Subject: Inheritance Tax Non Canadian Resident
Expert: taxman at centa.com
Date: Wednesday April 27, 2005
Time: 12:50 PM -0700
QUESTION:
My wife and I are both Canadian Citizens and lived in the US in 1993. My
father-in-law passed away in Canada and left my wife a portion of the
estate. Per form NR4, the income code was 11 (estate). There was
non-resident tax taken out prior to delivery to my wife. We are now back in
Canada. I thought I would give it a shot and fill out the forms for
non-resident returns for the year 2003 in an attempt to get a refund. The
assessment came back with a zero balance. Is the bottom line -- all
non-residents of canada will have un-refundable tax taken out on
inheritance? I thought I filled out the forms correctly for a portion of
the original tax. Thanks.
-------------------------------------------------------
david ingram replies:
Canada has no inheritance or estate tax.
The deceased pays the tax on RRSP accounts, tax on any deemed capital gains
up to the date of death and any accrued interest or dividends to the date of
death.
After the date of death, an estate forms and the beneficiaries have to pay
tax on their share of any interest, dividends, rents or capital gains unless
the estate pays the tax first and only distributes capital.
The NR slip received should have been 10% withholding tax on any interest
and or 15% withholding tax on any dividends and or 25% withholding on any
rents (assuming the estate was renting out dad's house).
There is no refund at this point unless you chose to file a Section 217
Canadian return and report your world income.
This means that your wife's world income would have to be less than $20,000
to get a refund of any kind from Canada.
And, if the NR4 had income of over $20,000 by itself, there could not
possibly be a refund from Canada.
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