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Canada has no inheritance tax, so money you receive from an estate isn’t income to you. The tax lands earlier, on the final return of the person who died, and the estate pays it. In the Ontario example below, a $300,000 RRSP left to an adult child added about $138,600 of tax to that return. A house passed on with none.
Is there really no inheritance tax in Canada?
Correct. Neither Ottawa nor any province taxes the person who receives an inheritance. What does exist is tax on the deceased’s own income and gains up to the date of death, plus a probate fee or estate administration tax in most provinces. The executor pays both from the estate before anything goes out to beneficiaries. Our page on taxes on inheritance gives the general picture. Here we go asset by asset, because the bill depends far more on what you inherit than on how much.
What does the CRA tax on the final return?
Income from 1 January to the date of death, plus a deemed sale of most capital property at fair market value just before death. Registered plans are treated as paid out in full. A principal residence can be exempt from the gain, and property left to a spouse or common-law partner can roll over at cost. The return is due 30 April of the next year for a death between January and October, or six months after death if it happened in November or December. The final return guide walks through the slips, and the Canada Revenue Agency: capital gains for someone who died page covers the deemed sale.
How is an inherited RRSP or RRIF taxed?
At its full value, on the deceased’s final return, unless it goes to a qualifying survivor: a spouse or common-law partner, or a financially dependent child or grandchild. The money lands with the beneficiary, but the tax bill belongs to the estate. That’s how a large registered plan can shrink the rest of an inheritance.
A rough Ontario case, computed with the site’s engine as an estimate. The person who died had $40,000 of pension income and a $40,000 capital gain from a brokerage account in the year of death, and left a $300,000 RRSP.
| Who gets the RRSP | Tax on the final return |
|---|---|
| Nobody (no RRSP in the example) | $9,417 |
| Spouse, rolled into their own RRSP or RRIF | $9,417 |
| Adult child who is not financially dependent | $148,041 |
The extra $138,623 works out to about 46% of the $300,000, because the plan stacks on top of the $60,000 already taxable that year ($40,000 of income plus the taxable half of the gain). A dependent child can defer the tax by buying a term annuity, and a child with a severe impairment can roll the money into an RDSP. An independent adult child can’t. Splitting the plan between several beneficiaries leaves the final-return total where it was, since it’s all income in one year.
What happens to an inherited TFSA?
It passes largely tax free. If a spouse or common-law partner is named successor holder, the account keeps its sheltered status and growth after death stays tax free too. Anyone else named as beneficiary receives the date-of-death value without tax. Earnings that build between death and the payout can be taxable to that beneficiary, depending on the type of account, so ask the bank for the figures. The Canada Revenue Agency: what happens when a TFSA holder dies page lists the rules. For a spouse, the CRA also describes an exempt contribution for post-death earnings starting in 2026, so read that page before moving the money. For what happens when you later take money out, see is a TFSA withdrawal taxable.
What is my cost if I inherit a house, and is selling it taxable?
Your cost is the house’s fair market value on the date of death, not what the owner paid decades ago. If it was the owner’s principal residence, the deemed sale on the final return is generally tax free, and a later sale taxes only the growth after that date. Say the house was worth $600,000 at death and you sell it for $650,000. The gain is $50,000, half of it is taxable, and for someone earning $70,000 in Ontario the extra tax is about $7,562.
Get a written appraisal dated close to the death. That figure ends up on the final return and becomes your starting point. If you move in, the home can become your own principal residence from then on. The inherited property gains page goes through designations and rental use.
How much are probate fees on a $700,000 estate?
It depends heavily on the province. For an estate of $700,000 going through probate, Ontario’s estate administration tax is $9,750, British Columbia’s probate fees come to $9,450 including the filing fee, and Alberta’s surrogate court fee tops out at $525. Assets with a named beneficiary, or held jointly with right of survivorship, skip probate. That’s why registered plans and many bank accounts don’t count toward these figures.
| Province | Fee on $700,000 | How it works |
|---|---|---|
| Ontario | $9,750 | Nothing on the first $50,000, then $15 per $1,000 |
| British Columbia | $9,450 | $6 per $1,000 from $25,000 to $50,000, $14 per $1,000 above, plus $200 filing |
| Alberta | $525 | Capped step fee for estates over $250,000 |
Check the Ontario: estate administration tax page and Alberta: court fees before relying on a number, and try the estate administration tax calculator for your own figures. An executor who wants a head start can read the executor tax checklist.
Where does this information come from?
Rules come from the Canada Revenue Agency pages on returns for someone who died, RRSP and RRIF payouts at death and TFSA holder death, plus Ontario, British Columbia and Alberta fee pages. Tax and fee amounts in the examples come from the site engine and are estimates. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
Do I report an inheritance on my own tax return?
No. The inheritance itself isn't income and has no line on your return. Report only what the asset earns once it's yours (interest, dividends, rent) and any gain when you later sell it. An RRSP payout is reported on the deceased's final return.
Who pays the tax, the estate or the beneficiary?
The estate pays, through the executor, before the money is distributed. An executor can ask the CRA for a clearance certificate first. A beneficiary who got money early may be asked to give it back if the estate comes up short.
Can I inherit money from abroad without Canadian tax?
Canada doesn't tax the inheritance itself, and your cost for inherited foreign property is generally its value at the date of death. If foreign property you own costs over $100,000 in total, you may need to file Form T1135 with your return.
Is the amount withheld on an RRSP payout the final tax?
Usually not. The institution withholds a percentage as a down payment, and the real tax is worked out on the final return. On a $300,000 plan the final bill can be far above what was withheld, so the estate should keep a reserve.