General
¶ 1. Under paragraph 70(1)(a), an amount payable on a periodic basis that was not paid to a taxpayer before the taxpayer’s death is deemed to have accrued in equal daily amounts in the period for which the amount was payable. The value of the portion that is deemed to have accrued to the date of death is required to be included in computing the taxpayer’s income for the year of death. Paragraph 70(1)(a) applies to amounts of interest, rents, royalties, annuities (other than an interest in an annuity contract to which paragraph 148(2)(b) applies), remuneration from an office or employment, and other amounts payable periodically. This provision does not apply to amounts which had become payable before death.
Not quite clear on this one. Taxpayer deceased Dec. 2022. AutRep signed by executor.
From AFR, 3 T5 for Interest and dividends from banks were issued to deceased for 2022 tax year. Total amount ~$600.
Deceased Final T1 2022 (filed by other in June 2023 ) included those T5 amounts in total income.
Executor(daughter) told me she provided death certificate & Will to banks end-of-January 2023. However, she said the banks will not transfer the accounts to estate, to-date, as they require a signature from a “Medallion Guarantor” which, from what I understand, does not exist in Canada. So basically (I assume) Estate not finalized, to-date.
Same T5s were also just issued to deceased’s CRA for 2023 tax year.
Would those 2022 T5s qualify as per: ¶ 1. Under paragraph 70(1)(a), an amount payable on a periodic basis that was not paid to a taxpayer before the taxpayer’s death is deemed to have accrued in equal daily amounts in the period for which the amount was payable. The value of the portion that is deemed to have accrued to the date of death is required to be included in computing the taxpayer’s income for the year of death
or would they belong to a T3 return? And adjust deceased Final 2022 T1?
The T5s your referring to are they from Cdn companies / banks… or Foreign (USA, etc)?
Perhaps she needs to speak to a lawyer before you proceed. This investment must be closed or rolled over into an ongoing trust account.
I had a client ( lawyer assisted) obtain the appropriate paperwork ( Medallion Guarantor) to satisfy a US holding of income many many moons ago.
In my view you cannot include that income in 2022 T1.
I would suggest that a T3 is the appropriate tax form as income earned after date of death… which is still ongoing… is subject to tax under the Trust estate side of things… not the personal tax side.
Any other thoughts on this?
From AFR, the T5 slip from TD Mortgage is for interest from Canadian sources and 2 T5 slips, eligible dividends (box 24), from TC Energy Corp and Computer Share BMO (no foreign income on either slips )
I’m inclined to agree about the 2022 T5 income and file and adjustment to remove such income from Final return.
About the Estate, a lawyer would probably be the best asset.
Computer share is whom is looking for the Medallion Guarantor… been there they are US based… nearest I can understand they represent many old company profit share plans.
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Subsection 70(1) is the acts answer to cleaning up (or “prorating”) a deceased persons income attribution that could otherwise result in dispute after death.
To understand subsection 70(1), you need to understand what is defined upon in 70(2).
These subsections essentially outline what is to be included, and separated, when filing the deceased’s terminal return and when testamentary treatment of the estate is then considered .
70(2) is attributable to claims that the deceased would have had during their lifetime prior to death. So if any income that was receivable or accrued during their lifetime, and that person(s) could have had recourse and demanded those amounts while they were still living, would be included in a separate terminal return, meaning any amounts “receivable” would be taxed therein.
70(1) deals with everything after, essentially as captured in the testamentary stage of the deceased’s filing(s), and anything that is then accrued thereafter the time of death.
The answer to your question is yes, you need to file a T3 for income that is attributable to the taxpayer after the time of death. CRA will only issue the clearence certicate after the provisions set out in 70(3) are met (which is the final stage of beneficiary attribution, meaning 70(1) and 70(2) are dealt with).
Further, if the bank is requiring a Medallion Guarantor, that means you have foreign assets that the bank will not approve of transfer from the deceased to Canadian beneficiaries, and you need a CAD & US (foreign) transfer agents signature. My suggestion is to find who the custodian of the foreign securities is and have them guarantee the transfer once the clearance certificate has been issued by CRA (or just prior).
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This.
Computershare is a custodian, trust agent that will guarantee the transfer of foreign assets held by the deceased’s estate.