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Taxes

Is There an Inheritance Tax in Canada?

No. Canada has no inheritance tax on what you receive. Instead, when someone dies they are treated as having sold their property just before death, and any capital gain is taxed on their final return. Property left to a surviving spouse or common-law partner can usually pass at cost, with no gain.

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How tax works at death

  • Deemed disposition: the person is treated as having sold their property at fair market value just before death.
  • Final return: any gain since the property was bought is reported on the deceased's final return. In most cases, half of a capital gain is taxable.
  • Spouse rollover: property going to a surviving spouse or common-law partner can be transferred at cost, so no gain is reported.

Do heirs pay tax?

Taxes are settled by the estate before assets are distributed. What you inherit is generally not income to you, though income it earns after you receive it is.

Related

Capital Gains Tax in Canada: How It Works Only half of a capital gain is taxable: one-half of the gain is added to your income and taxed at your normal rate. The proposed increase to two-thirds was cancelled. Gains on a home that was your principal residence for every year you owned it remain tax-free. How to Register for CRA Represent a Client (Help a Family Member or Client) Represent a Client is the part of your own CRA account used to manage someone else's tax information, such as a parent, friend or client. Sign in, select Add account, choose Representative account, register yourself or your business, then get the person's authorization.

Sources

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