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Legal Ease
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Category: Canada Tax
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My dad passed away 4 years ago and I was the beneficiary to

Customer Question

Hello, my dad passed away 4 years ago and I was the beneficiary to his RRSP's do I have to pay taxes on them? CRA is now after me for the taxes. I was not the executor to his will.
Submitted: 4 months ago.
Category: Canada Tax
Expert:  Ulysses101 replied 4 months ago.

Hello, thank you for the question.

I assume that you got the RRSP as beneficiary of them directly? They didn't form part of the deceased's estate and then go to you under the will?

Customer: replied 4 months ago.
They were not mentioned in the will
Customer: replied 4 months ago.
I received paperwork from Investors Group regarding me dads RRSP's and it shows that I was the beneficiary
Expert:  Ulysses101 replied 4 months ago.

RRSPs can be transferred laterally to a spouse with no tax implication, such as to a spouse. That's usually how it's done because then the spouse doesn't owe taxes on them until they are withdrawn or the spouse subsequently dies.

RRSPs can be transferred to a dependent child if the child is a minor when the transfer occurs, then the child can dip into them for a period tax free, or at a much reduced personal tax rate assuming the child has a low taxable income.

But when the RRSPs are transferred otherwise, such as to you directly, the taxes are owed. Talk to your accountant, make sure that they understand when and how you got the RRSPs. You'll need to figure out whether to sell some to pay the tax owed, or find another way to finance that.

I suspect that the accountant you spoke to either isn't a real accountant, maybe someone at H&R Block or something, or perhaps they didn't know all the facts.

I'm sorry if this isn't what you wanted to hear. I'll await your question or comment if any; please don't shoot the messenger. If I've answered you then I'd appreciate a positive service rating please. That's how I get credit from the site for working with you today.

Customer: replied 4 months ago.
Thank you for your time
Expert:  Ulysses101 replied 4 months ago.

You're very welcome. If there's nothing else, may I have that rating please? That's how I get paid by the site.

Good luck


Expert:  Legal Ease replied 4 months ago.

Your question has just appeared on the Canada Tax list. It was placed on the Canada law list in error.

In fact your accountant was basically correct.

You are not liable for the taxes unless the estate cannot pay them.

There is a deemed disposition at death for all assets. So the estate must pay the taxes and not you.

The only exceptions are if you are a spouse or a financially dependent child but I am assuming that is not the case, or if the estate has no funds to pay the taxes. In that case you would be liable but otherwise you are not.

Let me know if you need any further clarification.

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