Inheritance tax in Canada: Complete guide for expats

There’s no specific inheritance tax in Canada – but that doesn’t mean that no tax is paid on the estate of a deceased person. As with most tax matters, the taxes which may apply to any Canadian inheritance depend a lot on the specific circumstances. This guide walks through the basics – although you’ll also require professional support to navigate any tax questions you may have about your own unique situation.

Read on to learn about inheritance and estate tax in Canada, with a quick look at how providers like Wise could help you repatriate your money if you inherit there – or pay taxes from abroad if you need to do so.

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How does inheritance tax work in Canada?

Canada does not have inheritance tax, which means that if you’re a Canadian tax resident, and receive an inheritance from someone living locally, you are unlikely to be taxed on this income in Canada. However, there are taxes paid to the Canadian Revenue Agency when someone dies, which are deducted from the estate value before distributions are made – and if you’re an expat in Canada you may still have to consider taxes in your home country.

In Canada when someone dies, the executor of the will, or an appointed representative must work with the Canada Revenue Agency (CRA) to complete a final tax return and pay any duties owed. This is similar to an estate tax which is used in many countries, as technically it is the deceased person who is subject to the tax rather than the beneficiary of an inheritance.

The difference between estate tax and inheritance tax can be confusing. The key difference is when the tax is assessed, and who has to pay it – here’s what you need to know:

• Estate tax – estate tax is paid by the executor of the estate, before any of the assets can be distributed to beneficiaries.
• Inheritance tax – inheritance tax is paid by beneficiaries of specific inheritances given after someone dies.

Tax can be complicated – and even more so if there are different countries involved or if you’re navigating a new system in a different country. The information in this article does not constitute advice. Tax requirements can change and are highly personal – get advice from a tax professional to understand your own obligations.

Canadian inheritance laws and succession rules

Inheritance taxes in Canada were removed over 50 years ago. This means that if you’re living in Canada and receive a pay out from a will, you are not likely to need to pay any tax on it. This is because taxes will have already been paid on the estate prior to any distributions being made.

If someone dies without a will in Canada, provincial laws dictate who the beneficiaries are after taxes have been deducted. Generally these laws favour the individual’s spouse and children, but there are some variances on a local level about how succession laws apply.

Who pays inheritance tax in Canada?

When someone dies in Canada the tax is paid to the CRA by the executor of the will, and before any distribution of money to family members or other beneficiaries.

If you’re a Canadian tax resident and get an inheritance from another Canadian resident who has died, you probably do not owe tax to the CRA. However, the situation gets more complicated if you’re not a tax resident or if your home country requires you to report and pay tax on worldwide income. 

As inheritance tax rules and exceptions can change and may be complicated to navigate, get personal advice if you’re unsure of your obligations.

International inheritance tax considerations 

If you’re an expat in Canada from a country which requires you to pay tax on worldwide income, you may still need to report and potentially pay tax on your Canadian inheritance. In this case you’ll likely need professional support to make sure you’ve paid the right amount and covered your duties in Canada and your home country.

If you inherit in Canada and need to pay inheritance tax – or if you’ve inherited and need to repatriate your inherited funds to your home country, providers like Wise, OFX or Xe Money Transfer may be able to help. 

Wise offers high value transfers with the mid-market rate, OFX has no transfer cap and a 24/7 phone service if you like to talk through your transactions, while Xe Money Transfer uses variable fees and rates on transfers all around the world.

How much is inheritance tax in Canada?

While there’s no inheritance tax in Canada, tax is paid on the income and assets of an individual who dies. The executor of the deceased person’s will is responsible for informing the CRA that the individual has died, and completing and submitting final tax returns on their behalf.

The tax which applies – and the rates at which it must be paid – depend on the type of income reported. For example, there may be an income tax liability for the year in which the individual has died, or capital gains taxes on assets.

At the time of writing, Federal income tax in Canada depends on the income amount earned, and runs from 14.5% to 33%. There may be additional provincial or territory level income tax to pay as well as this. Capital gains taxes may also apply, although some exclusions are offered where property is concerned for example.

How to calculate inheritance tax

The process of calculating the taxes owed after someone dies can be complicated, and can vary depending on the situation of the individual involved. Usually the representative of the deceased person must file a final T1 Income Tax and Benefit Return, called the Final Return, along with other optional T1 returns if the individual had relevant assets to report.

There’s guidance on the CRA website which covers the most important documents to complete and return, and professional help is also available with completing this process.

Paying inheritance tax in Canada

The executor of the will, or the representative of the deceased person, must file the final CRA returns on the following schedule:

• Where the death occurred between January 1 and October 31 – filing must be complete by April 30 of the year following the death 
• Where the death occurred between November 1 and December 31 – filing must be complete 6 months following the death, on the same calendar day as the date of death

Once the final filings have been submitted, the representative will get a notice of assessment and can then pay amounts owed using the following methods:

• Direct withdrawal from a Canadian bank account
• Debit or credit card
• Cheque
• Money transfer platform (PayPal, Interac e-Transfer)
• Wire transfer
• Cash

The representative can then apply for a clearance certificate which allows them to disburse funds without personal liability to the tax authorities. The processing time for the clearance certificate can be 120 days or more. 

Canada inheritance tax for non-residents

While there’s not likely to be any tax to pay in Canada if you inherit following the death of a Canadian resident, you may need to report and pay tax in your home country, or wherever you’re a tax resident.

This can mean that you need to report your inheritance as income or another form of asset on your annual tax filing in your home country. You might also have to comply with other laws in your home country depending on the rules there and your overall assets both in Canada and elsewhere. 

To give an example, if you’re a US citizen and come into money overseas, you may need to report under FATCA – the Foreign Account Tax Compliance Act. This states that US persons living outside the US may have to report foreign assets over 200,000 USD. US taxpayers living in the US who have assets of 50,000 USD or more overseas must also declare it.

Assets subject to inheritance tax

Tax is paid on any income earned in the tax year, on behalf of the deceased person, by their representative or executor. In general the executor of a will in Canada will also need to value certain assets to calculate any capital gains tax owed, including things like:

• Real estate
• Cash including money held out of state in some cases
• Certificates of deposit and other assets like stocks and bonds
• Life insurance payable to the insured or to the estate
• Annuities
• Household goods, jewelry and other assets

Estate tax in Canada

Estate taxes are settled by the executor of an estate, prior to any distributions to beneficiaries. This is closer to the system in Canada, although the specific taxes paid upon the death of someone there may not be called estate taxes.

There’s usually no liability to the beneficiary in Canada as this is settled centrally. Once you have received any inheritance you can then choose to hold it in Canada or repatriate it with a provider like Wise to your home country if you’d like to.

Inheritance tax rates and thresholds in Canada

Where taxes are owed on the assets and income of a deceased person in Canada they’re paid according to the prevailing rates. There are certain exemptions and deductions, which can make the calculation of tax complicated. If you’re involved in settling the affairs of a loved one who has died in Canada you’ll likely need to get professional advice to navigate the system.

Inheritance law and pensions in Canada

If the individual who dies has a pension such as a RRSP, the treatment of this asset depends on factors including whether or not the RRSP has matured. It will also depend on whether or not the deceased person was splitting their annuity payments with a partner at the time of their death. Professional tax advisors with a knowledge of the Canadian system can be an invaluable support here if you’re trying to work out what assets to report or pay taxes on after a death.

Inheritance tax planning 

In some countries it can be helpful to take steps to plan your estate to limit the amount of taxes your beneficiaries will pay upon your death. Some options can include creating a trust, gifting amounts to loved ones rather than waiting for them to inherit, or leaving assets to registered charities. 

As there is no specific inheritance tax in Canada, these tactics may not be required – take professional advice if you need help with your tax planning in Canada.

Inheritance tax exemptions and reliefs in Canada

The taxes payable after a death in Canada can be subject to some reliefs and exemptions. For example, if the deceased individual owned a property which was their main residence, the capital gains on this asset may be exempt from tax. If the property passes directly to a spouse upon the death of the individual any tax payable may also be waived, subject to certain conditions.

Gift tax and lifetime transfers

Canada does not tax money given as a gift in most cases. This can mean that gifting money to loved ones is an approach to managing your estate planning, rather than leaving the funds to be distributed after your death.

Common mistakes and pitfalls to avoid

If you’ve inherited in Canada, you’ll need to get professional help with your tax affairs and the practical management of the estate. Here are a few tips.

• Get the professional support you need to help manage the deceased estate if you are called on as the executor of a will
• If any tax filing or payment is required, be sure to check the deadlines as there may be penalties for late payments
• Check your obligations both in Canada and your home country – in some cases you may need to report or pay tax in both
• If you’re repatriating funds after an inheritance, use a provider like Wise to get the mid-market rate on your currency conversion, and keep the costs of your transaction low.

Recent changes and updates in Canada

While inheritance tax has not been a factor in Canada for over 50 years, there are still changes made from time to time in policy relating to inheritance. For example, in 2025 Ontario changed the rules about succession and inheritance in the case of couples who remained married but were separated at the time of the death of a partner. 

As things do change relating to tax law on a pretty frequent basis, it’s important to check the most up to date details as related to your own situation if you find yourself needing to navigate the Canadian inheritance process.

Getting professional help for taxes in Canada

It’s important to seek professional advice when dealing with estate or inheritance tax in Canada – depending on your situation you may need to talk to tax advisors, lawyers, and estate planners. You may also need advice in your home country to make sure you’re covering all your duties.

While there are fees to pay for professional support, it’s important to note that mistakes could be costly – and navigating an unfamiliar tax landscape without help can be extremely stressful. Get the help you need promptly to make things as simple as possible for yourself, and to give you peace of mind that you’ve got everything in order.

Conclusion

While inheritance tax isn’t used in Canada, there are still taxes to pay on the estate of a deceased person. Plus, you may have duties in your own home country, or any other country in which you hold tax residency. If you’ve inherited in Canada, or if you’re involved in managing the estate of a deceased person there, you’ll need professional advice to navigate what can be a very complicated process.

This guide covers many of the important points to know about – and remember, if you need to repatriate funds from Canada, or pay tax in Canada from elsewhere in the world, you could save money on fees if you use Wise.

Wise is well set up for large international transfers offering high limits, mid-market rate currency exchange, and fee discounts when sending larger amounts. Spend less on administration, and get a smooth international payment with Wise.

Useful resources

• Canada Revenue Agency – what to do when someone dies
• Canada Revenue Agency – doing taxes for someone who has died
• Canada Revenue Agency – reporting income and transfers for someone who has died
• Canada Revenue Agency – filing and due dates after a death
• Canada Revenue Agency – taxable and untaxable income 
• Canada Revenue Agency – income tax rates
• FATCA – IRS reporting requirements for foreign assets for US persons