A question I’m asked a tremendous amount is, “Why am I at a pickleball court?” That’s none of your business. A second question I’m asked a tremendous amount is this: “Is there an inheritance tax in Canada? If I’m left some money, do I have to share it with the CRA?”

No! There is no inheritance tax in Canada. Just another reason to grab every inheritance you can. I am pro-inheritance!

Ah, but you wonder, “Is there an estate tax? Does the estate have to share with the government before it passes the rest on to me, a deserving soul, and to my greedy siblings and cousins?”

No! Well, technically no. We don’t have estate taxes in Canada either. But we do, in essence, have a death tax. And I think it’s mostly fair. It makes sense. The deceased has to file a tax return in the year he or she dies. For obvious reasons, they won’t be the one actually putting it together.

How does it work? Well, a good part of it is the exact way you would guess. Their income is reported. And that includes all income, all sources—just as it does when those of us who are living file. And, of course, any taxes already remitted are also reported (I’ve seen that missed, by the way, so be careful!) But then a little tricky and not great news: Assets in registered accounts, RRSPs and RRIFs are brought into income. Annoying! But there are exceptions like when the funds are left to a spouse. That can be a lot of money and, therefore, a lot of tax owed. TFSAs, on the other hand, no tax—living up to their name.

Now, more not great news, non-registered financial assets are deemed to be sold just before death and, therefore, taxes could be owed on unrealized capital gains. Could be, but aren’t always. For example, the principal residence when deemed to be sold doesn’t trigger a taxable capital gain—the principal-residence exemption. Or maybe the deceased had all GICs and, therefore, no gains. Or maybe the dearly departed was a horrible investor and had all losses. I’ve seen it. There’s more complicated things we can get into in this short video, but let’s not. Like what happens when there’s joint ownership involved? How does probate work? What about U.S. assets like stocks and real estate? Etcetera.

The point is, it’s very important to get good advice in this area on how to hold your assets, the best way to lay this all out in your will and, of course, my full name and address for your beneficiary designations.

This was, I hope though, a helpful look at the basics.