Clarifying Canadian Estate Taxation, (Almost) Everything You Need to Know
One of the most misunderstood issues when it comes to planning your estate is the question of taxes, what tax has to be paid and who pays it. While an in-depth discussion on the topic is beyond the scope of this article, we can certainly clear up a few misconceptions and shed light on the Canadian tax system. A common question I’m asked is what tax do beneficiaries pay? The simple answer is none. There is no inheritance tax in Canada. Any money you get as a beneficiary of an estate is considered after tax money. It doesn’t need to be included in your income. For the most part, this is also the case in many states in the U.S. There are a handful of states such as Iowa, Kentucky, and Pennsylvania which do impose an inheritance tax. Perhaps the fact that some states have an inheritance tax is the source of the misconception. However, the good news is that in Canada, the estate pays the tax rather than the beneficiary. That means any inheritance received by beneficiaries has already had t
