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Taxes after death start with one return. The legal representative files a final T1 for the year of death, due April 30 of the next year if the person died between January 1 and October 31. For a death in November or December, it’s due six months after the date of death. Most of the surprises come from what the CRA counts as income on that return.
| Date of death | Final T1 due |
|---|---|
| January 1 to October 31 | April 30 of the following year |
| November 1 to December 31 | Six months after the date of death |
We only confirmed the filing dates. Payment dates and the rules for a person who ran a business are on the CRA’s page for deceased persons, so read that before you count on a deadline.
What goes on the final return?
You report everything the person earned from January 1 to the date of death, reported like any other year. Then come the extras that only happen at death. The CRA treats the person as having sold all capital property just before dying, at fair market value. It also treats RRSP and RRIF balances as income received just before death, unless they pass to a spouse or partner on the special terms.
A T3 trust return may also be needed for income the estate earns after the death. That’s a separate filing with its own rules.
How much tax does the deemed sale create?
You start with what the person owned. Cottage, shares, rental property, each one produces a gain or loss as if sold on the day. A principal residence can be exempt, but the CRA says you still designate it on the final return with Schedule 3 and form T1255, even if the whole gain is exempt. Forget that and you’ve got a mess to clean up later.
Property that goes to a surviving spouse or common-law partner can roll over at its cost, with no gain reported, if the conditions are met. The gain waits until the spouse sells. The CRA’s conditions include that the property becomes locked in within 36 months of the death.
In the year of death, net capital losses also get extra room. They can reduce other income as well as other gains. To estimate the tax on a deemed gain, use the capital gains tax calculator. We assume a 50% inclusion rate for 2026, which isn’t printed on the CRA pages we read.
What happens to an RRSP or RRIF at death?
This one catches families out. The full market value of the plan is income on the final return, all in one year. A $100,000 RRSP on top of $40,000 of pay in Ontario adds about $32,015 of tax in our engine, which is 32% of the plan. Compare that with a spouse rollover, where the tax is deferred. The RRSP withdrawal tax calculator runs the same sum for any amount, and the retirement income tax calculator shows a normal year for comparison.
Notice the same $32,015 comes from a $200,000 capital gain at 50% inclusion. A big registered balance and a big gain hit the return in a similar way.
Is there a tax on the estate itself?
The CRA pages we read describe a final return, not an inheritance tax. On top of that some provinces charge a probate fee on the estate’s value. Ontario’s Estate Administration Tax is $15 for each $1,000 above $50,000 of estate value. On a $500,000 estate, that’s $6,750. The estate administration tax calculator handles the other provinces we have data for.
Assets with a named beneficiary, or held jointly, usually sit outside the estate value for that fee. Income tax on a registered plan is a different charge and doesn’t disappear because the plan skips probate.
What mistakes cost the most?
Distributing the estate before the tax is sorted is the big one. Read the CRA’s page on what happens after you file, which covers the clearance certificate, before you hand over the money.
Others are smaller. Missing the T1255 designation on the house. Leaving out a rollover election. Forgetting that the final return and the estate’s T3 are two different filings. And assuming the 50% inclusion rate hasn’t moved: the planned rise to two thirds was cancelled in March 2025, but check the current rate when you file.
If the estate holds a business, foreign property or a cottage with a large gain, you’ll want an accountant for the return. A plain estate with a house and a bank account is a smaller job.
Where the numbers come from
Filing dates, the deemed sale, the RRSP and RRIF rule, the rollover and the T1255 requirement come from the CRA’s pages for preparing returns for someone who died. The Ontario fee comes from Ontario.ca. Dollar examples are from our calculators on 2026 data and are estimates.
Frequently asked questions
When is the final tax return due after a death?
April 30 of the next year if the person died between January 1 and October 31. For a death in November or December, six months after the date of death.
Is there an inheritance tax in Canada?
The CRA pages we read describe the final return, not an inheritance tax. Some provinces also charge a probate fee on the estate's value.
Does an RRSP get taxed when someone dies?
Yes, unless it passes to a spouse or partner on the special terms. The plan's market value is income on the final return.
Do I pay tax on a house the person owned?
A principal residence can be exempt, but the CRA says to designate it on the final return with Schedule 3 and form T1255.
How much is Ontario's probate tax on $500,000?
$6,750, at $15 for each $1,000 above $50,000, per Ontario.ca.
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Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.