The disability tax credit (DTC) opens the door to several government benefits and programs, in addition to being a valuable tax credit on its own.

That list of benefits now includes access to the new Canadian Dental Care Plan.

On Thursday, the federal government announced that adults with a valid DTC certificate, as well as children under the age of 18, may apply for the program, which provides full or partial dental care coverage to uninsured people with under $90,000 in family income.

The DTC is a non-refundable tax credit that lowers income tax payable for people living with a disability and/or those who support them. It consists of a base disability amount for all eligible individuals and an additional supplement amount for children under the age of 18. The provinces and territories also provide a disability and supplement amount.

In June 2022, the federal government passed legislation expanding the criteria for the mental functions impairment eligibility for the DTC, and removed the requirement that people living with Type 1 diabetes prove they spend at least 14 hours per week on activities related to administering insulin.

To access the DTC, you and your medical practitioner must complete Form T2201: Disability Tax Credit Certificate and submit it to the Canada Revenue Agency.

As of July 2025, low-income Canadians between the ages 18 and 64 with a valid DTC certificate will be eligible for the Canada Disability Benefit, worth up to $2,400.

Here are other disability programs, benefits or credits linked to the DTC:

• Registered disability savings plan
• Home accessibility tax credit
• Child disability benefit
• Medical expense tax credit
• Canada workers benefit
• Child care expenses deduction
• Canada student grant for students with disabilities
• Home accessibility expenses
• Home buyers’ plan
• Home buyers’ amount
• Qualified disability trust election
• Disability supplement to the Canada workers benefit

If you’re hoping to sell assets ahead of the June 25 implementation date for the new capital gains regime, you technically have until 11:59 p.m. local time on June 24 to do so.

But waiting until the last minute is a bad idea.

“The recommendation would be: don’t fall into that kind of scenario where you’re hours away from the deadline, and the time zone where the contract happens might be an issue,” said Christopher Ellett, tax lawyer with Moodys Tax Law in Vancouver.

The government has proposed increasing the capital gains inclusion rate on June 25 to two-thirds from one-half for all corporations and trusts, and any individuals whose capital gains exceed $250,000 in one year. As a result, some people may wish to sell assets prior to June 25 so that they’re subject to the 50% inclusion rate.

Regarding the timing of a sale, Ellett said commercial sale agreements tend to specify a closing time and date to avoid ambiguity.

“In that case, you can try to set [closing] in a certain jurisdiction, place and time, which is usually respected,” he said. “But there are factual situations where it’s left up to interpretation as to exactly where the actual closing took place.”

Kenneth Keung, director of Canadian tax advisory with Moodys Tax in Calgary, said a written contract is not required, however, for a sale to be effective.

“A contract can be oral. The key is when the beneficial ownership of the property transferred,” Keung said, explaining that possession, use and risk must be transferred. Critically, the buyer must also pay for the property, he said — known as paying consideration.

“In that case, I am able to document our agreement afterward, saying what happened on June 24. What I can’t do is on July 1 say, ‘I want to sell you this pen. Let’s pretend I sold it to you on June 24,'” Keung said.

Ellett warned that in many provinces, land transfers require a written agreement, “so you have to look at how each province interprets that.”

Ellett also acknowledged that some taxpayers might report a more favourable disposition date than actually occurred, which would be misguided. They may think, “Is the Canada Revenue Agency really going to examine all of these gains that get reported in 2024 to figure out what’s before and after June 25?” Regardless, he said, “it’s a big administrative issue for the CRA.”

As for publicly traded securities, Canada and the U.S. will move to next-day trade settlement on May 27 and 28, respectively. As a result, the last trading day for settlement on Monday, June 24, is Friday, June 21.

Keung said the CRA generally deems a sale to have occurred on the settlement date, not the trade date. “That’s because a disposition doesn’t take place until a seller is entitled to proceeds, [which is] settlement,” he said.

Keung recommends not waiting until the last minute. The settlement date “is not up to you,” he said, since unexpected events can delay the process, especially if financial institutions are inundated with transaction requests.

For example, many financial institutions recommend placing orders a few days before the RRSP contribution deadline for the same reason.

June 24 also is Saint-Jean-Baptiste Day, a statutory holiday in Quebec. Banks and other institutions will be closed in the province, so taxpayers must plan accordingly.

If a taxpayer enters an agreement to sell property before June 25, but the closing happens on or after June 25, Keung and Ellett said the government is likely to deem the closing date as the transaction date.

“Because Finance gave us a 10-week delayed implementation timeline, I doubt they … will extend the whole regime” for contracts signed but not closed before June 25, Keung said. “That’s my guess.” (Editor’s note, June 13: The notice of ways and means tabled on June 10 indeed offered no relief for transactions arranged before June 25 but that close on or after that date.)

Until draft legislation is tabled, taxpayers and their advisors must rely entirely on the 425-word statement about the capital gains inclusion rate in the 2024 federal budget. Draft legislation may also change as it is debated in the House and Senate.

“This would not be the first example of draft legislation that is proposed to already be in effect, and that has not been enacted,” Keung said.

Earlier this month, the Canadian Bar Association and Chartered Professional Accountants of Canada asked the government to allow taxpayers to trigger capital gains without having to sell property, known as a deemed disposition.

Key dates

Friday, June 21:

• Last trading day on Canadian and U.S. markets for settlement on June 24.
• Last scheduled sitting day for the House of Commons before summer recess, and a possible sitting day for the Senate. This is the last day when both chambers of Parliament could sit prior to the June 25 effective date. (The Senate is not scheduled to sit on June 24.)

Monday, June 24:

• Saint-Jean-Baptiste Day, which is a holiday in Quebec. Banks and other institutions are closed in the province.
• Canadian and U.S. markets are open.
• Last day of Period 1 (which covers capital gains and losses realized before the inclusion rate increases).

Tuesday, June 25:

• The inclusion rate rises to two-thirds from one-half on capital gains above $250,000 realized annually by individuals, and on all capital gains realized by corporations and trusts.
• Period 2 begins, which covers capital gains and losses realized on or after the day the inclusion rate increases.

We will update this story as new information arises.

With files from Rudy Mezzetta

The first home savings account (FHSA) can be a powerful tool to save for a down payment.

What’s critical to getting most out of the plan, however, is understanding what counts as a “qualifying home” under the FHSA’s rules, both when someone opens an account and when they want to make a tax-free qualifying withdrawal to buy or build a home.

Let’s start with the basics.

The FHSA allows first-time home buyers to save for a down payment on a tax-free basis. As with an RRSP, contributions to an FHSA are tax-deductible, while withdrawals to purchase a first home are tax-free, like with a TFSA.

Contribution room begins accumulating once an FHSA is opened. The annual contribution limit is $8,000, with a lifetime contribution limit of $40,000. Up to $8,000 in unused contribution room can be carried forward to a future year. An FHSA can remain open for up to 15 years or until the end of the year when the holder turns 71, whichever is earlier.

An FHSA withdrawal to buy a qualifying home is known as a tax-free qualifying withdrawal. Any savings remaining in the FHSA may be transferred, tax-free, to an RRSP or RRIF until Dec. 31 of the year following the year of the first qualifying withdrawal. Non-qualifying withdrawals are included in the FHSA holder’s income in the year of withdrawal.

Both the FHSA and the Home Buyers’ Plan can be used to purchase the same home.

What is a qualifying home?

A qualifying home is defined as a housing unit located in Canada, whether existing or being constructed.

The definition includes detached and semi-detached homes; townhouses; mobile homes; condo units; and apartments in duplexes, triplexes, fourplexes and apartment units.

Also included is a share in a co-op housing corporation that entitles someone to an equity interest in a housing unit. (A share that only provides a right to tenancy would not qualify.)

“The criteria for what qualifies is quite broad, really,” said Aaron Hector, private wealth advisor with CWB Wealth in Calgary. “Any actual equity ownership interest in what could be considered a personal residence is going to count.”

Opening an FHSA

A person must be a first-time home buyer to open an FHSA.

For FHSA purposes, a first-time home buyer is defined as a Canadian resident aged 18 to 71 who didn’t live in a qualifying home (or what would be a qualifying home if it were in Canada) that the person owned or jointly owned in the current year or the previous four years.

In addition, the person cannot have lived in a qualifying home (or what would be a qualifying home if it were in Canada) that their spouse or common-law partner owned or jointly owned in the current year or in the previous four.

If the person is single when they open an FHSA, the spousal condition doesn’t apply.

A person who owns or owned a rental property but didn’t live in that property as a principal residence in the current or previous four years is considered a first-time home buyer if they meet all other conditions.

Qualifying withdrawals

A Canadian resident who has a written agreement to buy or build a qualifying home by October 1 of the following year, and who lives in or intends to live in that home as their principal residence within a year of buying or building it, can make a tax-free qualified withdrawal from their FHSA.

The FHSA holder must again be a first-time home buyer, but the term is defined differently when withdrawing from the account than when opening it. For the purposes of making a qualifying withdrawal, a first-time home buyer is someone who has not owned or jointly owned their principal residence in the current year, except for the 30 days immediately before the withdrawal, or any of the previous four years.

The 30-day exception allows a homeowner to move into a qualifying home and then make the qualifying withdrawal.

Hector said he expects that some FHSA holders to be tripped up by this rule: “Thirty days goes by quickly when you’ve got a lot of stuff going on in your life.” If the new homeowner misses this window, they won’t be able to make a qualifying withdrawal for that home at all.

Another difference in qualifying as a first-time home buyer when you make a qualifying withdraw is that it doesn’t matter whether the FHSA holder lives in a home that their spouse or common-law partner owns or jointly owns when they make the withdrawal.

For example, a person who opens an FHSA and later begins living in a home owned by a spouse or common-law partner qualifies as a first-time home buyer for purposes of making a qualified withdrawal for the purchase of a home, if they live or intend to live in that home within a year of acquisition, Hector said. This rule could be helpful to an FHSA holder who wants to buy part of their partner’s home, for example.

Qualified home, qualified withdrawals

A multi-unit dwelling is a qualifying home if the buyer lives or intends to live in that home.

“Someone could go out and buy an eightplex and they rent out seven units and live in the eighth, and that [would qualify as a qualifying home] as long as [it] belongs to them and they’re living there,” Hector said. “The kicker is you have to be intending to use this home as your principal residence within a year of acquiring it.”

A mixed-use commercial-residential property — a residence above a shop, for example — should be a qualifying home “as long as more than 50% of the property is considered personal-use property,” said Jacqueline Power, assistant vice-president of tax and estate planning and distribution with Mackenzie Investments in Toronto. “There is nothing definitive [in CRA guidance] stating this, but this [application] is similar to other areas, [such as] the application of HST, for instance.”

However, a person buying land could not make a qualifying withdrawal, Power said, unless they had an agreement to build a home on that land by October 1 of the year after the purchase was made, and they meet all other requirements.

Some homeowners find the idea of holding their mortgage in their RRSP appealing, particularly as interest rates remain relatively high.

While not a commonly used strategy, a “non-arm’s length mortgage” effectively allows someone to lend money to themselves (or a family member) from their RRSP to fund a mortgage on a home. The homeowner makes monthly mortgage payments back to the RRSP, which earns a guaranteed rate of return — the interest on the mortgage.

However, clients interested in such a strategy must consider the significant fees typically associated with setting up a non-arm’s length mortgage, as well as the risk of overexposure to a single asset, said Jason Heath, managing director of Objective Financial Partners Inc. in Markham, Ont.

“If someone has the majority of their net worth in their home equity and a mortgage for the balance of the home value, they don’t have exposure to stocks and bonds and other asset classes,” Heath said.

Finding a financial institution willing to set up the arrangement can be difficult, he said: “It’s not as simple as transferring your mortgage into your RRSP.”

Under the Income Tax Act, registered plans may hold a debt obligation secured by a mortgage on Canadian real estate if the mortgage is administered by an approved lender under the National Housing Act and insured by the Canadian Mortgage and Housing Corporation or a private insurer.

The interest rate charged on the mortgage, and the terms of the mortgage, must reflect normal commercial practices. Typically, the rate on a non-arm’s length mortgage would be the posted rate with no discounting, Heath said.

The mortgage must be administered by the bank in the same manner as a mortgage on property owned by a stranger. Failure to do so may result in adverse tax consequences.

“There would need to be an appraisal, and you would need to be approved for the mortgage, even though you’re lending the money to yourself,” Heath said.

For this reason, non-arm’s length mortgages are not a way “to borrow money you couldn’t otherwise from the bank,” Heath said.

In addition to the typical fees associated with securing a mortgage, the borrower would likely have to pay the bank an annual administration fee for managing the non-arm’s length mortgage and a mortgage insurance premium to the insurer.

According to a CIBC report on RRSPs published in 2023, the mortgage-insurance premium on a non-arm’s length mortgage would range from 0.6% to 4.0% of the amount of the mortgage.

Mortgage payments to the RRSP would not represent new contributions to the plan. Interest payments made to an RRSP would not be tax deductible.

Clients interested in implementing such a strategy would need a large enough RRSP to make it worth the effort and expense, Heath said: “You would never do it with a $50,000 mortgage.”

Heath said people may be attracted to the strategy because they like the idea of holding an investment in their RRSP with a higher rate of return than they feel they might get with other investments at the same risk level.

However, the borrower is likely paying a higher rate of interest on their mortgage than they could have otherwise negotiated.

Heath said he’s not a fan of the strategy: “I’d rather pay a lower rate of interest than the posted rate on my mortgage, and hopefully [earn] a high rate of return on my RRSP anyway.”

However, a non-arm’s length mortgage might be appropriate for someone who was going to invest their RRSP assets in GICs anyway.

“If anyone was going to be enticed to do this, it would be somebody with a conservative risk tolerance [and] somebody with a relatively large RRSP, so that hopefully they had some other stuff in their RRSP beyond their mortgage, [as well as] somebody lucky enough to find a trustee or a custodian who will set this up [on their behalf],” Heath said.

Heath said he suspected most banks have moved away from offering non-arm’s length mortgages because it probably isn’t profitable. Providing a client with a traditional mortgage loan and providing products and advisory services to help manage assets in their RRSP is likely more lucrative than serving as a custodian for a non-arm’s length mortgage for that same client, Heath suggested.

“I wouldn’t be surprised if [most] banks and trust companies said, ‘This isn’t worth it,'” Heath said.

Note: On March 28, the Canada Revenue Agency announced that bare trusts would not have to file a T3 trust return or a Schedule 15 for 2023 trusts under expanded trust reporting rules, unless the CRA made a direct request for these filings. The CRA took the decision to exempt 2023 bare trusts “in recognition that the new reporting requirements for bare trusts have had an unintended impact on Canadians”. The agency said that it would work with the Department of Finance over the coming months to further clarify its guidance on the bare trust filing requirement. 

Do you hold an account “in trust” for a child, or is your name on the deed for a property that isn’t yours for convenience reasons?

If so, you may be part of an arrangement known as a bare trust, which means that this year and beyond, a trust return must be filed with the Canada Revenue Agency (CRA). There are hefty penalties associated with failing to do so.

Fortunately, because this requirement is brand new for 2023, the CRA has said it will not impose penalties on taxpayers who file a return for a bare trust late except in “the most egregious cases” for 2023. 

April 2 is the deadline for the trustee of a bare trust to file the T3: Trust income tax and information return for 2023.

A bare trust exists when a trustee’s only duty is to transfer property to a beneficiary on demand. However, the CRA has not indicated whether even common structures are bare trusts, leading to confusion, said John Oakey, vice-president of taxation with CPA Canada in Dartmouth, N.S.

“If my parents are getting older and they put my name on the deed to their property, to their principal residence, is that a bare trust? We think the answer is yes, but the CRA hasn’t provided an answer yet,” Oakey said. “If my kids inherit money from their grandparents, and I put it in trust for them because they’re minors, we think that’s a bare trust, but the CRA hasn’t provided any guidance yet.”

The CRA’s guidance said a bare trust for income tax purposes “is a trust arrangement under which the trustee can reasonably be considered to act as an agent for all beneficiaries under the trust with respect to all dealings with all the trust property.”

One example of a bare trust given by the CRA is when a property developer holds registered title to real property for privacy reasons, while the developer retains beneficial ownership of the property.

As for the penalty relief, the CRA had already stated in December that it wouldn’t apply penalties — $25 per day late, with a minimum of $100 to a maximum of $2,500 — for filing a trust return and a Schedule 15 for bare trusts after the deadline.

However, the CRA also said at the time that if the failure to file was done knowingly or due to gross negligence, the agency could apply a penalty of $2,500 or 5% of the fair market value of the property held by the trust, whichever is greater.

In updated guidance released March 12, the CRA said it would not apply gross-negligence penalties for late filing of bare trusts for 2023, except in “the context of a compliance action, such as an audit, where all factors and circumstances of the taxpayer’s situation are considered together.”

The expanded relief from penalties will provide “more comfort for those who are still trying to verify whether or not they do indeed have a filing obligation,” said Aaron Hector, private wealth advisor with CWB Wealth in Calgary. “They don’t need to rush into a filing until they know for sure it is necessary.”

The CRA has said the relief from penalties will apply for 2023 and only for bare trusts, as opposed to other trusts, as “the CRA recognizes that the 2023 tax year will be the first year that bare trusts will have a requirement to file a T3 return including the new Schedule 15.”

The CRA did not provide a time limit for the administrative relief from penalties for bare trusts in 2023. However, the filing requirement for 2023 and subsequent years for trusts, including bare trusts, remains.

The deadline for filing a T3 return is 90 days after the trust’s year end. For trusts with a 2023 calendar year end, the deadline for filing the return is March 30, 2024. However, as that’s a Saturday and April 1 is Easter Monday, the CRA said it will consider the T3 return to be filed on time if the agency receives it, or it’s postmarked, by Tues., April 2.

Many Canadians will be asking their employer for a signed Form T2200: Declaration of Conditions of Employment to allow them to claim employment expenses related to working from home.  

However, employers have no legal requirement to provide one.

“Under the Income Tax Act, there’s nothing really which compels the employer to issue the Form T2200,” said Lawrence Levin, tax partner with EY Canada in Toronto, during a February webinar on claiming home-office expenses.

The Canada Revenue Agency has stated it expects employers to provide the form if an employee meets the conditions for claiming expenses, Levin said, and many employers do. However, there is no statutory requirement.

Edward Rajaratnam, tax partner with EY Canada in Toronto, said in an interview that some clients have told him they’re considering not providing their employees the form this year, given that the CRA did not issue the 2023 version or revised guidance until Feb. 2.

Many employees prefer to file well ahead of the tax-filing deadline of April 30, leaving little time for employers to enact processes for providing the forms.

The 2023 tax filing season opens Monday.

Rajaratnam said companies should provide a Form T2200 to eligible employees, even if it’s not required: “You don’t want to negatively impact [company culture] just for a form.”

Employees who are required to pay for employment expenses for which they are not reimbursed, including home-office expenses, may be able to claim a deduction for the expenses if they worked from a home office more than 50% of the time for at least four consecutive weeks in a year.

Employees who worked from home in 2023 and who are eligible to claim home-office expenses must use the “detailed” method to do so, which will require obtaining a completed T2200.

The temporary “flat rate” method, which allowed Canadians working from home due to Covid to claim up to $400 in employment expenses in 2020 and up to $500 in 2021 and 2022, is not available for 2023. That method did not require the employee to get a form from their employer.

With the flat-rate method no longer available, employers will likely be receiving more requests for the T2200 for 2023, Rajaratnam said. Further, the shorter version of the T2200 — the T2200S: Declaration of Conditions of Employment for Working at Home Due to COVID-19 — that the CRA offered for 2020, 2021 and 2022 isn’t available for 2023.

Typically, an employee must be required to work from home in order to claim a deduction for home-office expenses.

However, employees who worked from home voluntarily last year under an agreement with their employer will be able to claim employment expenses on their tax return, the CRA said in their guidance for 2023. The agreement can be either written or verbal and does not need to be part of an employment contract.

If you have a prescribed-rate loan with a spouse or other family member, make sure the borrower pays interest on that loan on or before Jan. 30.

Failure to pay by that deadline will result in any investment income earned on the loan being attributed back to the lender for the year the interest was incurred — and all subsequent years. As a result, the strategy will no longer allow you and your family member to split income, which is usually why the loan was set up in the first place.

However, if the annual interest is paid within 30 days of year-end, the loan can remain in effect at the prescribed rate that was current when the loan was originally made.

A prescribed-rate loan strategy involves someone in a high tax bracket loaning money for investment purposes to a spouse, common-law partner or adult child in a lower tax bracket so the investment income is taxed at that lower rate, thus achieving income splitting and tax savings. 

To avoid the investment income being taxed in the hands of the person in the higher bracket, the loan must be executed with a minimum interest rate as dictated by income tax regulations, known as the prescribed rate. The lower the prescribed rate on the loan, the greater the potential for income splitting using a prescribed-rate loan strategy. 

Maintaining the original rate is crucial if the prescribed-rate loan was established when interest rates were much lower than they are currently. As recently as the second quarter of 2022, the prescribed rate was 1%, the lowest rate at which the prescribed rate for family loans can be set. However, the prescribed rate has since risen with inflation. For the first quarter of 2024, the prescribed rate is 6%. 

The borrower must transfer the interest payment to the lender and document the transaction, as the Canada Revenue Agency could ask for evidence that interest was paid.

KEY TAKEAWAYS FOR CLIENTS

• The deadline for making a charitable donation and claim a tax receipt for 2023 is December 31
• Try to donate public securities well before the end of the year
• If you are making a large donation, you may want to do so before the alternative minimum tax takes effect

As the end of the year approaches, you may have questions for your financial advisor about making charitable donations as both a way of giving back to your community and to achieve tax savings.

“A lot of people now have a better idea of generally what their tax liability [for the year] will be,” said Jacqueline Power, assistant vice-president, tax and estate planning and distribution with Mackenzie Investments in Toronto. “Now, they are trying to figure out, ‘How much should we donate in an effort to be able to reduce that tax liability?’”

Individuals can claim a donation tax credit for donations to registered charities of up to 75% of the taxpayer’s income in a year. (In the year of a taxpayer’s death, and for the tax year before, the limit is 100%.)

The federal donation tax credit is 15% on the first $200 of donations and 29% (33% to the extent income exceeds $235,675 in 2023) on amounts above. The provinces and territories also offer donation tax credits at different rates for donations below and above the $200 threshold.

Depending on the jurisdiction, the total federal-provincial credit can represent more than half of the gift amount once total annual donations exceed $200 in a calendar year.

The deadline for making a charitable donation in order to claim a tax receipt for 2023 is December 31.

If you donate publicly listed securities, you’ll receive a tax credit based on the value of the shares at that time they’re donated. In addition, any capital gain realized on the disposition of the shares will be free from tax.

However, as a charity that receives an in-kind donation will need to arrange for the shares to be sold, try to donate publicly listed securities well before the end of the year.

“Sometimes people wait until the middle of December and hope that they’re going to be able to make that in-kind charitable donation and use that credit, and sometimes the timing is just a little too tight,” Power said.

In 2023, the last day to trade Canadian-listed stocks is Wednesday, Dec. 27. Trades executed on Dec. 28 and 29 will settle on Jan. 2 and 3, 2024, respectively.

If you’re looking to make a large donation, you might consider doing so before 2024, when the federal government’s proposed changes to the alternative minimum tax (AMT) are set to become effective, Power said.

Under the proposed revamped AMT, only half of the donation tax credit can be applied against the AMT, down from 100% under the current rules. Meanwhile, 30% of capital gains on the donation of publicly listed securities would be included in adjusted taxable income for the purposes of the AMT.

“If there are investors who are trying to decide, ‘Should I make an in-kind donation [this year], should I wait until next year?’, and AMT applies to them, it is likely better for them to make that donation in 2023,” Power said.

The federal government didn’t include proposed changes to the AMT when it tabled Bill C-59 in the House of Commons on Nov. 30. That bill included legislation to implement proposals from the 2023 federal budget and the fall economic statement.

In an email, a spokesperson for the Department of Finance said the government is “committed to implementing the AMT reform” and is currently reviewing stakeholder commentary on the draft legislation to implement the changes.

Even though the government is unlikely to have legislation in place to implement the AMT by Jan. 1, it “may still have that as an effective date,” said Power in an email following the tabling of Bill C-59. Power said “it’s a guessing game” as to how the government might ultimately proceed.

“If [a client] is philanthropic and worried about the AMT changes and how they affect charitable giving, they may still want to make the donation before year end just to be on the safe side,” Power said.

A key challenge executors face when administering an estate is dealing with the banks where the deceased held their accounts.

Banks, understandably, don’t want to expose themselves to liability by releasing assets to someone who is not entitled to receive them. They are also bound by privacy legislation not to disclose information about client accounts to an unauthorized person.

However, executors can help smooth the estate administration process by working with, not against, the bank’s dedicated estate settlement department, said Tom Junkin, senior vice-president of personal trust services with Fiduciary Trust Canada in Calgary, part of Franklin Templeton.

“Don’t be a square peg in a round hole,” Junkin said. “If the bank says they need [a document] from you, don’t even try to argue with them — just get [it] and follow the procedures they want you to follow. Life will be much easier.”

At the start of the estate administration process, banks will ask the executor for a death certificate for the deceased.

Funeral homes generally provide at least 10 copies of the original death certificate and executors can typically ask for more, if needed, said Irit Gertzbein, estate lawyer and principal with Gertzbein Law in Toronto.

Executors will “need one for the Canada Revenue Agency, one for the lawyer, one for the court, one for each bank,” Gertzbein said. The deceased may have held accounts at multiple banks, so executors need quite a few copies, “and only originals are acceptable.”

The bank will also ask for a copy of the will and identification for all the executors (if there are more than one).

Banks generally require a certificate of probate from the executor to prove the will is valid and that the executor is the authorized personal representative for the estate administration.

However, if the estate is small, a bank may exercise its discretion and not require the executor to obtain probate. In those cases, the bank will release funds to the executor but will require them to provide an indemnity against the bank’s potential liability. 

Once the bank is aware that an account holder has died, it will freeze the deceased’s account. However, banks generally will allow payments, such as probate or income tax, to government agencies and for funeral expenses to funeral homes. They may also allow for the payment of other immediate expenses, such as lawyer’s fees or utility bills.

The bank generally will make the payment directly to the payee and not to the executor, said Monique Charlebois, an estate lawyer in private practice in Oakville, Ont. and a former senior estates counsel with the Office of the Public Guardian and Trustee in Ontario.

Once the executor has received probate, they will typically establish an estate account in their own name into which they can consolidate the deceased’s assets and make payments on behalf of the estate.

Establishing a dedicated estate account is highly advised, Junkin said, since “as an executor, you’re required to account to the beneficiaries from the date of death.”

In some cases, however, it could be advisable not to consolidate all the deceased’s accounts, Gertzbein said. For example, if a payment or distribution from the estate needs to be made to a payee or a beneficiary in another province and the deceased held an account in that province, it may be practical to leave that account open to make the payments.

“It depends on what [amount] has to be paid, where it has to be paid, where the money is right now, where the beneficiaries are located, what relationship the deceased had with each bank and which way will be the least resistant way to do things,” Gertzbein said.

While the bank will help the executor as they administer the estate, executors should keep in mind that banks aren’t able to provide legal or tax advice, Junkin said. For that, executors should consider seeking advice from an estate lawyer or accountant.

“I would consider [banks] to be experts on their own policies and procedures regarding their own products and services,” Junkin said. “I would not look to [them] for advice on other matters related to the estate.”

When the time comes to make distributions to estate beneficiaries, the bank will want a letter of direction signed by the executor (or executors), and a copy of probate. The bank will then issue a cheque to the executor or to the estate, not to the beneficiaries directly. The executor will deposit the cheque into the estate account.

“I’ve never seen a bank willing to issue a cheque [directly] to the beneficiaries,” Junkin said. “They’re not going to assist you in administering the estate, because they don’t want the liability.”

Tips for making estate administration easier

Retail staff at the bank will typically refer the executor to their estate department.

“My service experience with major banks in the last two or three years has been very good,” said Junkin, speaking specifically about estate administration. “They’ve upped their game.”

Junkin said the executor should ask for a direct phone number on first contact with the bank’s estate department to save themselves from having to go through the main contact centre each time they call.

Executors should also note the bank’s file reference number for the estate, because the bank will keep detailed notes of conversations with the executor. “It will streamline everything,” Junkin said.

Executors should communicate with the bank in writing — either email or letter — whenever possible, but when meetings occur in person or over the phone, executors should take notes so they can hold the bank accountable for any agreements made, Junkin said.

Each time they meet with bank representatives, executors should take along identification and the estate file with all documentation: “Bring another copy of probate even though you gave them one already.”

Executors should also be prepared to repeat the “story” of the estate — the key details about their estate administration— to bank representatives, Junkin said, as it’s “very rare” for a bank to assign a specific individual to one file.

Most people rely blindly on their tax slips to properly report their income. But if the information contained on the tax slip is wrong or incomplete, is the taxpayer still liable for the taxes owing and any arrears interest or penalty?

That was the issue before the Tax Court in June 2017 (Bolduc v The Queen, 2017 TCC 104) in the case of a Quebec truck driver and an incorrect T4. The T4 slip, known formally as the “Statement of Remuneration Paid,” is one of numerous tax reporting slips that a payor is legally required to complete. The rules surrounding the preparation of the slips are strict. The deadlines are tight and the penalties for not filing, or filing incorrect slips, are severe. Yet mistakes happen.

In the case before the court, the taxpayer worked for five different companies in 2013, each of which issued a T4 slip reporting, in total, about $40,000 of employment income before any deductions withheld at source.

Audit discovery

In filing his 2013 return, the taxpayer reported gross income from employment of $16,577 from one of the companies. When that corporation’s payroll accounts were audited by CRA, however, the agency discovered that $7,994 in gross salary had been omitted from the T4 slip issued to the employee [DASH] and was consequently not reported on the employee’s 2013 tax return.

CRA analyzed the taxpayer’s 2013 bank account statements, which revealed deposits totaling approximately $36,600 of wages. The taxpayer testified that the only T4 he had received from the company, for the 2013 taxation year, was for $16,577 and he included this amount in his 2013 income. He stated that he never received an amended T4 from the company to account for the additional $7,994 in employment income.

The CRA representative testified the corporation’s accounting records were “weak and non-existent for one period in 2013.” She contacted the company’s accountant, but even he mentioned that he had difficulty obtaining information from his client.

The CRA auditor compared the cheques issued to the employees against the company’s wage book and noted that the total amount of the cheques issued to employees exceeded the wage total entered in the wage book and, consequently, on the T4s prepared by the accountant. As it turned out, the T4s for 12 employees did not match the amounts on the cheques issued by company for the 2013 taxation year.

Discrepancy

Upon noticing the discrepancy, the CRA auditor sent written notification to the company’s owner inquiring about the difference between the total amounts of the cheques issued to certain employees and the totals entered in the wage book, and requested that the owner contact her to discuss the situation.

The owner never replied to CRA’s request and, as a result, the CRA amended the T4s of the 12 employees with deficient T4 slips. The taxpayer was one of these 12 employees.

CRA sent the company the amended T4s for the 12 employees. It was then the company’s responsibility to send the amended T4s to the affected employees. The taxpayer stated he never received an amended T4 for 2013. In addition, the paystubs issued to him “were difficult to understand, as was the record of employment provided.”

The taxpayer testified that since he worked for several employers in 2013, he relied on the T4s he’d received to complete his 2013 income tax return. It was therefore “difficult for him to take into account that the T4 issued by [the company] did not match the amount he had received from it as employment income.”

At trial, once the taxpayer understood that $7,994 of employment income had mistakenly been omitted from his T4, he agreed that this amount had been correctly included by the CRA in calculating his income for 2013.

The only issue left to be resolved, therefore, was the arrears interest charged by CRA. The judge recommended that CRA should forgive the arrears interest involved, saying, “It would seem unfortunate that [the taxpayer] must now pay the interest due to his employer’s errors and negligence.”

The message, however, was that the taxpayer remained liable for back taxes owed on income, regardless of whether it was correctly reported on his T4.

Takeaway

Your advisor can help you confirm the amounts reported on your T3 and T5 investment income slips with the income or mutual fund distributions reported through the account statement. This could prove to be invaluable should a CRA dispute ever arise as a result of an inaccurate tax slip.

Jamie Golombek is managing director, tax and estate planning, CIBC Wealth Strategies Group.