Is There Inheritance or Death Tax in Canada?

In Canada, there is no inheritance tax or death tax. The estate of a deceased person, rather than beneficiaries, pays any tax owed to the government. All income earned by the deceased upon death is paid by the estate in the deceased tax return. Since the estate has paid the taxes, Canadian beneficiaries receive inheritances tax free.

How Are Estate Assets Taxed?

All income earned by a deceased person is taxed on a final (terminal) tax return.

Non-registered assets (assets linked and investments that are not registered with the Canadian federal government) are considered by the Canada Revenue Agency (CRA) to have been sold for fair market value immediately before death. Any capital gains from investments in non-registered assets are taxable at 5()% of the deceased' s marginal tax rate.

The fair market value of registered assets (RRSPs, RIFs, TFSAs) are classified as income for the deceased person in the terminal return and are taxed at the applicable personal income tax rate. Typically a deceased person's estate will pay the taxes and the beneficiary of a registered as et will receive the asset tax free.

Filed Under
Transition of Wealth