Question from Christine: Are savings accounts and chequing accounts taxable on death? What fiscal impact can we predict?
Indeed, savings accounts and checking accounts are taxable on death. But financial planner Antoine Chaume, of Lafond Financial Services, says it’s not that bad! In fact, it is the interest income that the tax authorities are eyeing, so the impact may well be minimal.
“Let’s say you’ve deposited $ 500,000 in savings into an interest-earning account. In this case, with an interest rate of 0.1% for example, you would have a gain of $ 500, which will be taxable. But given this small amount, the tax payable will be minimal. », He explains.
Antoine Chaume specifies that this interest income is taxable each year, and that therefore you do not expose yourself to a steep tax bill on death, since the tax will have been paid as and when.
“There’s no unrealized capital gain that accumulates, so there won’t be any bad surprises for the estate,” he says.
Good advice to optimize your liquidity while avoiding taxes? Contribute to your TFSA if it is not maximized.
“By placing your savings in a TFSA rather than a chequing account, you will have better returns and the interest generated is not taxable. This is therefore an attractive option to grow your savings tax-free, ”says Mr. Chaume.