2014-0525991M4 Tax Treatment of Monetary Inheritances

Principal Issues: Whether the Income Tax Act contains any provision stating that inheritances are not taxable?

Position: No. However, the Canada Revenue Agency’s general position, as set out in paragraph 4 of IT-334R2, Miscellaneous Receipts, and on page 10 of the T1 General Income Tax and Benefit Guide, is that most gifts and inheritances (i.e., voluntary transfers of real or personal property without consideration) are not subject to tax in the hands of the recipients.

Reasons: See below.

Author: Mahendran, Anandavally
Section: -

May 07, 2014

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence of March 12, 2014, about the tax treatment of monetary inheritances in Canada.

You were told by accountants you consulted that inheritances are not taxable in Canada, but you would like to know specifically what legislation applies. The Income Tax Act does not contain any provision stating that inheritances are not taxable. However, the Canada Revenue Agency’s general position is that recipients do not have to pay tax on most gifts and inheritances, also known as voluntary transfers of real or personal property without consideration.

You can find this information in paragraph 4 of Interpretation Bulletin IT-334R2, Miscellaneous Receipts, on page 10 of the General Income Tax and Benefit Guide, and on the CRA webpage “Amounts that are not taxed.” These documents are available at www.cra.gc.ca/E/pub/tp/it334r2, www.cra.gc.ca/E/pub/tg/5000-g, and www.cra.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/nttxd-eng.html, respectively.

I trust the information I have provided is helpful.

Yours sincerely,

Kerry-Lynne D. Findlay, P.C., Q.C., M.P.

Ananthy Mahendran
905-721-5204
2014-052599

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