Is there an inheritance tax in Canada when a parent dies?
No. Canada has no estate tax and no inheritance tax, so a beneficiary does not pay tax simply on receiving a gift under a will. What Canada has instead is a deemed disposition: most capital property is treated as having been disposed of at fair market value immediately before death, and the accrued gain is taxed on the deceased's final return. The liability therefore falls inside the estate before anything is distributed, not on the people who inherit. Families who have heard about estate tax elsewhere often expect the wrong mechanism, and the difference matters once a foreign death-tax filing has to be reconciled as well.
What happens to the family cottage when I die?
Unless it passes to a spouse in a way that qualifies for the rollover, it is treated as disposed of at fair market value immediately before death, and the accrued gain enters the final return. Two pieces of work follow. The property has to be valued as at that moment, with evidence that will stand up rather than an opinion of what it is worth. And the original cost has to be established, which for a property held over decades usually means reconstructing purchase documents and the cost of improvements. Neither job is easier after the fact, so both are worth assembling now.
Does leaving everything to my wife postpone the tax?
It can defer it, not remove it. Where capital property passes to a spouse in a way that qualifies, the rollover carries the property across at the deceased's cost rather than at market value, so no gain arises at that point. The gain has not gone. It sits with the spouse and is measured again on a later disposition or on her own death. Qualification depends on how the property passes, including the terms of any trust it passes into, so the wording of the will decides the outcome. A plan that assumes the rollover without testing the drafting is built on a hope.
Do my US shares get taxed by Canada as well when I die?
Foreign assets are inside the deemed disposition computation. Canada measures the accrued gain on worldwide capital property, so American and other overseas holdings are valued and brought in alongside domestic ones. If a foreign death tax is also charged on the same property, the two are reconciled by credit rather than simply added together, although the credit does not always absorb the whole of the other tax, because the two taxes measure different things: one the accrued gain, the other the value of the asset. We compute both together, since the order in which they are assessed decides when the credit can be finalised.
How do we value assets at the date of death for the final return?
As at immediately before death, and with evidence appropriate to the asset. Quoted holdings are straightforward. Real property, private company shares, partnership interests and personal-use items of substance are not, and those are the figures an examination tests. Two practical points. A valuation obtained for another purpose, such as insurance or a mortgage, rarely satisfies the requirement. And a sale shortly after death does not automatically set the date-of-death value, because the estate is a separate taxpayer from the deceased and the difference between the two figures belongs to the estate. We identify which assets need independent valuations at the start.
What if the estate has no cash to pay the tax on death?
This is the central difficulty of a deemed disposition: the tax is charged on a gain nobody has realised, so the liability arrives before any money does. Where the estate's wealth sits in a cottage, a private company or land, the executor is asked to fund a liability out of assets that cannot be sold quickly, or should not be sold at all. The planning answer is liquidity, arranged in advance and tested against the actual composition of the estate. Where relief for spreading the liability may be available, it has to be applied for on the facts rather than assumed.
How do I file US taxes when I am married to a foreign spouse?
Three routes. File separately, listing your spouse as a non-resident alien — which needs either an identification number for them or the accepted notation where none exists. Elect to treat them as a resident and file jointly, gaining the joint brackets and accepting their worldwide income. Or file as head of household if you have a qualifying dependant, which some Americans abroad can do while married. The right answer turns on their income and their assets. See a US person with a non-resident spouse.
Do green card holders living abroad have to file US taxes?
Yes. A lawful permanent resident is a US tax resident, taxed on worldwide income, and that status does not end simply because you moved away — it ends when it is formally abandoned or administratively terminated. Two traps follow. Filing as a non-resident on a treaty claim can put the immigration status itself at risk. And ending the status after holding it long-term can bring you inside the expatriation regime. See giving up a green card.
