Canada has no inheritance tax. You don’t pay tax on what you inherit, and the CRA lists most inheritances among amounts that aren’t reported or taxed. The tax is settled before you’re paid, on the final return of the person who died: their investments are treated as sold at death, and their RRSPs and RRIFs generally count as income in that year. So the first job is usually patience while the executor finishes, and the second is a plan for the money. A one-time plan from a Canadian fee-only planner costs a median C$1,900.
This is the Canadian version of our guide to a financial advisor for an inheritance, which covers US rules.
How tax works when someone dies in Canada
Three rules do most of the work.
1. The deemed disposition. The CRA treats the person’s capital property, such as shares, funds and a cottage, as sold at fair market value immediately before death. Any gain goes on the final return. For 2025 the CRA’s guide shows half of a capital gain as taxable; see capital gains tax in Canada. A principal residence can be exempt, but it still has to be designated on the return.
2. RRSPs and RRIFs. The full value of an RRSP or RRIF is generally included in the deceased’s income for the year of death. On a large account, that can push the final return into the top bracket.
3. The spouse rollover. Property left to a surviving spouse or common-law partner, or to a qualifying spousal trust, can pass without the deemed sale, and an RRSP or RRIF can move to them with the tax deferred. The tax comes later, when the survivor sells or withdraws.
Who else gets a deferral. A financially dependent child or grandchild can also receive RRSP or RRIF money with the tax deferred. One who is dependent because of an impairment has more options, including a rollover to their RDSP. Others can use the money to buy a term annuity.
TFSAs. A spouse or common-law partner named as successor holder simply takes over the TFSA. Any other beneficiary generally pays no tax on the amount up to the account’s value at death, though growth after death is taxable. Quebec doesn’t recognize successor holder designations, and recognizes beneficiary designations only in some TFSA contracts.
What reaches you, by type
| What you inherit | Tax to you | What to know |
|---|---|---|
| Cash or the proceeds of the estate | None | Paid after the executor settles the final return |
| Shares, funds or property | None when received | Your cost is the value at death, so selling soon after means little gain |
| An RRSP or RRIF as named beneficiary | Usually none | The estate generally pays the tax, unless you’re a spouse or qualifying dependant |
| An RRSP or RRIF as a spouse or common-law partner | Deferred | Withdrawals are taxed to you later as income |
| A TFSA | None up to its value at death | Growth after death is taxable |
| Life insurance | None | Most amounts received from a life insurance policy after a death aren’t taxed |
The mismatch to watch. An RRSP can go straight to a named beneficiary while the tax on it is paid out of the rest of the estate. If the RRSP goes to one child and the house goes to the residue split three ways, the other two can end up funding their sibling’s tax bill. Executors and heirs should spot this early, because it often starts family arguments.
Timing: why it takes months
The final return is due April 30 of the year after death for deaths from January 1 to October 31, and six months after death for deaths in November or December. After filing, the executor normally waits for the assessment and asks the CRA for a clearance certificate. The CRA’s guidance is plain: distribute assets before getting one and the executor is personally liable for unpaid tax, up to the value distributed. That’s why many executors hold back part of the estate until the certificate arrives.
Most estates also go through probate first, and the cost depends on the province: on a C$500,000 estate, C$525 in Alberta against more than C$6,000 in Ontario, B.C. and Nova Scotia. See probate fees by province.
The first 90 days for an heir
- Wait for the executor. Ask them for a rough timeline and whether any part of the estate is being held back for tax.
- Park the cash. A high-interest savings account or a GIC in your own name. Hold off on big purchases.
- Don’t rush to sell inherited shares, or to keep them. Your cost is their value at death, so there’s little tax either way if you sell soon. That makes an inheritance a cheap moment to diversify.
- Check your contribution room. If you have unused RRSP or TFSA room, an inheritance is a chance to fill it.
- If you’re the surviving spouse, decide how to take the RRSP or RRIF. Rolling it into your own plan defers the tax, and RRIF withdrawals then count toward your income, including for the OAS clawback. See RRIF withdrawal planning, and check whether you qualify for CPP survivor benefits.
Common mistakes
- Cashing a spousal RRSP rollover too early. A surviving spouse who withdraws the lot pays tax at their top rate in one year.
- Treating the RRSP beneficiary form as separate from the will. It isn’t separate in effect. Who pays the tax and who gets the money can be different people.
- Spending before the clearance certificate. If the executor pays out early and tax turns out to be owed, the executor is personally liable for it, and will usually ask the heirs to hand money back.
- Keeping the deceased’s advisor by default. You don’t have to. Inherited accounts can be moved, and you can pay for advice by the hour or the plan instead.
Questions to ask a planner
- How many inheritances have you planned in Canada in the past year, and in my province?
- If I’m the surviving spouse, how would you draw down the rolled-over RRSP or RRIF against CPP, OAS and my own income?
- Will you work with the executor and the estate’s accountant?
- Should I sell the inherited investments now or hold them, and why?
- Is your fee fixed in writing? Do you or your firm earn anything from products you recommend?
When a fee-only or advice-only planner is worth it
If you inherited cash and you already have a plan, you may not need anyone. A planner earns their fee when the inheritance changes your plan: a surviving spouse with a large RRIF, an heir who can now retire early, a cottage that needs a decision, or an inheritance from a parent in the US. For cross-border estates, read cross-border financial advisors first.
Medians in Canadian dollars, from prices firms publish on their own websites
Source: Wellspent fee report
The samples are small, so treat the middle half as your guide. An advice-only planner charges for the plan or the hour and leaves the investing to you. We don’t report a Canadian percentage-of-assets figure, because fewer than 12 Canadian fee-only firms published one we could check. If someone offers to manage the inheritance for a percentage, ask for the dollar cost a year on your actual balance. See what fee-only advisors charge in Canada for how to read these numbers.
Before you move money, check any advisor who will recommend specific investments on the CSA’s National Registration Search; our guide to checking a financial advisor in Canada shows the rest. If the inheritance is large or includes a family business, the family wealth transfer specialty and the list of family wealth transfer specialists are the place to start. Once it’s settled, update your own will and beneficiaries: our guide to estate planning in Canada covers what that involves.