Prior to distributing the assets of an estate the estate trustee applies for a tax clearance certificate. This document from CRA certifies that the deceased’s taxes for before the time of distribution have been paid.
The estate trustee can only ask for a clearance certificate when all the returns have been filed and the notice of assessment(s) received. Estate trustees who do distribute the estate assets before receiving a tax clearance certificate are personally liable for unpaid amounts to the extent of the property that was distributed. CRA will also charge interest.
For more information about this document we refer the reader to http://www.cra-arc.gc.ca/tx/ndvdls/lf-vnts/dth/clrnc-eng.html