Inheritance Tax Advice in Canada

In Canada, inheritance tax does not exist as it might elsewhere. However, inheritances aren’t entirely tax-free. Various tax obligations can arise when someone passes away, affecting the estate and its beneficiaries.

Deemed Disposition

In Canada, rather than an inheritance tax, the deceased’s estate is responsible for settling any taxes due before distributing the remaining assets to beneficiaries.

At death, all assets owned by the deceased are assumed to be sold at their fair market value. This assumption may trigger a capital gains tax if the sale price of the assets exceeds their original purchase price.

This tax responsibility falls on the estate and needs to be settled before asset distribution.

Probate Fees

Although there is no inheritance tax, Canadian provinces may impose probate fees. These fees are assessed during the legal process of validating a will, and their amount varies depending on the estate’s total value:

• Probate fee in Canada = 1.5% of the estate’s total value.