Tax Lesson 19 YOURLOGO Start Lecture Note: This screen has no script. Static page. YOURLOGO Start Lecture

Taxation at Death An individual’s legal representative must file a deceased taxpayer’s tax return. If the taxpayer dies after October and prior to the tax return due date (i.e., November 1 to April 30th) then the tax return is due at the later of 6 months from the date of death and the normal tax return due date (April 30th; note: the self-employed have a June 15th tax return deadline) For example if someone died on September 1, 2016; his/her 2016 tax return would be due on April 30, 2017 (i.e., their normal filing deadline); and If someone died on December 31, 2016; his/her 2016 tax return would be due on June 30, 2017 (i.e., 6 months after death) The deceased taxpayer will have a deemed disposition of all capital property at fair market value at the date of death (other than property transferred to a spouse, a spousal trust or a former spouse as part of a divorce or separation agreement). This will trigger any capital gains (or capital losses) existing as of death The FMV of an RRSP or RRIF will also be included in the deceased taxpayer’s income (unless the RRSP or RRIF is transferred to a spouse, spousal trust, a former spouse as part of a divorce or separation agreement, a dependent child or a RDSP of a dependent and infirm child or grandchild)

Taxation at Death (cont) Property transferred to a spouse, a spousal trust or a former spouse as part of a divorce or separation agreement is deemed to be disposed of at cost (i.e., tax-free rollover). A spousal trust is a trust where the spouse is entitled to all of the income of the trust (while the spouse is alive) and no one other than the spouse can receive any income or capital of the trust (while the spouse is alive) Trusts and graduated rate estates were discussed above