The estate trustee is personally liable to satisfy every “obligation” imposed on the estate during or before the creation of the estate, including amounts “payable or remittable” by the estate, subject to certain value limits (s. 267.1). S. 270 provides that the estate trustee must obtain a clearance certificate before distributing any property or money of the estate, failing which there generally is personal liability.
Where the estate trustee fully complies with s. 270 and obtains a clearance certificate certifying that all amounts payable or remittable by the estate and the estate trustee have been paid (or security has been accepted), are there any GST/HST financial liabilities relating to the administration of the estate for which the estate trustee could still be held personally liable, for example, because of the independent personal liability imposed on the estate trustee by s. 267.1?
S. 267 of the ETA generally provides that Part IX of the ETA applies as though the estate of a deceased individual were the individual and the individual had not died. This applies to all of the obligations imposed under Part IX, for example: complying with registration requirements, the charging and collection of tax when making taxable supplies and also the filing of returns. Generally, under section 267.1 of the ETA, anything done by a trustee of a trust in its capacity of trustee of the trust, and by extension of the definition of trustee, the personal representative of a deceased individual in its capacity of personal representative of the estate of the deceased individual, is deemed to have been done by the trust and by extension, the estate respectively.
In general, section 270 of the ETA provides that a representative handling the estate or administering or winding up a commercial activity or business of a person is not entitled to distribute any property or money under the representative's control before obtaining a certificate described in that section from the Minister of National Revenue. This document certifies that all amounts, that are, or can reasonably be expected to become, payable or remittable under Part IX in respect of the reporting period during which the distribution is made, or any previous reporting period, have been paid, or that security for the payment or remittance of the amounts has, in accordance with Part IX, been accepted by the Minister. Failure to obtain the certificate renders the representative personally liable for the payment or remittance of those amounts to the extent of the value of the property or money distributed.
That being said, the fact that a clearance certificate is issued to a representative of an estate, does not free the estate from any outstanding obligations under Part IX and as such, the trustee would still be liable to satisfy these obligations pursuant to subsection 267.1(2).
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