Do you ever wonder why things are the way they are? Someone does and that someone recently asked the Canada Revenue Agency why inheritances are not taxable.
Although the questioner was told by his or her accountants that inheritances are not taxable in Canada, they asked the Canada Revenue Agency (CRA) to reply with details of the specific legislation that carves out inheritances. In their response the CRA confirmed that the Income Tax Act does not contain any provision stating that inheritances are not taxable. However, the CRA did confirm their general position as set out in in paragraph 4 of Interpretation Bulletin IT-334R2, Miscellaneous Receipts, that is, 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 should know that like transfers in other jurisdictions are not tax-free. Another example of how much there is to be thankful for in Canada.
Happy Thanksgiving and thanks for reading.