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How Term Life Insurance Can Help Reduce the Tax Burden on Your Family
There are no estate taxes in Canada. However, the Canada Customs and Revenue Agency (CCRA) still claims its share of your assets when you die.
At death, all your capital assets, including property, investments, collectibles, etc., could face a deemed disposition. That is, the government would tax these assets as though you had sold them at fair market value just before you died. Tax could have to be paid on the amount your assets have appreciated in value since you acquired them.
For example, if the current value of a property that you bought ten years ago for $40,000 is now $90,000, your final tax return will include a $50,000 capital gain. Currently, half of your capital gains must be claimed, meaning that $25,000 will be added to your final tax return and taxed at your highest marginal rate. The burden could be more than $12,000 for that asset alone!
Your RSPs are also subject to taxation, if qualifying beneficiaries for your RSPs, such as a spouse or dependent child, have not been named. The market value of your RSPs at the time of your death will be taxed as income on your final tax return, leaving an even larger burden on your family.
Don't let the CCRA leave your beneficiaries in financial hardship. Ensure that you have adequate life insurance to cover these bills. Use our online
Life Insurance Calculator to estimate your needs. You can also get free quotes online from top Canadian life insurers and apply online. Or, call 1-877-397-4187 to discuss your options with a licensed, non-commissioned TD Insurance representative¹.
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