Are gifts
or inheritances taxable?
There is no "gift tax" in Canada. Any
resident of Canada who receives a gift or inheritance of any amount from any 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. If income
producing property is gifted to a child who is under 18
years old, the income from the property
will normally be attributed back to the person giving the gift.
(Income Tax Act s 74.1(2))
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
page Rules
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, at page 14 under the
topic "Gifts, awards and social events".
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 &
Estates page.
Revised: July 20, 2010
