21 July 1997 External T.I. 9718535 - GENERAL INFORMATION REQUEST

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Seeking copy of protocol and general information re inheritances.

Position:

Copies of relevant information sent.

Reasons:

971853
XXXXXXXXXX T. Murphy

July 21, 1997

Dear Madam:

Re: Inheritances From Aunt in U.S.

As requested in your letter of July 3, 1997, enclosed is a copy of the 1994 Protocol to the Canada-U.S. Income Tax Treaty. Also, enclosed is a copy of the guide "Preparing Returns for Deceased Persons."

The Government of Canada does not impose inheritance taxes.

Generally, under the Income Tax Act (Canada) an heir who acquires property upon the deceased's death acquires it at a cost equal to its fair market value at that time.

Where the deceased was not a resident of Canada and was neither employed nor carried on a business in Canada before death, the deceased would generally only be subject to tax in Canada on gains with respect to any "taxable Canadian property" owned by the deceased. In this regard, the Income Tax Act (Canada) provides for a deemed disposition of such property for proceeds of disposition equal to its fair market value immediately before death (the heir would be deemed to acquire the property at a cost equal to those deemed proceeds). Taxable Canadian property is described in the enclosed Interpretation Bulletin, IT-420R3. Proposed amendments to the definition of taxable Canadian property are also enclosed for your information. An apartment in the U.S. would not be considered taxable Canadian property.

We trust this information will be of assistance to you.

Yours truly,

for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch

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