British Columbia has no estate tax and no inheritance tax. What an estate actually pays are two different things: probate fees to the BC Supreme Court, set by the provincial Probate Fee Act, and federal income tax on the deceased’s final return, which usually includes capital gains triggered by death and the full value of any registered retirement accounts. For most families in BC, the income tax bill is the larger of the two.
Probate Fees in BC
Probate fees are calculated on the gross value of the estate that passes through the court. Estates worth $25,000 or less pay nothing, and no court filing fee applies at that level either.1BC Laws. Probate Fee Act
Above that threshold, the Probate Fee Act charges in tiers:1BC Laws. Probate Fee Act
- $25,001 to $50,000: $6 for every $1,000 (or part of $1,000) above $25,000.
- Above $50,000: $14 for every $1,000 (or part of $1,000) above $50,000, plus the first-tier fee.
A separate $200 court filing fee applies under the Supreme Court Civil Rules to start the probate proceeding.2BC Laws. Supreme Court Civil Rules – Appendix C
Take a $500,000 estate. The first $25,000 is free. The next $25,000 costs $150. The remaining $450,000 costs $6,300. Add the $200 filing fee, and the total is $6,650. The executor has to pay the full amount before the court will issue the estate grant.1BC Laws. Probate Fee Act
Assets That Don’t Count Toward Probate Fees
Probate fees only apply to assets that flow through the estate. Several kinds of property pass directly to their recipient and never enter the calculation:
- Property held in joint tenancy with right of survivorship — real estate, bank accounts, or investment accounts — passes to the surviving joint tenant automatically.
- RRSPs, RRIFs, TFSAs, and RESPs with a named beneficiary transfer outside the estate.
- Life insurance paid to a named beneficiary (anyone other than the estate itself) is not treated as property of the deceased for probate purposes.
- Assets held in a living (inter vivos) trust set up during lifetime are not part of the probate estate.
Keeping beneficiary designations current on registered accounts and life insurance is the simplest way to shrink the probate bill. Joint tenancy and living trusts can save more, but they carry their own consequences: putting an adult child on the title of a home, for example, can create tax problems and expose the property to that child’s creditors or divorce.
Capital Gains Tax on Death
Under section 70(5) of the Income Tax Act, someone who dies is treated as having sold all of their capital property at fair market value immediately before death.3Justice Laws Website. Income Tax Act – Section 70 Nothing actually changes hands, but every asset that has grown in value produces a capital gain on the final return.4Canada Revenue Agency. Taxable Capital Gains on Property, Investments, and Belongings
Only a portion of the gain is taxable. For 2025, the inclusion rate was 50%. The federal government announced plans to move the rate to two-thirds for individuals on annual capital gains above $250,000, effective January 1, 2026.5Government of Canada. Government of Canada Announces Deferral in Implementation of Change to Capital Gains Inclusion Rate Executors should confirm the rate in force when filing.
The deemed disposition rule catches investment portfolios, rental properties, and vacation homes. The numbers get large quickly. A rental property bought for $200,000 and worth $600,000 at death creates a $400,000 gain. At a 50% inclusion rate, $200,000 lands on the final return as taxable income, which can push the estate into BC’s top marginal brackets.
Spousal Rollover
When capital property passes to a surviving spouse or common-law partner, or to a qualifying spousal trust, the deemed disposition doesn’t apply. The property transfers at the deceased’s adjusted cost base, and the gain is deferred until the spouse sells or dies.3Justice Laws Website. Income Tax Act – Section 70 The rollover is automatic; the executor doesn’t have to elect into it. In practice it can postpone a very large tax bill for decades.
Principal Residence Exemption
If the deceased’s home qualified as a principal residence for every year they owned it, the entire capital gain on that property is tax-free. The executor claims the designation on the final return using Schedule 3 and Form T1255. If the home passes to a surviving spouse, even that designation isn’t required on the final return.4Canada Revenue Agency. Taxable Capital Gains on Property, Investments, and Belongings Given BC property values, this exemption often shelters the single largest gain in the estate.
RRSPs and RRIFs at Death
Registered retirement plans are where BC estates most often get hit hardest, and the rule surprises many executors. When the holder of an RRSP or RRIF dies, the entire fair market value of the plan is added to their income for the year of death.6Canada Revenue Agency. Death of an RRSP Annuitant There’s no partial inclusion. A $500,000 RRSP adds $500,000 in ordinary income to the final return, and the tax on that can easily exceed $200,000 at BC’s top combined federal and provincial marginal rate.
The spousal exception applies here too. If the surviving spouse or common-law partner is the sole designated beneficiary, the plan rolls over into the spouse’s own registered plan with no immediate tax.6Canada Revenue Agency. Death of an RRSP Annuitant A missing or outdated beneficiary designation can turn what should have been a tax-deferred rollover into a six-figure liability.
The Final Return, Deadlines, and Clearance Certificate
The executor files a final income tax return for the deceased covering income from January 1 to the date of death. That return includes employment and pension income earned up to death, the deemed capital gains, and the full RRSP or RRIF value.3Justice Laws Website. Income Tax Act – Section 70
Deadlines depend on the date of death. For deaths between January 1 and October 31, the return is due by April 30 of the following year. For deaths between November 1 and December 31, the deadline is six months after the date of death.
Before paying anything out to beneficiaries, the executor should apply to the CRA for a clearance certificate confirming that all taxes have been paid. Without one, the executor is personally liable for any unpaid tax up to the value of the assets distributed.7Canada Revenue Agency. Apply for a Clearance Certificate Processing can take several months, and distributing early is a real financial risk.
Property Transfer Tax on Real Estate in an Estate
BC’s property transfer tax normally applies whenever real estate changes hands, but the province exempts most estate transfers so the same property isn’t taxed twice:
- Transfers from the deceased to the executor or administrator are exempt.8Government of British Columbia. Property Transfer Tax Exemption Codes
- Transferring a principal residence from the estate to a related beneficiary is exempt, as long as the property was either the deceased’s principal residence or had been the beneficiary’s residence for at least six continuous months before death.8Government of British Columbia. Property Transfer Tax Exemption Codes
- Jointly held property passing to the surviving joint tenant is exempt from the general property transfer tax, though the additional property transfer tax can still apply.8Government of British Columbia. Property Transfer Tax Exemption Codes
Properties larger than 0.5 hectares, or classified as something other than residential, may not qualify for the full principal residence exemption under the property transfer tax rules, even where they qualify for the federal principal residence exemption on the income side.