La présentation au SAIM (Services aux Aînés de Montréal du 7 juillet 2017, à 10h30 am, au 6è étage, au Centre culturel de Côte-des-Neiges sera offerte en vietnamien (powerpoint).
Estate tax rules- SAIM- HT- July 3, 2017
1- There is no estate tax in Canada. The CRA considers the estate to be a sale, unless the estate goes to the surviving spouse or common-law partner. This means that it is the deceased person that pays the capital gain taxes on the income to the government in its final tax return rather than the beneficiaries.
When the estate is settled, the beneficiaries do not have to worry about taxes.
If there is a balance to pay, the tax will be deducted from the estate before it can be settled and distributed to the beneficiaries.
So, there is no tax on death or inheritance tax in Canada.
2- The donation is made during his lifetime or at death, the tax consequences are the same.
3- Giving cash has no tax implications. But investing such as real estate (residential property) or securities (equities) is equivalent to a inferred sale (taxable GC). Current tax rates apply to capital gains.
4- Canada does not impose a gift tax; So you can give your children any amount of cash and it will not be taxed as income or deducted as an expense.
On the other hand, if you give money during your lifetime, you could reduce the amount of tax on your estate that must be paid (on your last tax return).
5- The testamentary trust (la fiducie testamentaire) exists on the day of death.
It is a separate entity and will be taxed when the investments earn income or capital gains.
6- The total amount accumulated in the TFSA and the unused subscription rights can be transferred to the spouse’s TFSA only.
In this case, income is tax sheltered.
7- The transfer of the TFSA to another heir is possible only to the extent that it has unused subscription rights in its own TFSA.
But the unused rights of the deceased are lost.
8- The fair market value of a Registered Savings Plan (RRSP) or a Registered Retirement Savings Plan (RESP) is included in the deceased’s income and is subject to tax rates that are ordinarily apply to individuals. Capital gains from the RRSP or RESP will be treated in the same manner as usual.
9- Are certain inherited assets exempt from taxation? There are some tax exemptions for inferred dispositions.
These include the principal residence exemption and the cumulative capital gains exemption.
10- Canadian succession laws relate to a surviving spouse or common-law partner:
– Any non-registered capital property may be transferred to the deceased’s spouse or common-law partner.
– For registered assets (such as RRSPs and RRIFs), the deceased person is considered to have received the fair market value of plan assets immediately prior to death.
This amount must be included in the income reported in the final return.
– However, it is possible to defer income tax if an eligible person has been designated as the beneficiary of the RRSP or RRIF.
An eligible person may be a spouse or common-law partner;
A child, grandchild or dependent child under 18 years of age;
Or a child, grandchild or grandchild of any age who is financially dependent and who has a physical or mental disability.
SUCCESSION RULES – SAIM- HT- July 3, 2017
1-The division of the testamentary succession takes place at the end of the marriage (divorce or death) or the dissolution of the civil union.
2-At the time of death, at the opening of the succession, the division of property acquired during the marriage is governed by the rules of the primary system (the family patrimony) and the rules of the matrimonial regime chosen by the married spouses (la société des acquêts or the separation of property or the community of property) or by the spouses civilly united.
The sharing of property is automatic and compulsory for all, and the division of the matrimonial regime is automatic and compulsory according to the rules of the chosen matrimonial regime.
The property will be shared half and half between the spouses.
The division of property is then carried out according to the last wishes of the late testator.
3- The property of the family patrimony includes the family residence and the rights related to their use:
– 1) The house of the spouses, the family cottage, the condo in Florida where the family spends the holidays, the camping caravan and the boats used by the family.
– 2) The items that house the family residences, namely: furniture (sofa, bed, table, sideboard, …); The appliances (fridge, washer, …); Electrical appliances (coffee maker, toaster, oven, microwave); Electrical appliances (TV, sound system); Works of art (portrait, painting, sculpture).
– 3) Vehicles used by the family, namely: automobile, motorized motor vehicle, utility vehicle.
– 4) Money accumulated during marriage in a pension plan (RRSP, Pension Fund).
4-The assets of the matrimonial regime are the property excluded from the family patrimony. Excluded are inheritance property (the grandma’s buffet, even if it is in the house and used by your wife).
5- Unworthy Heir, Contestation, Preferential Sharing, Unequal Sharing, Legacy Reduction, Deemed Acceptance, Revocation, Waiver, Irrevocable Married Joint Beneficiary.
6- Legal devolution: legal settlement of the succession without will (IN AB INTESTAT)