Are Inheritances taxed in Canada?

January 31, 2023


This is probably one of the most common questions we get from new clients. In short, the answer is NO, the money you receive from the estate of a loved one (in Canada) is not added to your income/taxed to you by Canada Revenue Agency.

That doesn’t mean tax isn’t paid by the estate of the deceased, it can be and may reduce the beneficiary’s share, but it is not paid by the beneficiary receiving the funds.

How various accounts are handled upon the death of the owner depends on several factors:

  1. Was the account jointly held?

Most joint investment accounts that we administer are defined at “Joint with Rights of Survivorship”. This means that upon the death of one of the owners, the account continues under the name of the surviving owner, whether that be a spouse or child. The estate of the deceased may have some tax obligations depending if the account dispersed any income (interest, dividends, or capital gains) in the account up until the date of death.

  1. Was the account registered (like an RRSP, LIF, or TFSA) or not (like a regular bank account)?

Registered accounts like TFSAs and RRSPs allow the owner to name a beneficiary on the account so that the money is sent directly to the beneficiary by the financial institution without having to go through the estate or probate first. Non-registered accounts, or registered accounts without a beneficiary on file, must go through probate before being dispersed to the beneficiaries of the estate, as prescribed in the owner’s will.

  1. Did the owner have a spouse?

Certain account types (mainly pension plans and their cousins, Locked-In Retirement Accounts & Locked-In RRSPs) sometimes have provisions that the owner’s spouse has claim on the account before any named beneficiary. This depends on the pension jurisdiction so check with their financial institution.


How does the death claim process work?

After the death of an account owner, accounts with a beneficiary are paid out to that person, after some paperwork is filed. Any accounts without a beneficiary will go through your provincial probate, which is a lengthy process (several months, even up to a year or more). The money is usually sent directly to a new bank account in the name of “The Estate of [the deceased]”. From there it is dispersed to the beneficiaries, according to the will, by the executor of the estate. Things like property or real estate are handled according to the will, but still not taxed to the beneficiary of this property.


These are just a few examples of the many factors that come into play when dispersing an account after a loved one passes away. If you are concerned about how your loved one’s estate may be taxed upon their death, speak with an advisor to build a solid estate plan.




The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This Blog was written, designed, and produced by Natalie LeBlanc & David Moore, PFP, STI for the benefit of David Moore, PFP, STI who is an Investment Fund Advisor registered with Investia and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe are reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds, approved exempt market products and/or exchange-traded funds are offered through Investia Financial Services Inc.

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