Save Money On Death - File A Rights Or Things Tax Return

Where a taxpayer dies, all capital property is deemed disposed of at fair value. This can create a large tax amount owing depending on the property owned. Certain property including matured but unclipped bond coupons, dividends declared but unpaid at date of death and salaries or vacation pay owing at date of death but unpaid are considered Rights Or Things. There are generally three choices for reporting this income as follows:

1. If transferred to beneficiaries within 1 year of death or within 90 days after assessment of the deceased taxpayer's final tax return (whichever is later), the value of Rights Or Things transferred to beneficiaries must be included in their income and will be excluded from the income of the deceased taxpayer. 

2. The Rights Or Things may be included in the deceased taxpayer's final tax return.

3. A special election can be made to include the value of the Rights Or Things on a separate tax return of the deceased. The election is made within one year of date of death or 90 days from the date of assessment of the deceased taxpayer's tax return (whichever is later).

By electing in the third choice above, tax savings can result. Basically, a second full set of personal tax exemptions may be claimed in addition to those claimed on the final tax return of the deceased. 

Careful planning with a Chartered Accountant is warranted. Contact Keith Anderson CA at (780) 447-5830 if you need advice. 

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