Tax Question:
What is a Rights and Things Return and when is it filed?
Facts:
A Rights and Things Return is a return that may be filed for a deceased person in addition to the regular date of death return. It would include items that were unpaid at the time of the death, such as interest on un-matured deposits, unpaid salary and unpaid dividends. A Rights and Things Return is always optional; however, is advisable if there are relatively large unpaid amounts of income at the time of death.
Conceptually, think of a rights and things return as the return that would have been filed had the deceased lived past their date of death. It contains things that would have been normally experienced had the deceased continued to live. In contrast, the date of death return only captures things that happened to complete before the date of death or was deemed to have occurred as at the date of death.
If the unpaid amounts are significant, filing a separate Rights and Things Return permits a doubling up of certain tax credits, such as the basic personal credit, the age credit, the spousal credit, the eligible dependant credit, the caregiver credit and the infirm dependents age 18 or older credit. In addition, other tax credits can be split between the two returns, such as the disability amount for the deceased or their spouse, interest paid on student loans, tuition amounts for the deceased or transferred from a child, medical expenses and charitable donations. By splitting these tax credits between the two returns, a portion can be claimed on each return to match the credits to the income claimed. You also receive the advantage of the graduated tax rates on the income filed on both returns.
Overall, filing a Rights and Things Return can result in significant tax savings.
If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.
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