Can you please help?
My brother, a Canadian citizen, has inherited a property in the
UK on which he will pay UK inheritance tax from the sale
proceeds.
He wishes to distribute the residual funds to his UK based
brothers and sisters. Is he liable for tax in Canada on the
proceeds he will receive from the estate? If so, how much?
Kind regards
-------------------------------------------
david ingram replies:
Whatever he receives as an inheritance in England (or any other
country) is tax free to him in Canada after the tax is paid in
the other country.
An exception does occur when the Canadian inheritor receives
monthly payments from a pension. In most of these cases, the
country the pension is paid out of takes 15% and the person
reports the income again in Canada and pays tax to Canada as
well. The good news is that they then get to claim the tax paid
to the other country as a deduction from the actual Canadian tax
on a dollar for dollar basis as a Foreign tax credit.
Another small exception would be if your brother inherited the
property and it went up in value between the date of inheritance
and the date of sale. If that was the case, then your brother
would have a capital gains tax to pay to Canada but, again, would
get to claim a FTC for the tax paid to the UK on a proportional
basis.
Hope this helps.
David Ingram's US / Canada Services
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Specialists
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