Employment and self-employment income
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Salary, wages or commissions
- Found on slip
- T4 - box 14, as well as other T4, T4A and T4PS amounts (issued to the employee who died)
- Report on lines
- 10100 to 10400 (101 to 104 until 2019) of the Final Return of the employee who died
Report all salary, wages, or commissions received from January 1 to the date of death. Also include amounts that accumulate from the start of the pay period in which the employee died to the date of death.
Employment income that the person who died earned before the date of death but received after the date of death is eligible for an optional Return for Rights or Things.
To determine how to report the commission income and claim expenses for a self-employed salesperson, see Guide T4002, Self-employed, Business, Professional, Commission, Farming, and Fishing Income.
For more information on employment income, see line 10100 and line 10400.
Commissions from box 42 of the T4 slip included in line 10100 must also be entered on line 10120.
Death benefit to an employee
If the person who died received a death benefit from their employer, refer to how to report a death benefit from an employer.
Tax-exempt income for emergency services volunteers
Tax-exempt income for emergency services volunteers from box 87 on the T4 slip must also be entered on line 10105 if it was not included on line 10100.
Wage-loss replacement contributions
The total wage-loss replacement contributions shown in documents from the employer or insurance company must be entered on line 10130.
Retroactive adjustments for specific types of employment income are not reported
Retroactive adjustments to the following employment income when a collective agreement or other authorizing instrument has been signed after the date of death, are not taxable, and are not reported in either the Final Return of the deceased or the T3 Trust Income Tax and Information Return (T3 Return) for the estate:
- Salary or wages (including overtime) from the end of the last pay period to the date of death
- Salary or wages (including overtime) for a pay period finished before the date of death, but paid after death
- Payment for vacation leave earned but not taken
If the document that allows the change was signed before the date of death, the amount must be included in the Final Return.
- Found on slip
- T5013 or other business records (issued to or maintained by the person who died)
- Report on lines
- 13499 to 14300 (135 to 143 until 2019) on the deceased proprietor's Final Return
If the person who died had self-employment income from a business, a profession, commission, farming, or fishing, report the gross and net income or loss on the appropriate line.
For more information on self-employment income, see lines 13499 to 14300.
How to report self-employment income on an optional T1 return
Income earned between the end of the last fiscal period and the date of death may be reported on a Return for a Partner or Proprietor if:
- the fiscal year end for the business is not December 31
- the person died after the end of the business’s fiscal period but before the end of the calendar year in which the fiscal period ended
If you are not filing the optional T1 return, include the income in the Final Return.
Business income after the date of death
If the business of the person who died continued to earn income after the date of death, it is generally considered income of the estate that should be reported on a T3 Trust Income Tax and Information Return (T3 Return).
Reserves in the year of death for self-employment income
A self-employed person may have amounts they receive in a later year for work done in a tax year, such as for a work in progress. The amount not yet received (but generally already invoiced) is a reserve on self-employment income.
If the deceased deducted a reserve from income in a previous tax year and has not yet reported it, it needs to be reported in the Final Return. Reserves for self-employment income should be reported according to line 8290 of Guide T4002.
In most cases, you cannot deduct a reserve in the year of death. However, there may be a transfer to a spouse or common-law partner, or spousal or common-law partner trust, of the right to income owing. When this happens, the legal representative and the beneficiary can choose to claim a reserve on the deceased's Final Return. To do this, complete Form T2069, Election in Respect of Amounts Not Deductible as Reserves for the Year of Death, and attach a copy to the deceased's Final Return.
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