- Income paid or credited by an estate to a non-resident beneficiary is subject to Part XIII withholding tax, and the estate reports it on an NR4 slip.
- A trustee who distributes before getting a CRA clearance certificate can be personally liable for unpaid amounts, which is one reason payments can take time.
- RRSP withdrawals paid to non-residents of Canada are subject to 25% withholding unless a tax treaty reduces it.
You have been named as a beneficiary of someone who lived in Ontario, but you live in another country. You may be wondering whether Canada will take tax off your share, how long it will take and how the money will reach you.
The answers depend on what the estate holds and what kind of payment you receive. This article explains the main Canadian rules that tend to come up, so you can ask better questions of the estate trustee and of a lawyer or accountant.
Who handles the estate, and why that matters to you
An estate trustee collects the estate assets, pays taxes and debts, and distributes the residue to those entitled. Your share is normally paid only after those steps are done. If the deceased owned real property or assets held by a financial institution, the estate normally has to be probated through a Certificate of Appointment of Estate Trustee.
In practice, the estate trustee (often working with a lawyer) is your main contact, not the CRA or the bank. You can ask for updates, but timing depends on the estate.
Withholding tax on what an estate pays you
Income paid or credited by an estate to a non-resident beneficiary is subject to Part XIII withholding tax under paragraph 212(1)(c) of the Income Tax Act, and the estate reports it on an NR4 slip. Tax withheld by an estate or trust must reach the CRA or a Canadian financial institution on or before the 15th day of the month after the month it was withheld. That deadline is the estate's responsibility, not yours.
This does not mean every dollar you receive is taxed. The CRA lists most gifts and inheritances as amounts that are not reported or taxed for the person who receives them. Whether a particular payment is income or a share of capital, and whether a treaty with your country changes the result, depends on the facts and is worth confirming with an accountant.
| Type of payment | What the rule says |
|---|---|
| Income paid or credited by an estate | Part XIII withholding tax applies, reported on an NR4 slip |
| RRSP withdrawals paid to non-residents | 25% withholding unless a tax treaty reduces it |
| Registered plans with a named beneficiary | Excluded from the estate value used for Estate Administration Tax, so they skip probate |
Why the clearance certificate can slow things down
A legal representative should get a CRA clearance certificate (Form TX19) before distributing estate property. Anyone who distributes without one is personally liable for unpaid amounts, up to the value of the assets distributed. The certificate is requested only after returns are assessed and amounts are paid or secured.
The deceased's final return also matters. Capital property is treated as disposed of immediately before death at fair market value, and any gain or loss is reported on that return. Because tax on that return is a matter for the estate, it can affect what is left to share, and a careful trustee may hold back part of your share until tax matters are settled.
If you cannot be found, and how funds are sent
If a trustee cannot locate a beneficiary, trust money held by trustees may be paid into court by order of the court, and money paid into court is then subject to the court's order. That is one route for holding a share for someone who cannot be found, so keep your contact details current with the trustee.
How the money is physically sent, in what currency, and what identification the trustee will want depend on the trustee, the financial institutions involved and the facts. Ask early rather than assuming.
Be careful about scams. Ontario's official guidance warns people to beware of upfront fees, and being asked to pay a fee to release an inheritance is a warning sign of fraud. Confirm the trustee's identity through the lawyer handling the estate before sharing banking or identity details.
What to do next
- Confirm in writing who the estate trustee is and which lawyer, if any, acts for the estate.
- Ask whether a Certificate of Appointment of Estate Trustee has been issued and when the trustee expects to distribute.
- Ask what makes up your share: cash, property, or a registered plan.
- Ask whether the trustee expects to withhold tax and issue an NR4 slip.
- Speak with an accountant about how the payment is treated in the country where you live.
- Keep your address and banking details up to date with the trustee.
- Never pay a fee to have an inheritance released.
Frequently asked questions
Will Canada tax my inheritance if I live abroad?
The CRA lists most gifts and inheritances as amounts that are not reported or taxed for the person who receives them. However, income paid or credited by an estate to a non-resident beneficiary is subject to Part XIII withholding tax. Which rule applies depends on what the payment is, so confirm with an accountant.
What is an NR4 slip?
It is the slip an estate uses to report income paid or credited to a non-resident beneficiary. You may need it when reporting the payment in the country where you live.
Why is the estate taking so long to pay me?
The trustee must collect assets and pay taxes and debts before distributing the residue. A trustee who distributes without a clearance certificate can be personally liable for unpaid amounts, so careful trustees often wait.
What happens if the estate cannot find me?
Trust money held by trustees may be paid into court by order of the court, and it is then subject to the court's order. Keeping your contact details current with the trustee helps you avoid that.
Sources
- CRA – Amounts that are not reported or taxed — canada.ca
- Ontario.ca – Estate Administration Tax — ontario.ca
- Ontario.ca – Administering estates — ontario.ca
- Trustee Act, R.S.O. 1990, c. T.23, s. 36 — Ontario e-Laws
- CRA – The purpose of a clearance certificate — canada.ca
- CRA Income Tax Audit Manual, Chapter 17 — canada.ca
- CRA – Tax rates on withdrawals — canada.ca
- CRA T4013 – T3 Trust Guide — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a wills & estates question
Start a file online — flat, published fees, reviewed by a licensed lawyer before a dollar is owed.