Canada is generally viewed as a country with no estate tax. While that's true, what many people don't realize is that a "Deemed Disposition Tax," which is similar to an estate tax, applies when you die.
Deemed Disposition Tax is so-named because your investments are deemed to be sold at death. Any capital gains triggered by their sale are included in a final income tax return filed in the year of death. A final tax return also includes the value of any retirement accounts and income received from stocks, bonds, real estate investments and even in some cases the life insurance proceeds in the year of death. With Canadian federal income tax rates of up to 29%, this final taxation can be substantial. Provincial taxes and probate fees also apply.
Unless you take steps to reduce these costs, there will be less money left in your estate for your beneficiaries. Follow these helpful tips and you’ll keep the Canada Revenue Agency (CRA) from being your biggest and happiest beneficiary:
It is a good idea to structure your estate in a way that reduces any taxes owed. If you feel your Will needs to be updated, please give my office at call at 780-458-8228 to book an appointment and discuss options.
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