What Is the Deemed Disposition of Assets at Death in Alberta?

This answer covers the law of Alberta.

The deemed disposition is a tax rule that treats a person as having sold all their property just before death, even though no sale happens. Each capital property is treated as sold at its fair market value at that time, and whoever acquires it takes that value as their cost.

The gain or loss is the fair market value at death minus the adjusted cost base, and the legal representative reports it on Schedule 3 and line 12700 of the final return. That tax falls on the final return, so the estate pays it, not the heir.

There are exceptions. Property passing to a spouse, common-law partner or qualifying spousal trust is generally treated as sold at adjusted cost base instead, if the spouse or partner was a Canadian resident at death and the property is locked in for them within 36 months of death. The legal representative can elect out of that rollover property by property. A principal residence may be fully or partly exempt but must still be reported. Farm or fishing property can have special rules. An accountant or lawyer can confirm how this applies to your assets.