Receiving an Inheritance From Abroad: CRA Reporting in Ontario

You live in Ontario and a relative abroad has died, leaving you money, a bank account or property. Along with the grief come practical questions. Do you owe Canadian tax? Do you have to tell the CRA about assets held overseas? Can you simply move the money here?

This article explains the Canadian reporting rules the CRA publishes for inheritances and foreign property. The rules of the country where the person died are a separate matter and can change the answer.

Is an inheritance from abroad taxed in Canada?

The CRA lists most gifts and inheritances as amounts that are not reported or taxed for the person who receives them. So receiving the inheritance is not usually itself an income item on your Ontario return.

That does not end the tax story. If you inherit property and later sell it, the rule for deceased taxpayers is that capital property is treated as disposed of immediately before death at fair market value, and your later sale is measured against the value reported on the deceased's final return. If the person who died lived abroad, how their own country taxed the estate is a separate question to confirm with a lawyer or accountant.

When you must file Form T1135

A Canadian resident whose specified foreign property costs more than $100,000 in total at any time in the year must file Form T1135. For property you received as an inheritance, the cost amount is its fair market value at the time of the inheritance.

In plain words, the reporting duty is about what you hold abroad, not about the inheritance being taxable. You can owe a form even when you owe no tax.

Foreign estate tax and the Canada–US treaty

Some countries tax the estate itself before anything reaches you. For US estates, Article XXIX B of the Canada–United States Tax Convention lets US estate tax paid on US-situs property reduce Canadian tax for a Canadian-resident decedent. The estate of a non-citizen non-resident also gets a pro-rated US unified credit.

US estate tax amounts and rules are set by US law, and other countries have their own systems. Get local advice on what the foreign estate must pay before it distributes to you.

Bringing the money into Canada

How a foreign estate releases funds, what proof it needs from you, and how currency is converted all depend on the country and the financial institution involved. A lawyer or accountant can confirm the steps for your situation.

Be careful about anyone who asks for money up front. Ontario's official scam guidance warns people to beware of upfront fees, and a request to pay a fee to release an inheritance is a warning sign of fraud.

What to do next

• Get a copy of the will or notice from the foreign estate, and confirm it is genuine through the estate's own lawyer or court.
• Ask what the foreign estate has paid in tax, and in what currency you will be paid.
• Keep records of the value of each asset at the date of death.
• Add up the cost of all foreign property you hold, to see if the Form T1135 threshold may be met.
• Speak to an Ontario lawyer or accountant before moving or investing the funds.

Frequently asked questions