Tag: clearance certificate
The Canada Revenue Agency (CRA) recently provided an update regarding its processing of clearance certificate requests.
Due to COVID-19, clearance certificates may be taking longer to process because employees have limited access to CRA offices and are receiving minimal submissions by mail or fax. Any new clearance certificate applications submitted after March 12, 2020 may not form part of the inventory being processed. As such, CRA is encouraging legal representatives who submitted a clearance request after March 12, 2020 to resubmit the request and supporting documents electronically, either through My Account, Represent a Client or My Business Account.
If the applicant cannot use one of these portals, in order to help stop the spread of COVID-19, CRA has created a temporary procedure allowing taxpayers and their representatives to submit clearance certificate requests and supporting information by e-mail. To do so, we can contact the CRA at CCTX19G@cra-arc.gc.ca, and the province where the executor lives should be named in the subject line. CRA has a sample e-mail accessible in the link at the top of this blog, and CRA warns that sensitive information or attachments should not be included in the e-mail request. We can expect a CRA officer to reply by e-mail with requirements to authorize e-mail communication and to advise when/if we are permitted to submit the clearance certificate application by e-mail.
This e-mail option is helpful to applicants, as it may avoid delay in attending to an estate’s tax matters. However, it is a route to consider carefully, as there is greater risk in proceeding by e-mail than through portal access.
Thanks for reading and have a great day,
Natalia R. Angelini
The “Executor’s Year” is a common law rule that gives estate trustees one year to administer the estate before beneficiaries have a legal entitlement to demand payment. In general, interest on a legacy will be payable to a beneficiary with calculation commencing one year after the testator’s death or after obtaining the certificate of appointment of estate trustee, where applicable, unless otherwise specified in the will. There is nothing in the rule that prevents the estate trustee from making an earlier distribution. If the year has passed and the estate trustee has not made satisfactory progress with the administration of the estate, the beneficiaries may be entitled to take action for unnecessary delay.
The executor’s year is commonly referred to as a “rule of thumb” or an informal rule, because of its flexibility. The rule assumes the estate in question is relatively simple. In fact, many estates take longer than one year to be fully administered. Applying for a Clearance Certificate from the Canada Revenue Agency will often extend the time before final distribution, as it can take months to receive the Clearance Certificate.
The executor’s year was recently considered by the Supreme Court of Prince Edward Island in Cornish Estate, Re. In this case, the executor did not administer the estate in a timely manner, but the court found this was because of the high degree of conflict between the beneficiaries of the estate. The court declined to penalize the executor, even though she was well beyond the one year guideline in winding up the estate. The court held: “The Executor’s Year is still the proper benchmark, but it assumes only normal difficulties, and certainly no outright rebellion or action against the Executor by a sibling or siblings who raise and attempt to enforce baseless claims not mentioned in the Will, as appears to have happened in this case.”
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