Step 2: appoint an authorized representative

The trustee appoints an authorized representative.

Unless the representative of the deceased (the estaete trustee) wants to file income tax returns for the deceased by themselves they need their own ‘authorized representative” at CRA.

Authorized representatives are common for income tax filings in Canada. Essentially, most people appoint an accountant or tax preparer as their authorized representative to assist with their own income taxes.

However, in the case of estates, the estate trustee needs to appoint their own authorized representative to assist them with the tax returns for the deceased. This is slightly different from the norm and yet another wrinkle that can create added delay, stress and cost.

An estate trustee is free to choose an expert to assist them only with the taxes for the estate. The authorized represenatative of the estate trustee does NOT need to be the same person who assisted either the deceased with their income taxes nor does it need to be the person who assist the trustee with the trustee’s personal taxes.

Choose wisely: expertise really matters.

When you are an estate trustee, you should choose someone with deep relevant experience dealing with income taxes for deceased taxpayers to assist you as your authorized representative.

Most accountants and tax preparers do not have a lot of experience in this niche. We strongly recommend that you choose an expert.

Inexperience of the tax preparer with estates will cost: it will create stress, delay, cost, and the risk of incorrect returns. because every step of filing income taxes for deceased taxpayers is quite different from filing normal returns for living taxpayers

Step 1, ensuring that the estate trustee is recognizerd by CRA as the legal representative of the deceased does not exist at all as a necessary step for taxpayers who are alive. As a result, most tax preparers have very little experience with this step. We do, and we do it very efficiently.

Step 2: appointing the authorized representative, is different for an estate trustee than for a regular taxpayer. Again, most tax preparers will have limited experience with this step.

Step 3, preparing the T1 returns for a deceased taxpayer is very different from routine T1 returns, especially for the terminal T1 return. Tax law for the year of death is complex and different from tax law applicable to living taxpayers. Many tax preparers have very little experience doing the analysis required to deal with deemed dispositions of assets on death. The risk of making a significant error that costs the estate a lot of money is highest here.

Step 4, T3 returns for estates is radically differnt from ordinary tax preparation work. Many tax preparers have rarely filed the T3 trust return required for an estate (many do not even have the required software to complete and file these returns).

Lastly, there are many steps like requests for relief from penalties and interest because of unavoidable delay that are common in estates and quite uncommon in regular tax pratcie. Experience matters to ensure that these are prepared and filed efficiently and properly.

In our case, we act often as the authorized representative of the legal representative for income taxes for deceased taxpayers and their estates, but with a few exceptions we never act for living taxpayers.

Filing to authorize a representative of the estate trustee.

Once the estate trustee has been recognized by CRA as the legal representative of the deceased, they need to make an additional filing to authorize their representative.

We can prepare the documents necessary for us to act as the authorized representative of the estate trustee quickly, and arrange for the estate trustee to sign them. We will then file them on behalf of the estate trustee with CRA.