elizabeth_action

If, from the UK, I inherit an asset via a trust fund (set up to side step British inheritance tax), do I then have to pay the Canadians capital gains tax or inheritance tax on that asset?

Aviator

There is no inheritance tax in Canada, whether there is CGT depends on your interest in the trust. You should consult an accountant.

DaveLovesDee

Or give it all to me.

Aviator

There is no gift tax either

You'd almost think we were a tax free society, until you add up the other 20+taxes we get dinged for.

Alan2005

There has to be some restrictions on that. Otherwise, I'd work for free and get a 'gift' from my company

Ben W Bell

Yeah, you can gift a spouse of family member up to X a year for tax reasons, but a company can't really gift you money like that.

DaveLovesDee

30+ taxes if you live in Toronto.

Hi Ben.

JonboyE

This is the key. Property in a trust is legally owned by the trustees, not the beneficiaries. The default position I would take for a foreign family or testamentary trust is that a Canadian taxpayer does not have any liability for CGT until the trust distributes the property to the taxpayer. However, this can change depending upon the terms of the trust agreement so the OP might want to get some personalized professional advice if the amounts involved are substantial.

Different rules apply to Canadian trusts.

harju

I'm curious as to why you say there is no "gift tax"? Without going into detail there are all sorts of deemed disposition and income attribution rules that prevent gifting assets (incl money) tax free.

Aviator

Because there isn't any.

However for those trying to use tax shelter gifitng schemes may find they come unstuck.

JonboyE

Because I can give as much as I want, to anyone I want, whenever I want, and there is no tax payable.

If you are gifting property there is an actual disposition and you may be liable for any taxable capital gain. However, this is a tax on the increase in value of the property while you owned it, not a tax on the gift.

There cannot be any capital gain on cash so you can gift cash without tax implications.

If you gift cash to a family member the subsequent investment income earned may be attributed back to you in calculating marginal tax rates. However, this is a tax on the income earned by the gift, not on the gift itself.

harju

I am obviously not familar with the term "Gift Tax" as it is used in UK taxation. Thanks for the clarification. I was thinking purely of disposition and attribution rules which are designed to prevent tax benefits from gifting.

Would I be correct to say, in the simpliest of forms, gift tax prevents a person from avoiding inheritance tax by giving away their estate before they die?

Novocastrian

As I understand it, yes. There is no inheritance tax in Canada, therefore no point in a gift tax either.

Alan2005

I guess you might want to give your kids, parents, siblings a wad of cash. If you're 95 it might not make much difference, but if you're 40 you might prefer them not to have to wait until you shuffle of this mortal coil.

elizabeth_action

Thanks all!