Taxation and Gifting of Ontario Estate to Non-Residents of Canada

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It is not uncommon today for family members to relocate abroad for school, career, family, or to pursue other personal interests. These expatriates will often sever specific ties to Canada in order to maintain a non-resident of Canada status for the purpose of not requiring to file Canadian tax returns.

When Ontario estate is gifted to beneficiaries, the estate must first pay for the estate administration tax, decease's income tax and all other death taxes as required at the time of obtaining probate (having the will proven and validated in court if necessary). Beneficiaries are not taxed on the estate asset upon receipt.

However, if the estate asset generates ongoing income such as rental or business income, the income will be taxed as the beneficiary's personal income. For gifted cash, there is no tax on the interest on the deposit in the bank account.

Beneficiaries who are non-resident of Canada pay Canadian taxes on income received from sources in Canada such as the ongoing rental or business income generated from an Ontario estate.

Landmark Law Professional Corporation may assist in your wills and estate planning matters.

Disclaimer: This article does not contain legal advice and only provides general information. It is not intended to replace advice from a qualified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this article before making decisions. Use of this article does not establish a lawyer-client relationship.

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Winnie J Luk, BA, JD, MBA, founder of Landmark Law, is a seasoned Ontario lawyer practicing in Wills and Estates, Real Estate, and Business Law and frequent speaker of free legal education seminar.