Personal Finance

inheritance in Canada

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  • Nov 6th, 2008 5:13 pm
[OP]
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Dec 23, 2005
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inheritance in Canada

Say I have and my wife a joint bank account. This has inside around $100k. I died, will this money be considered as an income to my wife for year 2008 and she needs to pay 20-30% of it to the goverment.

Another similar question, if I and my child are the only family members. I have only a house and some small money in my bank account may be $10k. If I died will the house go to my son (let us think that I paid the house price)? and then will my son require to pay taxes on that?... Will the government consider it is an income to my son and he will need to pay taxes? OK, this house is 450k so you need to pay 30% which is 150k and as you do not have good cash ... Will my child require to pay that money and if he could not the government will sell his house for compensation?

My friend is a Canadian and he has a chance to work in the middle east gulf for $200k/year + accommodation costs + round trip tickets to Canada each year + no taxes ...etc. Now he has around 200k in his Canadian bank account. He is married and has two sons less than 10 years. He will send to the government to deem him as a tax payer so he is good here for the taxes. He will not pay anything. He prepared himself to stay in the gulf for 15 years and then return back. His question what is better for him and his family, should he transfer what he gains from the gulf to Canada or keep the money in the gulf and what to do with his money here? If he died for any reason, how to get the maximum benefits for his family? In Gulf, they will give his family all the money he has as no taxes there. Here what will be the situation!
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[OP]
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Dec 23, 2005
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Inheritance tax

Since the government of Brian Mulroney in the 1980s, Canada has had no inheritance taxes. Instead, inheritance is treated as a disposal subject to the same capital gains taxation as, for example, the sale of the asset.
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tasamy wrote: Say I have and my wife a joint bank account. This has inside around $100k. I died, will this money be considered as an income to my wife for year 2008 and she needs to pay 20-30% of it to the goverment.
If the account is a RRSP account, yes. Otherwise, no. AFAIK, you can't have joint RRSP accounts, so the answer would be no.
Another similar question, if I and my child are the only family members. I have only a house and some small money in my bank account may be $10k. If I died will the house go to my son (let us think that I paid the house price)? and then will my son require to pay taxes on that?...
Your son (or a trustee acting on his behalf) would have to pay property taxes, and taxes would have to be paid on the interest generated by the $10k -- but there would be no tax payable as the result of the inheritance of the house at all.

*Unless* the house was not a principal residence, and/or was used as a rental and depreciation was claimed, in which case, capital gains tax could be owing.
Will the government consider it is an income to my son and he will need to pay taxes? OK, this
Generally not. Your son would get the house free and clear of any income tax. He would still have to pay any property taxes, including unpaid back taxes. If you have an unpaid income tax debt, it is possible that some portion of the house would have to be paid as income tax if cash was not available in the estate to cover.
house is 450k so you need to pay 30% which is 150k and as you do not have good cash ... Will my child require to pay that money and if he could not the government will sell his house for compensation?
No, such an inheritance would not be considered income, however, your estate must settle all of its debts prior to paying out the proceeds of your estate.

My friend is a Canadian and he has a chance to work in the middle east gulf for $200k/year + accommodation costs + round trip tickets to Canada each year + no taxes ...etc. Now he has around 200k in his Canadian bank account. He is married and has two sons less than 10 years. He will send to the government to deem him as a tax payer so he is good here for the taxes. He will not pay anything. He prepared himself to stay in the gulf for 15 years and then return back. His question what is better for him and his family, should he transfer what he gains from the gulf to Canada or keep the money in the gulf and what to do with his money here? If he died for any reason, how to get the maximum benefits for his family? In Gulf, they will give his family all the money he has as no taxes there. Here what will be the situation!
I'd suggest that your friend spend a couple thousand bucks and sit down with a CA firm (or consulting firm) that specializes in this sort of thing. His situation is likely way too complex to be entrusted to someone on an internet forum operating with limited information.
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