Death and taxes

Most people are familiar with the old adage of life’s two certainties: death and taxes. However, not everybody understands that the two certainties coincide.

This bulletin is designed to provide you with an understanding of the tax implications of holding various non-registered assets and registered assets when you pass away, as well as tax filing requirements at death.

Unlike other countries, Canada doesn’t have a death, estate or inheritance tax when a person passes away. Instead, Canada imposes a deemed disposition on the date of death.

This means that you’re deemed to dispose of all your capital property for fair market value proceeds immediately prior to your death. This includes everything from your home, car, vacation properties, business assets, personal effects, investments, and more.

The result is, if any of these assets have appreciated in value since you acquired them, there could be significant taxes owing on the capital gains in the year of death. Therefore, depending upon the type of property you own on death, this could leave your estate with a hefty tax liability without proper planning.