Inheriting money from overseas

Inheriting money from overseas? In most cases, you don’t need to pay tax in Canada when receiving inheritance money from abroad. But you’ll want to choose the right transfer service to keep your costs as low as possible.

Options for receiving inheritance money from overseas in Canada

Bank wire transfers, cheques and electronic funds transfers (EFTs) are commonly used to receive inheritance money from overseas. But newer options like international money transfer services and foreign currency accounts might reduce your transfer costs.

International money transfer service

One of the easiest ways to transfer money overseas is by using an international money transfer service. These companies often provide lower fees and better exchange rates than banks. Companies like OFX can potentially save you thousands of dollars if you’re moving a large amount.

With most services, it’s free to set up an account. Then you can input your transfer details and see what rates and fees you will be charged. Compare quotes from multiple companies to ensure you’re getting a competitive deal.

Must read: Best money transfer services

Foreign currency account

You can also have your inheritance money transferred to a foreign currency or borderless account. For example, Wise has a multi currency account that offers competitive exchange rates and low fees. These types of accounts often allow you to easily transfer money from one currency to another, spend in different currencies and possibly set up direct debits to pay bills and subscriptions.

With Wise, you can receive non-wire transfers and hold money in your account for free. But there’s a small fee for USD wires or CAD SWIFT payments. You’ll also pay a small percentage fee whenever you convert currencies.

Bank transfer

Alternatively, you could arrange for the estate executor to deposit your inheritance directly into your Canadian bank account. This is much quicker than waiting for a cheque to arrive in the mail and get cleared by your bank. But the money transfer will still be subject to the bank’s fees and exchange rate, which are often pricier than dedicated international money transfer services.

Bank cheque

When you inherit money from overseas, the estate may give you a bank cheque that can be deposited in your Canadian bank account. The cheque will likely be issued in a foreign currency and will be subject to the exchange rate your bank offers when you deposit the cheque.

This rate is not always the best on the market. Plus, a large cheque may take a long time to clear; there are faster transfer methods available.

Is there an inheritance tax in Canada?

No, there is no inheritance tax in Canada. Instead, assets are taxed with the deceased person’s estate and then passed on to inheritors. So, the deceased person’s estate is taxed on your inheritance, not you.

However, if your inheritance goes up in value after you’ve received it, you may be responsible for capital gains tax. For instance, say you inherit stocks. After a while, the stock prices rise and you decide to sell. The profit you make from selling stocks is subject to capital gains tax.

These rules apply to Canada. Other laws may apply in the country from which your inheritance is transferred. Speak with a tax professional to make sure you fully understand your obligations.

Frequently asked questions

• How much money can I inherit from overseas?

  In Canada, there are no limits to the size of incoming money transfers, so you can receive an inheritance in any amount from overseas.

• What's the safest way to receive an inheritance from overseas?

  Bank wire transfers are generally considered the safest way to receive a large money transfer, like an inheritance, from overseas. However, bank wires can be slow and expensive.

  Dedicated international money transfer services are federally regulated in Canada typically adhere to industry-standard best practices for protecting personal data and money in transit. Consider using a service like this if you want to keep costs down.

• Do I have to declare my inheritance to the CRA?

  Generally, you don't need to declare inheritances on your tax return as income. This is because inheritances are already taxed with the deceased person's estate. Consult a tax professional to find out for sure if any assets you inherit should be declared on your tax return.