Deemed dispositions, as they\u0027re known, can be a burden at a number of points in your life.
And most Canadians know that when they die, taxes follow. That’s because Canadian tax law treats everyone’s estates as if they sold everything the day they died — which means even if you plan to keep your cottage or investment account in the family, the tax man will want a cut.
That’s when — as Peter Weissman, a partner at Cadesky Tax in Toronto, says — they can end up feeling like a “damned disposition” for the person left holding the bill.Deemed dispositions ensure you don’t avoid taxArticle content“You don’t get taxed on the full value of your assets, you get taxed on the gains that you haven’t realized,” explains Weissman — meaning in essence gains on assets you haven’t sold.
By taxing gains at the time of death, the government was able to ensure assets don’t get passed along for generations, avoiding tax perpetually. “The idea is to try to make it a closed system,” says David Rotfleisch, a tax lawyer with Rotfleisch & Samulovitch in Toronto. “So you can’t just keep pushing off capital gains forever.”
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