Can a beneficiary who lives outside Canada inherit from an Ontario estate?
A beneficiary who lives outside Canada can be named in an Ontario estate, but tax rules may apply to income they receive. Estate or trust income paid or credited to a non-resident is subject to Part XIII tax at 25%, and a tax treaty can reduce the rate or give an exemption. The 25% rate is only the default, and the result varies by treaty country.
Withheld Part XIII tax must reach the CRA by the 15th day of the month after the month the amount was paid or credited. For an estate or trust, the NR4 return and slips are due no later than 90 days after the end of the estate's or trust's tax year.
Before distributing property, the estate's legal representative should get a clearance certificate (Form TX19); without one, they are personally liable for the deceased's unpaid tax, up to the value of the property distributed. The CRA lists most gifts and inheritances among the amounts that are not reported as income. An overseas heir may also have reporting duties in their own country. Because the treatment depends on the country and the type of payment, confirm the details with a lawyer or accountant before sending funds abroad.
Key takeaways
- Estate or trust income paid or credited to a non-resident is subject to Part XIII tax at 25%, and a tax treaty can reduce the rate or give an exemption.
- Withheld Part XIII tax must reach the CRA by the 15th day of the month after the month the amount was paid or credited.
- For an estate or trust, the NR4 return and slips are due no later than 90 days after the end of its tax year.
- Before distributing, the legal representative should get a clearance certificate (Form TX19), or they are personally liable for unpaid tax up to the value distributed.