Canada: Goods And Services Tax/Harmonized Sales Tax (GST/HST) And Death

Last Updated: February 13 2017
Article by Frédéric Pansieri, BBA, CPA, CA

The death of an individual that operates a business as a sole proprietor may have GST/HST implications; mostly for the deceased's estate (the "Estate") and its trustees. In this article, we will provide a brief overview of some of the GST/HST rules to consider following the death of a GST/HST registered sole proprietor.

Death of a GST/HST registered individual

When a GST/HST registered sole proprietor dies, his Estate will be deemed to continue the business as if the individual had not died, with the following exceptions:

  • A last GST/HST return for the individual will have to be filed for the reporting period that ends on the date of death.1 The Canada Revenue Agency (the "CRA") must be notified of the individual's death prior to the due date for the final return. The CRA will close the account effective the date of death. If the CRA is not properly notified it may reject a GST/HST return filed for the reporting period ending on the date of death.
  • The Estate's first reporting period will begin on the day after the date of death and end on the day the individual's regular reporting period would have ended if the individual had not died. For example, assume an individual files annually for each calendar year. If the individual dies on September 12th the Estate's first GST/HST return will cover the period September 13 to December 31st. The Estate is considered to be a person separate and distinct from the deceased individual for GST/HST purposes. If the Estate does not generate any GST/HST taxable revenue after the individual dies, the Estate may not be required to register and file any GST/HST returns. However, even in such a case, the Estate may want to register for GST/HST purposes to claim input tax credits ("ITCs") relating to the costs of winding down or selling the deceased's business.

The Estate will need to provide any existing clients of the business with the Estate's newly assigned GST/HST account number. Any GST/HST registered client will need the Estate's GST/HST number so that the client can claim ITCs.

The section entitled "Responsibilities of the Estate" below provides additional information that may be relevant to the trustee for GST/HST purposes. Special rules, not addressed in this article, also apply to the estate of a bankrupt person.

Transfer of the business assets of the deceased

The Estate may transfer, on a GST/HST free basis, any business property of the deceased individual to a beneficiary of the Estate if all of the following conditions apply to the property:

  • Immediately before death, the property was held by the individual for consumption, use or supply in the course of a business that was carried on immediately before the individual's death. This condition may not be satisfied if, for example, the individual was too sick to continue operating the business until the time of death. CRA's view is not clear on this point but one would hope the CRA would be lenient.
  • The Estate transfers the property, in accordance with the individual's will or the laws relating to the succession of property on death, to another individual who is a beneficiary of the Estate.
  • The beneficiary who acquires the property is a GST/HST registrant at the time of the transfer. A registrant includes a beneficiary who is GST/HST registered or who is required to be registered for GST/HST purposes.
  • The property is received for consumption, use or supply in the course of the commercial activities of the beneficiary. It does not have to be the same business that was carried on by the deceased individual. A commercial activity also does not have to be a business. The property could be, for example, a commercial building or land that is acquired by the beneficiary solely for resale.
  • Finally, the Estate and the beneficiary must jointly elect to have the transfer take please on a GST/HST free basis2. There is no prescribed form for this election and it does not have to be filed with the CRA. This election does not have to be for the transfer of all the Business' properties to a single beneficiary. Separate elections could be made for multiple properties each distributed to different beneficiaries. Although a beneficiary would generally acquire the property from the Estate for free, the purpose of the joint election is to avoid the Estate being required to charge the beneficiary GST/HST calculated on the property's fair market value.

The Estate trustee should also obtain a clearance certificate3 before distributing the Estate's assets. Otherwise, the trustee(s) may be held personally liable for the payment of any GST/HST owing by the Estate to the extent of the value of the assets so distributed.

Responsibilities of the Estate

Each Estate trustee will be liable to satisfy every GST/HST obligation imposed on the Estate, whether the obligation was imposed before or during the period during which the trustee acts as Estate trustee (including the period before the individual's death). The satisfaction of an Estate obligation by any of the trustees will discharge the liability of all other trustees to satisfy that obligation.

Each trustee will be jointly and severally liable with the Estate and each of the other trustees, if any, for the payment of all GST/HST that become payable or remittable by the Estate before or during the period during which the trustee acts as an Estate trustee, with the following exceptions:

  • A trustee is liable for the payment or remittance of amounts that became payable or remittable before becoming a trustee only to the extent of the property or money of the Estate under the control of the trustee; and
  • The payment or remittance by the estate or the trustee of an amount in respect of the liability discharges the joint liability to the extent of that amount.


A trustee should be aware of the potential GST/HST implications before he/she agrees to act as an Estate trustee. It is also important for any beneficiary to register for GST/HST purposes in a timely manner (i.e., before the time the deceased's business assets are distributed to the beneficiary) to minimize any potential negative implications.


1. The CRA has the discretion to waive the requirement for the trustee to file a GST/HST return for any reporting period of the individual ending on or before the day the individual died.

2. Under subsection 167(2) of the Excise Tax Act.

3. A clearance certificate is a certificate by which the CRA confirms no debt relating to GST/HST are owing by the Estate. The Estate's trustee is required to file Form GST352 to apply for the certificate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Frédéric Pansieri, BBA, CPA, CA
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