The Canadian Money Roadmap Unpacking The $660,000 Tax Nightmare
Oct 1, 2025
A family unexpectedly faced a staggering $660,000 tax bill after the loss of both parents. The discussion uncovers how media framing blamed RRSPs, while important factors like capital gains and asset liquidity were overlooked. Evan clarifies Canada's deemed disposition rule, emphasizing the role of proper estate planning and communication. Strategies like life insurance and RRSP withdrawals are explored to manage tax implications, ultimately advocating for comprehensive financial strategies to secure assets for heirs.
AI Snips
Chapters
Transcript
Episode notes
Family’s Real-World Tax Shock
- A Burlington couple in their early 60s died in the same year and left RRSPs totalling about $715,000 which rolled together on death.
- Their adult daughter was shocked by a final tax bill reported as $659,000 and shared the story on CTV to warn others.
How Death Triggers Taxable Events
- Canada uses a deemed disposition rule at death that treats capital assets as if sold for tax purposes.
- RRSPs without a surviving spouse are taxed as income in the year of death and can push heirs into very high marginal rates.
Cottage Capital Gains Explained
- Capital gains on a secondary property are taxable for the period it was not the principal residence.
- Evan's back-of-envelope shows a ~$1.2M gain could explain roughly $300K of the family's tax bill due to inclusion rules.