Estate tax issue


In Canada, unlike other countries, there is no tax applied to beneficiaries inheriting an estate following the death of a loved one. This means there is no death tax or ‘inheritance tax’ in the same manner that other countries deal with taxation following a death or inheritance. However, this does not mean that there are not important tax issues that need to be considered.

Canada assumes that a deceased person liquidates all assets one minute prior to death. All these assets are transferred to the dying individuals estate. Depending on how the estate is set up there may be taxes that require payment by the estate itself.


The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 (PDF)). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.

A filing is required for estates with combined gross assets and prior taxable gifts exceeding:

$1,500,000 in 2004 - 2005;

$2,000,000 in 2006 - 2008;

$3,500,000 for decedents dying in 2009;

$5,000,000 or more for decedent's dying in 2010 and 2011 (note: there are special rules for decedents dying in 2010);

$5,120,000 in 2012

$5,250,000 in 2013

$5,340,000 in 2014

$5,430,000 in 2015

$5,450,000 in 2016

$5,490,000 in 2017

Roughly 2 of Every 1,000 Estates Face the Estate Tax

Today, 99.8 percent of estates owe no estate tax at all, according to the Joint Committee on Taxation.[3] Only the estates of the wealthiest 0.2 percent of Americans — roughly 2 out of every 1,000 people who die — owe any estate tax. (See Figure 1.) This is because of the tax’s high exemption amount, which has jumped from $650,000 per person in 2001 to $5.45 million per person in 2016.


Thus, the estate tax is best characterized as a tax on very large inheritances by a small group of wealthy heirs; repeal would amount to a massive windfall for those heirs. That’s why it is misleading to characterize the tax as the “death tax,” as repeal advocates often do. Rather, as other observers such as the columnist E. J. Dionne have said, estate tax repeal could be more appropriately called the “Paris Hilton tax cut.”[4]

Estate, inheritance and gift tax comparisons internationally