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Principal Residence Declaration on Deceased Returns - Late Filing

I have recently been retained by a client to complete a final T3 return for an individual who died in Oct 2018. They completed the 2018 T1 return themselves on a tax program.

On doing my complimentary review of the filed returns, I noted a couple of errors, one of which is the non-declaration of the principal residence owned at the time of death. Deemed disposition would be at FMV since the residence gets inherited by the son.

Has anyone had any experience with late filed designations of this nature and any potential penalty waivers? I am just waiting on the phone with CRA.

I was planning on filing a T1ADJ manually with a letter outlining the situation, and wait and see if a penalty gets assessed.

Thanks in advance for any wisdom.

Re the late filing:
I forget at the moment where I saw about the penalties, but I see that page 43 of Guide T4037 says:
“If you forget to make this designation in the year of the disposition, it is very important to ask the CRA to amend your income tax and benefit return for that year. The CRA will accept a late designation in certain circumstances, but a penalty may apply.”

However, I see that potentially the return you are doing may NOT be the “final” T3 return.
You say that the residence “gets inherited by the son”, which implies that the residence is still the property of the Estate, (having acquired it at FMV on DOD), and the the Executor has NOT YET distributed this property.
Indeed, the Executor should NOT do so until receiving the TX21 clearance certificate which has reported the TAX DISPOSITION of the real estate by the Estate (not the deceased). In the crazy real estate markets, the estate may incur tax on Capital gains, so the Executor would be well advised to take great care that he/she does not end up personally responsible for same.