This course will not make you an expert on the topic of income taxes on death but it should help you acquire sufficient knowledge to complete the income tax returns of a deceased taxpayer to minimize income taxes under the Income Tax Act, R.S.C. 1985, c.1 (5th supp.) (ITA) provisions currently in force. You should also be able to carry out basic estate planning for the purpose of minimizing income taxes on death and to carry out basic post-mortem planning.

Unlike other tax topics, the subject of income taxes at death is not contained within any one division or subdivision of the ITA; rather, the issues cross many of the ITA’s internal boundaries. Additionally, a number of elections are available in respect to deceased persons. These two facts complicate the natural flow of the topic, but every effort has been made to present the material in the most logical and practical arrangement. ITA quotations have been indented and italicized, or appear within quotation marks where they appear in the body of text. These quotations are generally followed by explanations.

The course is based on the Income Tax Act as it stood at April 30, 2011. Any pending legislative amendments, pronouncements, and proposals announced up to then are incorporated into these materials. Also included are the measures affecting the topic announced in the March 22, 2011 federal budget and reintroduced in the June 6, 2011 budget. You are expected to have a current Income Tax Act (ITA), as some of the ITA references included in these materials are paraphrased or merely cited, and you will want to refer to the actual provisions to build your comprehension.

This course comprises six modules and two quizzes — one following Module 3 and one at the end of the course.

Three appendices are also included. Appendix A lists website references to Interpretation Bulletins (ITs), Information Circulars (ICs), and forms referred to in the modules. Please note that these ITs and ICs may not reflect the most current version of the law. Appendix B is a list of information and documents necessary to prepare the income tax returns of a deceased person. Appendix C features a list of elections available when preparing the income tax return of a deceased person.

You are expected to have a current ITA or have access to an up-to-date tax service.

Module 1 Preliminary considerations
Distinguishing the legal representative from the professional preparing the returns
Standards
Gathering relevant facts
Other actions to consider before preparing returns
Non-residents
Important concepts

Module 2 Ordinary income in the year of death
Periodic payments
Rights or things
Business income
Testamentary trust income
Other income

Module 3 Deferred income plans, non-capital property, death benefits, and life insurance
Deferred income plans
Non-capital property
Death benefits
Life insurance policies
Tax free savings account

Quiz 1

Module 4 Capital property — The basic rules
Depreciable property
Other capital property

Module 5 Special rules — Capital and other properties
Spouse/common-law partner/spouse or common-law partner trust beneficiary
Farm and fishing property
Capital property reserves
Partnership interests
Capital stock

Module 6 Tax credits, compliance, and tax planning
Tax credits
Elective returns: Common attributes and the advantage of filing them
Income tax returns
Other compliance matters
Planning

Quiz 2

Appendices
Appendix A — Website references
Appendix B — List of information and documents to prepare the income tax return of a deceased person
Appendix C — Elections available when preparing the income tax return of a deceased person

Adam Plank, CGA, is the head of EPR Coquitlam’s Tax Practice which focuses exclusively on delivering value to privately held businesses.  For over 10 years, many with a national firm, Adam has worked solely with private corporations and their shareholders advising them on a broad range of taxation and business matters including corporate reorganizations, business and financing structures, estate, trust and will planning, business successions and divestitures and employee/shareholder compensation arrangements.