Inheritance tax from overseas

are there any tax implications

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 A client has asked an inheritance tax question which I have no experience in so will not be able to advise on.

Her relatives live in Canada and have asked her to find out if there are any tax implications for them receiving cash/assets through the will in Canada.

Should I be recommending another accountant, financial advisor or solicitor?

There is no way I am going to advise her as I'm just not competent in this area (as you can see from my basic question) but I don't want to just leave it at that

Replies (24)

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By johngroganjga
30th Jun 2017 10:14

You refer to "the will" but do not explain whose will it is.

Is this the will of a Canadian person who has died, and whose beneficiaries have sought advice from your client on the Canadian tax position of the estate and themselves as beneficiaries?

Or is it your client's will, which has Canadian beneficiaries.

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Replying to johngroganjga:
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By mrshamilton
30th Jun 2017 10:16

Sorry the will is for the relatives in Canada and the UK residents would be the beneficiaries

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By johngroganjga
30th Jun 2017 10:31

So the question is whether UK residents will pay UK tax on assets they receive as the beneficiaries of the estate of a deceased Canadian person?

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Portia profile image
By Portia Nina Levin
30th Jun 2017 10:34

If the deceased was not UK domiciled at death, and the assets are not UK situs, then there are no UK tax implications of the assets passing to the UK beneficiaries under the will.

They will pass at market value at the date of death for CGT purposes, and any income from the assets post transfer will be taxable on the UK beneficiaries.

It's as simple as that.

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Replying to Portia Nina Levin:
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By shelbyprice83
29th Nov 2021 16:17

Hi!

Does this change if the UK beneficiary is an executor of the mentioned Canadian will?

Thank you.

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Replying to shelbyprice83:
By SteveHa
29th Nov 2021 16:25

Wow - 4.5 years for a follow up question, and Portia hasn't been around for two of them.

But the answer is "no".

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Replying to SteveHa:
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By shelbyprice83
29th Nov 2021 16:28

Haha, I thought she was gone!

Thanks for your answer :)

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Replying to SteveHa:
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By shelbyprice83
29th Nov 2021 16:31

Some Canadian specialists are saying I need to get a corporate executor as the moment my Canadian father with Canadian assets would pass, his Canadian assets would become a non-resident. But surely that would happen if I'm the sole non-resident beneficiary as well? Seems like they just want 4%-5% of the estate...

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Replying to shelbyprice83:
By SteveHa
30th Nov 2021 09:21

That would seem to be a Canadian issue, and not something that I'm qualified to answer.

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By shelbyprice83
30th Nov 2021 20:27

Understood! Can you clarify when Portia said "They will pass at market value at the date of death for CGT purposes." that they would pass at market value at the date of death for CGT purposes NOT in the UK? (As I know this must happen in Canada. She said no UK tax implications so just double-checking.)

Thanks.

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Replying to shelbyprice83:
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By Tax Dragon
30th Nov 2021 23:47

Nobody speaks for Portia.

Base cost for UK CGT is determined in accordance with s62 TCGA 1992. I suspect Portia had s62 in mind when making that comment. The comment is, clearly, about UK tax.

I don't know what you mean by 'NOT in the UK', in context.

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Replying to Tax Dragon:
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By shelbyprice83
01st Dec 2021 10:25

As a non-resident executor (I'm based in the UK) of said Canadian will (my father is Canadian and the real estate is in Canada, he has never had any ties to the UK), I will already be paying CGT in Canada for the disposal when the Canadian real estate is handed over to me upon my father's passing. So would I need to pay CGT twice? Once in Canada and once in the UK?

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Replying to shelbyprice83:
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By Tax Dragon
01st Dec 2021 10:35

Canada charges (Canadian equivalent of) CGT on death. UK doesn't charge CGT on death (see s62 again).

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Replying to Tax Dragon:
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By shelbyprice83
01st Dec 2021 10:40

Great, thank you for your help.

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Replying to shelbyprice83:
By SteveHa
01st Dec 2021 08:14

Portia was referring to the base cost used for CGT purposes on eventual disposal of the asset, which is calculated in accordance with the legislation that TD has quoted.

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Replying to SteveHa:
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By shelbyprice83
01st Dec 2021 10:29

Would I need to pay CGT twice on the date of death? Once in Canada and once in the UK? (I know you're not a Canadian expert, I can tell you Canada will charge CGT on date of death so wondering if the UK would double-tax me.)

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Replying to shelbyprice83:
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By Tax Dragon
01st Dec 2021 10:42

And (to add to my most recent comment above) the Canadian CGT charge is (effectively) on your father, not you.

This might sound flippant and insensitive, it's really not meant as such - it's just matter of sad fact: your father disposed of his assets on his passing; you inherited from his estate - that's an acquisition. Your base cost (against a future disposal by you - which may be chargeable to UK CGT) is the value of the assets on acquisition.

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Replying to Tax Dragon:
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By shelbyprice83
01st Dec 2021 10:48

You're not being insensitive, it's helpful to understand when explained like that so thank you.

As I said above, Canadian advisors are pushing for me to get a corporate executor who gets 4-5% of the estate when I don't see any difference between me being the (non-resident) sole executor VS. the (non-resident) sole beneficiary (as my father leaves everything to me either way) - sure, I'll have more admin involved and have to fly back to Ontario to sort probate, etc. but I'd be back for funeral arrangements anyway and always had a flexible job. No bond is required to be posted when the commonwealth's involved and there aren't any UK tax implications on his assets, etc.

Hoping this is something we won't have to worry about in practice for years & years!

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Replying to shelbyprice83:
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By Tax Dragon
01st Dec 2021 10:57

That's not a tax issue. From a UK tax perspective, it makes no odds who administers the estate. (See s62 again... it's an amazingly hardworking section!) Whether it's sensible having a sole executor and what consequences that may have is outside scope of this forum.

Rhetorical question: why are these folks advising you, not your father?

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Replying to Tax Dragon:
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By shelbyprice83
01st Dec 2021 11:09

That's the thing, they said it's a tax issue to have a sole executor (rather than sole beneficiary) who is a non-resident of Canada. But as it's the UK we're dealing with and there are no tax consequences on acquisition of his assets, it should be OK.

In a nutshell, my father wants me to inherit all of his estate but he's not a professional from a law/tax perspective so we're seeking advice together as I'm more tech-savvy than him so it's easier for me to check emails, other comms, even this forum, etc. which is why it seems like they're "advising me" but in reality they're advising us.

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Replying to shelbyprice83:
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By Tax Dragon
01st Dec 2021 11:20

Sorry, I meant it's not a UK tax issue.

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Replying to shelbyprice83:
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By Leywood
01st Dec 2021 11:56

Please do not consider responses on here as 'advice'. (The site rules say you cannot anyway).

You need to get professional advisors in both countries. Not sure who your Canadian advisors are and whether or not they are qualified suitably to provide such advice. eg many Accountants in UK dont have a clue how to deal with clients in receipt of foreign income, so you would need to seek out a specialist, so the same goes for Canada. Best bet is to look on the website for the professional bodies in Canada to start your search.

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Replying to Leywood:
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By Tax Dragon
01st Dec 2021 12:22

It's true that the oft-cited s62 is for (UK) CGT only. It's hardworking, but it's not all-powerful! I think at least one of my comments above could be misconstrued.

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Replying to Tax Dragon:
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By Leywood
01st Dec 2021 13:11

[quote=Tax Dragon]

'' I think at least one of my comments above could be misconstrued.''

I could see that happening especially by a non professional (indeed even with some professionals as you know).

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