Updated Checked by the Tax-Services.ca editorial team How we check
Canada has no tax called a death tax that your heirs pay. In the CRA guidance we read, what gets taxed at death is the person who died: the CRA treats their property as sold the moment before, and any gain lands on a final return. Provinces then charge probate fees, which are a separate cost and not a tax on the inheritance.
Is there a death tax in Canada?
Not in the sense people fear. The CRA pages on doing taxes for someone who died describe a final T1 return, capital gains and income from registered plans. They don’t describe a tax on the person receiving the money. A designated beneficiary of a TFSA pays no tax on amounts up to the account’s market value at death, which the CRA states directly.
But the estate can owe a lot. That’s the part the label “death tax” is really pointing at, and it’s why the final return deserves more attention than it usually gets.
What is the deemed sale at death?
For tax, almost everything the person owned counts as sold at its market value the moment before death, though nobody sells a thing. The gain is market value minus what they paid, and generally half of it is taxable. It’s reported on Schedule 3 of the final return, and it stacks on top of the year’s other income, so it can push the return into the higher brackets.
There are two big exceptions. Property that goes to a surviving spouse or common-law partner who is resident in Canada can pass without a gain being triggered, and the gain waits until that person sells. And a principal residence can be exempt if it meets the CRA’s conditions and is designated on form T1255 and Schedule 3.
Say someone owned a cottage that cost $200,000 and is worth $600,000 at death, and the cottage isn’t their designated principal residence. They had $40,000 of other income in the year and lived in Ontario. The gain is $400,000, so $200,000 becomes taxable. Our engine puts the extra federal and Ontario tax at about $79,400. That’s before credits and any planning, and it’s the estate that pays, not the children. The capital gains tax calculator lets you try your own cost and value.
Who files the final return and who pays?
The person looking after the estate does, usually the executor named in the will, or whoever a court appoints when there’s no will. They file the final return, gather the slips and pay what’s owing from the estate’s money before anything is handed out. That’s why the heirs don’t get a separate bill: the tax comes off the top, and what’s left is what they receive.
It also explains a common frustration. A family can be told the estate is worth a certain amount and then find a smaller number in the bank, because the final return, the probate fee and any legal costs were paid first. If you’re the one handling it, start early. Gathering slips for T4s, pensions and investments takes longer than people expect, and the CRA page linked above is the place to check what has to be sent.
What happens to RRSPs and RRIFs?
The same CRA pages show RRSP and RRIF income reported on the final return, from the T4RSP and T4RIF slips. Full tax or a rollover to someone else depends on who’s named and how. We didn’t verify the rollover rules, so read the CRA page for your case before deciding anything. To see what a big withdrawal would cost in a given year, try the RRSP withdrawal tax calculator.
What does probate cost by province?
Probate fees are charged by the province and depend on where the person lived and what passes through the estate. Assets held jointly or with a named beneficiary often stay outside it. In Ontario, for instance, the fee is $15 for every $1,000 above $50,000.
| Province | Estate of $500,000 | Estate of $1,000,000 |
|---|---|---|
| Ontario | $6,750 | $14,250 |
| British Columbia | $6,650 | $13,650 |
| Nova Scotia | $7,783 | $16,258 |
| Saskatchewan | $3,700 | $7,200 |
| Alberta | $525 | $525 |
| Quebec | $241 court fee, for some wills | $241 court fee, for some wills |
The Alberta figure is a capped court fee, and Quebec doesn’t charge on the value of the estate. Saskatchewan’s page doesn’t say whether the $7 rate is per $1,000 or part of it, so treat that row as approximate. The probate fee calculator covers the other provinces and territories.
When is the final return due?
For a death from January 1 to October 31, the return is due April 30 of the next year. For a death from November 1 to December 31, it’s due six months after the date of death. If the person or their spouse was self-employed, the date is June 15 of the next year for deaths up to December 15. Any balance owing is still due April 30, and late filing costs 5% of the balance plus 1% for each full month, up to 12 months. We haven’t seen a separate date for deaths in 2026, so confirm it before you rely on it.
Mistakes that cost estates money
Treating probate as the tax is the first. Forgetting to designate a principal residence is the second, and it can turn an exempt gain into a taxable one. The third is assuming the beneficiary sorts it out later, when the legal representative is the one who files. A fourth is waiting: a late final return adds a penalty on top of a bill the estate was always going to owe.
The income tax calculator shows what the final year’s income adds up to, and our tools don’t cover every credit or trust rule. A lawyer or an accountant is worth hiring for a large estate, because the return and the estate’s own tax filing both carry deadlines. This site only explains the rules and can’t act for anyone.
The sources behind this page
The rules and dates come from the Canada Revenue Agency‘s pages on preparing returns for someone who died. Probate fees come from each province’s own fee schedule or statute, checked in September 2026. Tax estimates come from our 2026 engine. We aren’t connected to the CRA or any province.
Frequently asked questions
Does Canada have an inheritance tax?
The CRA guidance we read describes a final return and capital gains, not a tax paid by the heir. A designated TFSA beneficiary pays no tax on amounts up to the market value at death.
What is the deemed disposition at death?
The person is treated as having sold their property just before death. The gain, generally 50% taxable, goes on the final return.
Is a principal residence taxed at death?
It can be exempt if it meets the CRA's conditions and is designated on form T1255 and Schedule 3.
Who pays the tax owing at death?
The estate does, through the legal representative who files the final T1 return.
Is probate the same as a death tax?
No. Probate fees are charged by the province for the court grant. They are separate from the income tax on the final return.
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