A clearance certificate is CRA confirmation that a deceased person's or a business's taxes are paid, protecting the legal representative from personal liability before distributing assets.
Before an executor distributes an estate, or a corporation is wound up, they can request a clearance certificate confirming the CRA has been paid all amounts owing. Without it, the legal representative can be held personally liable for any unpaid tax if assets are distributed and later found to be owing.
Obtaining a clearance certificate takes time, the CRA must review the final returns, so it is a key step in estate administration and corporate wind-ups. Distributing assets before it is issued is a real personal risk for executors and directors.
An executor files the deceased's final return and requests a clearance certificate. Once the CRA confirms all tax is paid, the executor distributes the estate to the beneficiaries without personal exposure to a later tax claim.
Our certified accounting firm handles this for businesses and individuals across Canada, at fixed fees with no surprises.
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