or inheritances taxable?
There is no "gift tax" in Canada. Any
resident of Canada who receives a gift or inheritance of any amount from almost source
(except from an employer) will not have to include this in
their income. However, if capital
property (real estate, other than a principal residence, or investments) is
given as a gift, the person who has given the gift will be deemed to have sold
the capital property at fair market value, and will have to pay tax on any
resulting capital gain. The fair
market value is deemed to be the "cost" to the person to whom the
shares were given. If money or capital property is given or loaned to a
spouse or a related minor child, attribution rules will apply.
See our article on attribution
rules re gifts, transfers, or loans to a spouse or a related minor child.
Gifts from an employer
The above does not include gifts from an employer to an
employee, which will likely be considered a taxable benefit to the
employee. CRA has a series of questions that an employer can answer
to determine if there is a taxable benefit. This is found on their web
for Gifts and Awards. For more information on gifts or awards for
employees, see the Canada Revenue Agency ( CRA) guide T4130
Employers' Guide Taxable Benefits, and search for the
topic "Gifts, awards and social events".
Capital property owned at death
There are tax consequences to the estate of a deceased
taxpayer when capital property is owned at death. See How
can you minimize taxes of a deceased taxpayer? from the Wills &
Gift from someone in debt to Canada Revenue
Income Tax Act s. 160
If a tax debtor transfers cash or other property, directly or
indirectly, by means of a trust or by other means whatever, to:
then the recipient of the cash or other property can be
held liable to pay outstanding tax liabilities of the transferor, up to the
fair market value of the property transferred, less the fair market value of
anything that was given in return.
This applies, for instance, if a spouse transfers his or
her interest in the family home to the other spouse. It could also apply
if a private corporation pays dividends when there is an outstanding tax
liability. See the arm's length
Related Tax Court Cases / Newspaper Articles: