Do I Have to Pay Tax on an Inheritance in Alberta?

This answer covers the law of Alberta.

Generally, no: the tax that arises because of a death is dealt with by the estate, not by you as a beneficiary. A person who dies is considered to have sold all their property just before death, and any gain or loss is reported on the deceased's final return, with the tax paid by the estate as part of that return.

Some situations differ. The deemed sale is deferred when property goes to a spouse or common-law partner who was a Canadian resident at death, if the property is locked in for them within 36 months after death, although the legal representative can elect out property by property. Also, income the estate earns after death is reported on a T3 return, and a beneficiary may be taxed on income allocated to them.

Timing matters too. The representative should apply for a clearance certificate before distributing, because distributing without one can mean personal liability for tax owing. Final return due dates depend on the date of death and on whether a business was carried on. Tax on a later sale of inherited property depends on your facts, so an accountant or lawyer can confirm.