Estate Taxation

Basics of Estate Tax

  • The deceased is considered to have sold all of their capital property (including non-registered assets) at fair market price.

  • If the value of these assets have increased in value since their acquisition, the estate must pay capital gains on the asset.

  • If there is a surviving spouse or common law partner, the assets may be transferred tax-free to their registered plan (RRSP or RRIF).

Estate & Inheritance Tax

  • In Canada, beneficiaries don’t pay inheritance tax; instead, the estate pays the taxes owed to the government. 

  • If you have US assets, they may be subject to a state-based estate or inheritance tax and you may want to be aware of these states that do have estate or inheritance tax: States with Inheritance Tax

Duties of an Executor

  • When a person dies, their executor has to file a deceased tax return (final return) to the CRA. Any taxes owed are taken from the estate prior to being settled. 

  • Once the executor has settled the estate, they must get a clearance certificate from the CRA to confirm that all taxes have been paid. This allows the legal representative to distribute the estate’s assets without being personally liable.

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Last updated August 2021