term deposits are mentioned but are absent from rights and things examples.
5:07 pm
November 21, 2015
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Thank you, all, for your input. The tax savings would be cca. couple of thousand, if 'accepted as filed'. CRA reviewers are still looking into the matter since it was filed in April. I will inform you of the result, when the NOA arrives.
7:18 pm
October 27, 2013
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Norman1 said
The explanation was something like the deceased usually does not have a legal right to receive the accrued GIC/bond interest before date of death. Earning the interest or income for accrual reporting purposes doesn't mean one has also earned the legal right to receive the interest.That's likely why IT-210R2 (Income of Deceased Persons -- Periodic Payments and Investment Tax Credit) does not include interest accrued on unmatured investments or bond coupons that have not matured yet as a right or thing:.
Now that I also think about it more, I believe you are right. If the payment was not going to be made in the same tax year had the deceased been alive to December 31st, there is nothing that would have been payable and taxable in that particular year anyway. Nothing to report on a Rights and Things return.
7:34 pm
December 18, 2024
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That makes sense. When my MIL passed in January she received TSlips that we used for her last income tax. The tax preparer used some for her last income tax and some on her GRE account (A graduated rate estate, of an individual at any time, is the estate that arose on and as a consequence of the individual's death, if all of the following conditions are met: that time is no more than 36 months after the death of the individual. the estate is at that time a testamentary trust.) GIC income continued after death and only stopped when the probate letter was provided to the financial institution. The GRE taxes the same as when alive but no deductions. If you use the other Estate form….you pay the highest tax rate.
11:09 pm
April 6, 2013
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However, that approach doesn't produce the correct answer for dividends.
According to IT-212R3, a dividend is a right or thing when someone dies between the ex-dividend date and the payable date:
Dividends
12. A dividend which was declared but not paid before the taxpayer's death is a right or thing if the ex-dividend date, (or, if none, the date of record) was prior to the date of death. A dividend which is a right or thing is subject to the normal "gross up and credit" provisions.
Had the person not died on December 31, he or she would not have to report the dividend on his or her tax return until the tax year the dividend was received too.
4:10 pm
November 21, 2015
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From my post No.3: My question, at least I think that's the question, is using the Optional T1 to lessen the deceased tax, utilizing the personal exemption of the Optional T1. Because the CRA bulletin specifies the use of Optional T1 for "bond interest".
I was not sure if it applied to GIC interest.
Now, at the end of October, the NOA was received. The CRA accepted the GIC interest to be split into two tax returns, namely: Final T1 (declared received GIC interest)+ Optional T1 (declared earned GIC interest but not received before death).
Should it get once reassessed, I will notify you.
Please write your comments in the forum.