Foreign Inheritance for Canadians — Tax, Transfer and Reporting
A relative in the old country dies and leaves you a share of a house, or a bank account, or a portfolio. After the grief comes the practical confusion: a foreign estate, a foreign language of legal documents, a different currency, and the nagging worry that the Canada Revenue Agency will treat this windfall as taxable income. The reassuring core is that Canada does not tax inheritances at all, foreign ones included. The complications are at the edges — the foreign country's own rules, getting the money here, and what you do with it afterward.
This guide covers the Canadian tax treatment of a foreign inheritance and the practical steps. It is general information, not advice; a significant foreign inheritance warrants both Canadian and foreign professional help.
No Canadian tax on receiving it
Canada has no inheritance tax, so inheriting money or property from a foreign estate is not taxed in your hands in Canada.[1] The inheritance is not income to you. This is the single most important point and the one that most reassures people: the CRA does not take a slice of the inheritance simply because it crosses the border to you.
The foreign country may tax it
What Canada does not do, the other country might. Many countries have estate or inheritance taxes with their own rules, frequently applied at the estate level before anything is distributed — the opposite of Canada's approach. Whether foreign tax applies, and how much, depends entirely on that country's law, so any foreign tax question belongs with an advisor in that country. From the Canadian side, foreign tax paid can often be relevant to relieving double taxation if the same asset is later taxed here.
Bringing the money to Canada
An inheritance of cash or securities can generally be brought to Canada without Canadian tax on the inheritance itself. You will convert it to Canadian dollars at the exchange rate, and for a large transfer your bank may request documentation of the source of funds — routine anti-money-laundering practice, not a tax. Keep the foreign estate paperwork that shows the money is an inheritance, which makes the transfer and any later questions straightforward.
Inherited foreign property — your cost base
If you inherit foreign property rather than cash, your cost base is generally the fair market value at the date of death, converted to Canadian dollars.[2] That figure matters later: if you sell, your Canadian capital gain is measured from it, not from what your relative originally paid. Foreign tax on the same sale can usually be credited against Canadian tax, so the gain is not fully taxed twice. Record the date-of-death value and keep it.
Ongoing reporting
You do not report the inheritance as income, but two ongoing obligations can follow it.[3] First, income the inherited assets earn going forward — interest, dividends, rent — is taxable in Canada as part of your worldwide income. Second, if you hold specified foreign property over the reporting threshold, foreign-property reporting can apply. Neither is a tax on the inheritance; both are simply part of being a Canadian resident with assets and income.
What we focus on at It's Simple Will
The Will Creator helps you plan your own Canadian estate; a foreign inheritance you receive is mostly a tax-and-transfer matter best handled with a Canadian accountant and an advisor in the foreign country. Our guides aim to give you the Canadian lay of the land so those conversations are efficient. For inheritances from the US specifically, see receiving a US inheritance as a Canadian.
Related guides
Citations & sources
- [1]P113 — Gifts and Income Tax (inheritances not taxed in the recipient's hands) — Canada Revenue Agency
- [2]Capital gains — Prepare tax returns for someone who died (cost base at death) — Canada Revenue Agency
- [3]Doing taxes for someone who died — Canada Revenue Agency
Frequently asked questions
Is a foreign inheritance taxed in Canada?
Not on receipt. Canada has no inheritance tax, so inheriting money or property from a foreign estate is not taxed in your hands in Canada. You may owe Canadian tax later on income the inheritance generates, or on a capital gain if you sell inherited property, but the inheritance itself is not income to you.
Will the foreign country tax it?
It might. Many countries have their own estate or inheritance taxes, which are applied under that country's rules — often at the estate level before distribution. This is different from Canada, which has none. Whether and how much foreign tax applies depends entirely on the other country's law, so get advice there.
Can I bring the inheritance to Canada freely?
Generally yes. An inheritance of cash or securities can be brought to Canada without Canadian tax on the inheritance itself. You will convert it to Canadian dollars, and for a large transfer your bank may ask for documentation of the source of funds, so keep the foreign estate paperwork showing it is an inheritance.
What is my cost base if I inherit foreign property?
Generally the fair market value at the date of death, converted to Canadian dollars. That becomes your cost base, so if you later sell, your Canadian capital gain is measured from that value. Foreign tax on the same sale can usually be credited against Canadian tax to relieve double taxation.
Do I have to report a foreign inheritance?
You do not report the inheritance itself as income. But if you then hold specified foreign property over the reporting threshold, foreign-property reporting can apply, and any income the inherited assets earn going forward is taxable in Canada as part of your worldwide income. Keep records of date-of-death values.
Should I get professional advice?
For a significant foreign inheritance, yes. A Canadian accountant can handle the Canadian reporting and the foreign tax credit, and a lawyer or advisor in the foreign country can deal with that country's estate process and tax. Coordinating the two is where mistakes — and missed credits — happen.