Definitions for What to do when someone has died

Adjusted cost base (ACB)

This is usually the cost of a property, plus any expenses to acquire it, such as commissions and legal fees.

The cost of a capital property is its actual or deemed cost, depending on the type of property and how it was acquired. It also includes capital expenditures, such as the cost of additions and improvements to the property. You cannot add current expenses, such as maintenance and repair costs, to the ACB of a property.

For more information on ACB, see Archived Interpretation Bulletin IT-456R, Capital Property - Some Adjustments to Cost Base, and its Special Release.

If the deceased filed Form T664 or T664(Seniors), Election to Report a Capital Gain on Property Owned at the End of February 22, 1994, the ACB of the property may change. For more information, see Guide T4037, Capital Gains.


There may not be a will or the will may not name an executor. In this case, a court will appoint an administrator to handle the deceased's estate. An administrator is often the spouse, common-law partner, or the next of kin.


See Eligible amount of the gift.

Alter ego trust
This is a trust created after 1999 by a settlor who was 65 years of age or older at the time the trust was created, for which the settlor is entitled to receive all the income that may arise during their lifetime, and is the only person who can receive, or get the use of, any income or capital of the trust during the settlor's lifetime. A trust will not be considered an alter ego trust if it so elects in its T3 return for its first tax year.

Generally, an annuitant of a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) is the person for whom a retirement plan provides a retirement income. In certain circumstances, the surviving spouse or common-law partner may qualify as the annuitant when, because of the annuitant's death, they become entitled to receive benefits out of the retirement plan.

Annuity payment

This is a fixed periodic payment that a person has the right to receive, either for life or for a specific number of years. These payments represent a partial recovery of financing and a return (interest) on the capital investment.

Arm's length

Refers to a relationship or a transaction between persons who act in their separate interests. An arm’s length transaction is generally a transaction that reflects ordinary commercial dealings between parties acting in their separate interests.

Related persons are not considered to deal with each other at arm’s length. Related persons include individuals connected by blood relationship, marriage, common-law partnership or adoption (legal or in fact). A corporation and another person or two corporations may also be related persons.

Unrelated persons may not be dealing with each other at arm’s length at a particular time. Each case will depend upon its own facts. The following criteria will be considered to determine whether parties to a transaction are not dealing at arm’s length:

  • whether there is a common mind which directs the bargaining for the parties to a transaction
  • whether the parties to a transaction act in concert without separate interests; “acting in concert” means, for example, that parties act with considerable interdependence on a transaction of common interest
  • whether there is de facto control of one party by the other because of, for example, advantage, authority, or influence

For more information, see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm's Length.

Capital cost allowance (CCA)

In the year the deceased bought a depreciable property, such as a building, they could not deduct the full cost. However, since this type of property wears out or becomes obsolete over time, prior to death, they can deduct its capital cost over a period of several years. This deduction is called CCA. The deceased cannot claim it for the fiscal period that ends on the date of death.

When talking about CCA, a reference is often made to a class of property. Group depreciable properties into their separate classes. Base any CCA claim on the rate assigned to each class of property.

Capital property

This includes depreciable property and any property that, if sold, would result in a capital gain or a capital loss. This type of property is usually bought for investment purposes or to earn income. Capital property does not include the trading assets of a business, such as inventory. Some common types of capital property include cottages, land, buildings, equipment used in a business or rental operations, and securities such as stocks, bonds, and units of a mutual fund trust.

Common-law partner

This is a person you are living with and have a conjugal relationship with who is not your married spouse, and at least one of the following conditions applies:

  1. They have been living with you in a conjugal relationship for at least 12 continuous months


    In this definition, 12 continuous months includes any period you were separated for less than 90 days because of a breakdown in the relationship.
  2. They are the parent of your child by birth or adoption
  3. They have custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on them for support
Deemed disposition

This expression is used when a person is considered to have disposed of a property, even though a sale did not take place.

Deemed proceeds of disposition

This is an expression used when a person is considered to have received an amount for the disposition of property, even though the person did not actually receive that amount.

Depreciable property

This is usually capital property used to earn income from a business or property. The capital cost can be written off as CCA over a number of years.

Eligible amount of the gift

This is generally the amount by which the fair market value (FMV) of the gifted property exceeds the amount of the advantage, if any, received or receivable for the gift. There may be situations where the eligible amount may be deemed to be nil or the fair market value may be deemed to be less than the actual fair market value of the property. For more information, see Guide P113, Gifts and Income Tax, or Income Tax Folio S7-F1-C1, Split-receipting and Deemed Fair Market Value.

The advantage is generally the total value of all property, services, compensation, or any other benefit that the donor, or a person not dealing at arm's length with the donor, is entitled to as partial consideration for, in gratitude for, or in any other way related to the gift. The advantage may be contingent or receivable in the future.

The advantage also includes any limited-recourse debt in respect of the gift at the time it was made. For example, there may be a limited-recourse debt if the property was acquired as part of a gifting arrangement that is a tax shelter. In this case, the eligible amount of the gift will be entered in box 13 of T5003 slip, Statement of Tax Shelter Information. For more information on tax shelters and gifting arrangements, see Guide T4068, Guide for the Partnership Information Return (T5013 forms).


This is an individual or trust institution named in a will or appointed by a court to settle the deceased's estate.

Fair market value (FMV)

This is usually the highest dollar value that you can get for your property in an open and unrestricted market between a willing buyer and a willing seller who are dealing at arm's length.

Graduated rate estate (GRE)

A GRE of an individual at any time is the estate that arose on and as a consequence of the individual’s death, if that time is no more than 36 months after the death of the individual, and the estate is at that time a testamentary trust that meets all of the following conditions:

  • The estate designates itself as the deceased individual's GRE in its T3 Trust Income Tax and Information Return (T3 return) for its first taxation year.
  • No other estate designates itself as the GRE of the deceased individual.
  • The estate must include the deceased individual's social insurance number in its T3 return for each taxation year of the estate during the 36-month period after the death of the individual.

In Quebec, the liquidator is responsible for distributing assets of all estates. For estates with a will, the liquidator's role is similar to an executor's. For estates without a will, the liquidator acts as the administrator of the estate.


This means that the beneficiary who is to receive the property has a right to absolute ownership of it. No future event or development can take this right away. In order for a property to be locked-in:

  • for a spousal or common-law partner trust, it has to become locked-in before the surviving spouse or common-law partner dies
  • for an individual, it has to become locked-in before the individual dies
Non-arm's length

This generally refers to a relationship or transaction between persons who are related to each other.

However, a non-arm’s length relationship might also exist between unrelated individuals, partnerships, or corporations, depending on the circumstances. For more information, see Arm's length.

Qualified donees

These are as follows:

  • registered charities
  • registered Canadian amateur athletic associations
  • registered national arts service organizations
  • registered housing corporations resident in Canada set up only to provide low-cost housing for the aged
  • registered municipalities in Canada
  • registered municipal or public bodies performing a function of government in Canada
  • the United Nations and its agencies
  • registered journalism organizations
  • universities outside Canada, the student body of which ordinarily includes students from Canada, that have applied for registration and are registered with the CRA (these universities are no longer required to be prescribed in Schedule VIII of the Income Tax Regulations)


    If a university has applied for registration before February 27, 2018, and is registered by the Minister on or after that day, it is considered to have applied for registration. Any university named in Regulation Schedule VIII at the end of February 26, 2018, is also considered to have applied for registration.
  • Government of Canada, a province, or a territory
  • registered foreign charities to which the Government of Canada has made a gift

This is a person to whom you are legally married.

Testamentary spousal or common-law partner trust

This is a trust created, for the benefit of the surviving spouse or common-law partner, by provisions in the deceased’s will, or by court order in relation to the deceased’s estate made under any law of a province or territory that provides for the relief or support of dependants. The trust also must meet both of the following conditions:

  • The surviving spouse or common-law partner is entitled to all the income of the trust that arises before their death.
  • No other person can receive or obtain the use of the trust’s income or capital before the surviving spouse’s or common-law partner’s death.

For more information, see Archived Interpretation Bulletin IT-305R4, Testamentary Spouse Trusts.

Testamentary debts

These are debts or liabilities of all kinds that an individual incurred and did not pay before death. They also include amounts payable by the estate because of death.

Undepreciated capital cost (UCC)

Generally, UCC is equal to the total capital cost of all the properties of a class minus any capital cost allowance claimed in previous years. When property of the class is disposed of, you also have to subtract from the UCC one of the following two amounts, whichever is less:

  • the proceeds of disposition of the property (either actual or deemed) minus the related outlays and expenses to sell it
  • the capital cost of the property

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