Quote:
Originally Posted by the-rasta-masta
The person who dies gets hit with a pretty large tax bill so the overall inheritance amount in a sense gets taxed.
When one parent passes, the property gets passed directly to the surviving spouse with no tax. But when the second parent passes, it is called a deemed disposition.
Say the final parent passes away and owns:
$750,000 Primary Home (purchased for $300k)
$400,000 Second Home (purchased for $300k)
RRIF (RRSP): $500,000
Cash: $50,000
Life Insurance: $100,000
The Primary residence does not get taxed on capital gains. However the second home would have capital gains tax applied to the $100k appreciation in value from purchase.
The cash doesn't get taxed, but the value in an RRSP or RRIF would be taxed all at once so at a $500k value it would be taxed at the highest tax bracket and so quite a large portion of that money would be sent to CRA as a final tax return for the deceased individual.
Life Insurance Proceeds have no tax.
|
Which makes sense. When the person dies, they do a final tax return as if they've divested in all their assets, it gets taxed appropriately, and the settled amount after tax goes to the inheritor. In Canada, there's no inheritance tax, so you don't get taxed after that.
I think the original argument is Canada's got it right, and that introducing a inheritance tax doesn't make sense, because then you get taxed twice if you do so.