An estate that wishes to carry back a loss to the terminal return of the deceased under subsection 164(6) of the Income Tax Act (Canada) must file an amended T1 for the terminal year. A T1ADJ will not suffice. See pages 32 and 33 of T4013, T3 Trust Guide 2021, document 2020-0839951C6, STEP 2020 Question 15, and page 21 of the T3 Trust Guide.
If the carry back results in a refund, interest in respect of the deceased’s terminal year begins to accrue 30 days after the latest of
- the first day immediately following the subsequent taxation year;
- the day on which the return of income for that subsequent taxation year was filed; and
- the day on which the amended return was filed under paragraph 164(6)(e).
See paragraph 164(3)(d) and paragraphs 164(5)(d), (i), (j) and (k) of the Act.
STEP Round Table 2022, question 13, summarized in Tax Topics no 2657 (February 7, 2023)
