Does Canada have an estate tax?
No. Canada taxes at death through a deemed disposition instead. Most capital property is treated as sold at its fair market value immediately before death, and the accrued gain is reported on the deceased's final return. The tax is therefore an income tax owed by the deceased, not a levy on the estate or on the people inheriting. That distinction matters when a foreign country does impose a death tax on the same assets, because the two systems are measuring different things: one the growth in value while the person was alive, the other the value of what they left. A cross-border estate has to be filed so that both descriptions of the same assets hold together.
What does a deemed disposition actually mean if nothing was sold?
It means the tax rules treat the property as having been sold, at market value, immediately before death, even though no buyer existed and no money changed hands. The gain is the difference between that deemed value and the original cost, adjusted for anything that has happened to the cost over the years. The practical consequence is that tax can be due on assets the family still holds and may not want to sell. Where the estate is short of cash, the timing of that liability is usually the first thing to plan around, because the asset is illiquid and the liability is not.
Can the tax be deferred if everything goes to my spouse?
A spousal rollover defers the result rather than removing it. The property moves to the surviving spouse at its original cost instead of at market value, so no gain arises at death. The accrued gain is still there; it is now attached to the survivor and will be measured on their own death or on an earlier sale. A representative can also choose not to apply the rollover to a particular property, which is sometimes the better answer where the deceased has losses or deductions that would otherwise go unused. That is a decision to make property by property, with the figures in front of you.
Are assets I own overseas caught by this?
For someone resident in Canada at death, foreign assets sit inside the deemed disposition computation alongside the domestic ones. A flat in India, a holding in a US brokerage account and a Canadian portfolio are all measured the same way. The complication is that the country where the asset sits may also tax at death, on its own basis and on its own timetable, and foreign death taxes may be creditable against the Canadian result. Getting that credit requires the two filings to describe the same assets consistently, in the same currency convention, with the foreign tax evidenced.
Who decides what the assets were worth on the date of death?
The representative does, and has to be able to support it. Listed securities and bank balances are straightforward. Real property, private company shares, partnership interests and collections are not, and those are the values an authority is most likely to question years later. The value needed is the one immediately before death, not the price eventually achieved on a sale months afterwards, though a sale close to the date is useful evidence. Where the amount at stake justifies it, an independent valuation obtained at the time is far cheaper than reconstructing one under audit.
Can a deemed disposition produce a loss instead of a gain?
Yes. If property was worth less immediately before death than it cost, the deeming rule produces a capital loss in exactly the same way it produces a gain. That happens often enough with portfolios, with private company shares that never came good, and with foreign property bought at the top of a local market. Those losses are not automatically useful; where they can be applied, and against what, depends on the deceased's own history and on what else is on the final return. It is worth computing them properly rather than assuming a falling asset simply drops out of the picture.
What is RNOR status and why does it matter to a returning NRI?
Resident but Not Ordinarily Resident is a transitional Indian status that can apply for a limited period after you return, based on how long you were non-resident before. While it lasts, certain foreign income stays outside the Indian net that would be taxed once you become an ordinary resident — which makes the timing of a return date, and of realising foreign gains, a genuine planning decision rather than an administrative one. See the RNOR window.
What is double taxation?
Double taxation means the same income being taxed by two authorities. It comes in two forms: juridical, where two countries each tax one person on one amount, and economic, where two different people are taxed on the same underlying profit — a company on its earnings and a shareholder on the dividend paid out of them. Relief comes from a treaty, a foreign tax credit, or an exemption, and which one applies depends on the income type. How to avoid double taxation sets out the routes.
