How Much Can You Inherit Without Paying Taxes In Canada?

January 26, 2025

Written by Ron Cooke, President & Founder of Strategic Wealth Protection Partners in Ontario

How Much Can You Inherit Without Paying Taxes in Canada?

Inheritance rules in Canada can be complex, but the good news is that most inheritances are tax-free.

However, there are important tax implications depending on the type of assets inherited. Understanding these rules can help you protect your legacy and maximize what you leave to your loved ones.

How Much Can You Inherit Without Paying Taxes In Canada?

How much can you inherit tax-free in Canada?

In Canada, there is no inheritance tax.

This means you can inherit any amount without paying tax directly on the inheritance itself. However, the estate may be responsible for taxes before assets are passed to beneficiaries. This includes capital gains tax on investments, real estate, or RRSPs/RRIFs, which are considered income in the year of death.

If structured correctly, many of these taxes can be minimized or eliminated with proper estate planning.

How can you reduce the tax on an inheritance in Canada?

There are several ways to reduce taxes on an inheritance.

Using strategies like gifting assets before death, setting up a trust, or naming beneficiaries for RRSPs/RRIFs and TFSAs can help minimize tax burdens. Transferring assets through joint ownership or life insurance can also help avoid probate fees and taxes.

Consulting with an estate planner ensures that your loved ones receive the maximum possible benefit without unnecessary taxation.

Do you have to report inheritance money to the CRA?

No, you do not have to report an inheritance as income to the Canada Revenue Agency (CRA).

However, any income earned from inherited assets—such as interest, dividends, or rental income—must be reported and taxed accordingly. If you inherit an RRSP or RRIF, it may be subject to income tax unless it is transferred to a spouse or dependent.

Proper estate planning can help minimize these tax implications.

Is it possible to avoid capital gains tax on inherited property in Canada?

Capital gains tax applies when a property increases in value and is sold.

However, if the property was the deceased’s principal residence, it is exempt from capital gains tax. To reduce or defer capital gains tax on other properties, strategies like transferring assets to a spouse tax-free, using capital loss offsets, or setting up a trust can be effective.

Proper planning ensures that the estate’s value is preserved as much as possible.

What is the deemed disposition of inheritance in Canada?

Deemed disposition means that when a person passes away, the CRA considers all of their assets to have been sold at fair market value.

This can trigger capital gains tax on non-registered investments, real estate, and business assets. While some exceptions exist, such as tax-free spousal rollovers, proactive estate planning can help minimize the impact of deemed disposition and ensure a smooth wealth transfer.

How much money can be legally given to a family member as a gift in Canada?

There is no legal limit on how much money you can gift to a family member in Canada, and gifts are not subject to tax.

However, gifting assets like real estate or investments may trigger capital gains tax for the giver. If you are giving a large financial gift, planning ahead with tax-efficient strategies—such as spreading out gifts over multiple years or using trusts—can help minimize tax consequences.

Avoid Ontario’s Hefty “Death Tax”

While Ontario doesn’t have a direct estate tax on your total net worth, income tax on capital gains and deemed dispositions can have a significant impact on your estate.

These taxes can dramatically reduce the wealth you pass on to your loved ones.

For instance, assets like real estate (excluding your principal residence) and non-registered investments are deemed sold at fair market value upon death. The resulting capital gains are usually taxed at Ontario’s highest marginal tax rate, which exceeds 53.53% (2024).

Here’s an example: If you have an RRSP or RRIF worth $1,000,000, the government could take $535,000 in taxes upon your death.

That’s more than half of your hard-earned savings—gone to taxes, not your family. And that’s before factoring in additional costs like probate fees, executor fees, legal fees, and accounting fees. What will be left for your family?

Did you know that some of your assets may even face double taxation? Without proper planning, the total financial burden on your estate could be staggering.

Discover How to Minimize Taxes and Secure Your Legacy

Did you know that without a solid estate plan, taxes and fees in Ontario could claim a significant portion of your wealth?

If you’ve worked hard to build your business, investments, and properties, protecting your legacy for your loved ones is critical. At Strategic Wealth Protection Partners, we specialize in helping high-net-worth individuals in Ontario secure their financial futures.

Our Living Estate Plan is designed to:

Reduce estate taxes and probate fees.
Simplify wealth transfer to your loved ones.
Reflect your values and priorities in every detail.

Your Legacy Matters

With our personalized guidance, we’ll help you navigate options like Living Trusts to protect your assets and ensure your family’s peace of mind. Contact us today to book your Living Estate Plan Consultation and take the first step toward a secure future.

Schedule a Living Estate Plan Consultation

Planning your legacy is about more than numbers—it’s about ensuring your family remembers you and your values are honoured for many years to come.

Estate planning and trusts can feel overwhelming, especially if it’s your first time. That’s why we’re here.

With our simple, 5-Step Living Estate Plan, we make the process easy, helping you create a comprehensive estate plan or trust that protects your assets from taxes and probate fees while preserving your legacy. Tools like The Final Word Journal capture your story, wishes, and essential details like accounts and end-of-life plans, ensuring your family has clarity and comfort.

Take the first step today—schedule a consultation call and give your family the ultimate gift: peace of mind and the assurance they were always your priority.

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About the Author

RON COOKE, PRESIDENT & FOUNDER OF STRATEGIC WEALTH PROTECTION PARTNERS

With over 30 years in financial services, I’ve seen the challenges families face when a loved one passes—lost assets, unnecessary taxes, and emotional stress. That’s why I created the Living Estate Plan, a comprehensive process to protect assets, eliminate estate and probate fees, and create legacies that are remembered for many years to come.

This plan ensures your family receives not just your wealth, but a meaningful reminder of your care and love. Tools like The Final Word Journal capture your story, wishes, and essential details, offering clarity and comfort during difficult times.

Your final gift should be more than money—it should be peace of mind, cherished memories, and an organized estate.

Speak with Ron