Ontario Common-Law Spouse Dies With $750K in RRSPs and a Jointly-Held Home: Who Pays the Deemed Disposition Tax and What the Survivor Actually Gets in 2026
Key Takeaways
- 1Understanding ontario common-law spouse dies with $750k in rrsps and a jointly-held home: who pays the deemed disposition tax and what the survivor actually gets in 2026 is crucial for financial success
- 2Professional guidance can save thousands in taxes and fees
- 3Early planning leads to better outcomes
- 4GTA residents have unique considerations for inheritance planning
- 5Taking action now prevents costly mistakes later
Quick Summary
This article covers 5 key points about key takeaways, providing essential insights for informed decision-making.
Quick Answer
No, a common-law partner in Ontario does not automatically qualify for the tax-free spousal RRSP rollover at death. Under section 146(1) of the Income Tax Act, you must be a 'spouse or common-law partner' as defined by the CRA — meaning you have lived together in a conjugal relationship for at least 12 continuous months, or you share a biological or adopted child. If you meet the CRA definition and are named as the RRSP beneficiary (or the estate beneficiary under a qualifying will), the $750,000 RRSP can roll tax-free into the survivor's RRSP or RRIF. If you do not meet the definition — or if there is no beneficiary designation and no will — the entire $750,000 is deemed disposed on the deceased's final T1 return under section 70(5) of the ITA. On $750K of RRSP income stacked on top of any other income in the year of death, the tax bill in Ontario hits approximately $355,000 at the top combined marginal rate of 53.53%. The jointly-held home is a separate issue: joint tenancy with right of survivorship means the home passes to the survivor outside the estate — no probate, no will required. But the deceased's half of the home still faces a deemed disposition for capital gains purposes, and if it was the principal residence of the deceased, the Principal Residence Exemption under section 40(2)(b) eliminates that gain. The survivor keeps the home. The CRA keeps $355,000 of the RRSP. The difference between those two outcomes is one beneficiary designation form.
Key Takeaways
- 1The CRA definition of 'common-law partner' for RRSP rollover purposes requires 12 continuous months of cohabitation in a conjugal relationship, or a shared biological or adopted child. This is defined in section 248(1) of the Income Tax Act. Simply living together is not enough — the relationship must be conjugal, which the CRA evaluates based on factors like shared finances, social presentation as a couple, sexual and personal behaviour, and the degree of commitment. Two friends sharing a house for five years do not qualify. A couple that separated for three months in the middle of the year and then reconciled may not meet the '12 continuous months' test. If the CRA challenges the common-law status on audit of the terminal return, the estate bears the burden of proving the relationship met the definition — and by then, one partner is dead and cannot testify.
- 2When a $750,000 RRSP has no surviving spouse or common-law partner as beneficiary — or when the deceased does not qualify under the CRA definition — the full balance is included as income on the deceased's final T1 return under section 70(5). In Ontario, the marginal tax rates stack: the first ~$53,000 at ~20%, climbing through the brackets to 53.53% on income above ~$253,000. On $750,000 of RRSP income alone (ignoring any other income earned in the year of death), the approximate federal and Ontario tax is $355,000. If the deceased also earned $60,000 of employment income before death, the RRSP income stacks on top — pushing even more into the top bracket. The estate pays this tax, not the survivor. If the estate lacks liquid assets to cover the bill, the CRA can and does pursue the RRSP beneficiary directly under section 160 for the tax owing.
- 3Joint tenancy with right of survivorship on the home means the property passes automatically to the surviving co-owner at death — no probate, no will, no estate administration tax. This works regardless of whether the survivor is a spouse, common-law partner, sibling, or friend. But joint tenancy does not eliminate the deemed disposition for income tax purposes. The deceased's 50% interest in the home is deemed disposed at fair market value under section 70(5). If the home was the deceased's principal residence, the Principal Residence Exemption under section 40(2)(b) eliminates the capital gain on that interest — no tax owing. If the home was not the principal residence (investment property, cottage, or property owned while the deceased had a different principal residence), capital gains tax applies to the deceased's half of the accrued gain.
- 4Ontario's Succession Law Reform Act does not recognize common-law partners for intestacy purposes. If your common-law partner dies without a will in Ontario, you inherit nothing — the estate passes entirely to children, parents, or siblings under the intestacy hierarchy. This is the opposite of what most common-law couples assume. A married spouse in the same situation receives the first $350,000 of the estate (the 'preferential share') plus a proportional share of the remainder. A common-law partner receives zero. The only way a common-law partner inherits under Ontario law is through a valid will, a beneficiary designation on registered accounts, or a successful dependant's relief claim under Part V of the SLRA — which requires proving financial dependence and is uncertain, expensive, and slow.
- 5Three documents change the entire outcome: (1) a beneficiary designation on the RRSP naming the common-law partner — this alone enables the spousal rollover and eliminates the $355,000 tax bill, (2) a valid will that names the common-law partner as estate beneficiary — this ensures they inherit the non-registered assets that intestacy would deny them, and (3) a cohabitation agreement (domestic contract under Part IV of Ontario's Family Law Act) that documents the relationship and financial arrangements — this provides evidence of common-law status if the CRA challenges the rollover on the terminal return. Total cost to prepare all three: $2,000–$4,000 with an estate lawyer. Total cost of not having them: $355,000 in RRSP tax plus loss of the entire estate under intestacy.
Quick Summary
This article covers 5 key points about key takeaways, providing essential insights for informed decision-making.
The Part Most Common-Law Couples Miss: "Spouse" Is a Legal Test, Not a Living Arrangement
The CRA's definition of "common-law partner" for tax purposes is narrower than most people assume. Under section 248(1) of the Income Tax Act, you qualify as a common-law partner if you have lived with your partner in a conjugal relationship for at least 12 continuous months, or if you are the biological or adoptive parent of your partner's child. The "12 continuous months" requirement is strict — a separation of 90 days or more resets the clock. A couple that moved in together in March 2025 and one partner dies in January 2026 has been cohabiting for 10 months. Not 12. No rollover.
Even when the cohabitation requirement is met, "conjugal" adds a second layer. The CRA and the courts evaluate several factors: shared finances (joint bank accounts, shared expenses), social presentation (do friends and family recognize you as a couple?), sexual and personal behaviour, the nature of the commitment, and the expectations of the relationship. Two friends sharing rent in a Toronto condo for three years do not qualify. An elderly couple maintaining separate bedrooms but sharing everything else probably does — but "probably" is not certainty, and the burden of proof falls on the estate after one partner is gone. For a broader look at how common-law status changes inheritance tax treatment, see our common-law inheritance guide.
The Timing Trap: When 11 Months of Cohabitation Costs $355,000
Situation: A Mississauga couple moves in together in April 2025. He has $750,000 in RRSPs and names her as beneficiary. He dies suddenly in February 2026 — 10 months of cohabitation.
CRA's position: She does not meet the common-law definition. The RRSP does not roll over.
Result: $750,000 is included as income on his final T1. Tax owing: approximately $355,000.
She receives: The RRSP proceeds minus the tax the estate owes. If the estate can't pay, the CRA assesses her directly under section 160.
What would have changed the outcome: Had they been married — even a courthouse wedding the week before — spousal status would have been immediate and the rollover would have applied. Marriage creates instant spousal status for tax purposes. Common-law does not.
The $750,000 RRSP Collapse: What Happens on the Final T1 Return
When there is no qualifying spouse or common-law partner to receive the rollover, section 70(5) of the Income Tax Act treats the RRSP as fully deregistered on the date of death. The entire $750,000 is included as income on the deceased's final T1 return — stacked on top of any other income earned that year. This is not a capital gain with a partial inclusion rate. This is fully taxable income, dollar for dollar. For the complete mechanics of deemed disposition at death, see our deemed disposition guide.
Tax on a $750,000 RRSP Deemed Disposition — Ontario 2026
| Income Layer | Combined Fed + ON Rate | Tax |
|---|---|---|
| First ~$53,000 | ~20.05% | ~$10,627 |
| $53K–$112K | ~29.65% | ~$17,494 |
| $112K–$173K | ~43.41% | ~$26,480 |
| $173K–$220K | ~48.29% | ~$22,696 |
| $220K–$253K | ~51.97% | ~$17,150 |
| $253K–$750K | 53.53% | ~$266,051 |
| Total tax on $750K RRSP | ~$360,498 |
Assumes RRSP income is the only income on the final T1 (deceased died early in the year with minimal other income). If the deceased earned additional employment income, the total tax increases as more of the RRSP is pushed into the 53.53% top bracket. Ontario surtaxes (20% on basic provincial tax above $5,315 and 36% above $6,802) are included in the combined rates above.
The estate is primarily responsible for paying this tax. The executor must file the final T1 return and remit the tax before distributing any assets to beneficiaries. If the estate lacks the liquid assets to pay — a common problem when most wealth is locked in real estate and registered accounts — the CRA has tools. Under section 160 of the ITA, the CRA can assess the RRSP beneficiary (the person who actually received the $750,000) for the tax owing. Under section 159(3), the executor who distributes estate assets before paying the tax becomes personally liable.
The Jointly-Held Home: Probate Avoided, but the ACB Question Remains
Joint tenancy with right of survivorship is the most common way Ontario couples hold their home — and for good reason. When one joint tenant dies, their interest in the property passes automatically to the surviving co-owner. It does not flow through the estate, it does not appear in the will, and Ontario's estate administration tax (1.5% above $50,000) does not apply. On a $900,000 home, that saves $12,750 in probate fees. For the detailed math on how joint tenancy interacts with probate and capital gains, see our joint tenancy at death walkthrough.
But joint tenancy does not make the deemed disposition disappear. The deceased's 50% interest in the home is still deemed disposed at fair market value under section 70(5). Two outcomes are possible:
Outcome A: The Home Was the Deceased's Principal Residence
The Principal Residence Exemption under section 40(2)(b) of the ITA eliminates the capital gain on the deceased's 50% interest. No capital gains tax. The survivor takes ownership of the full property with an adjusted cost base equal to: their original 50% ACB plus the deceased's 50% at fair market value on the date of death. This "step-up" in cost base on the deceased's half means any future gain on that half is measured from the date of death, not the original purchase price.
Example: Home purchased for $400,000. FMV at death: $900,000. Deceased's 50% gain: $250,000. PRE eliminates it. Survivor's new ACB: $200,000 (their original half) + $450,000 (deceased's half at FMV) = $650,000.
Outcome B: The Home Was NOT the Deceased's Principal Residence
If the deceased had a different principal residence (uncommon for most couples, but possible if they owned a condo they lived in while renting out the jointly-held property), the gain on the deceased's 50% interest is taxable. Under the 2026 capital gains rules: 50% inclusion on the first $250,000 of gain, then 66.67% inclusion on gains above $250,000.
Example: Jointly-held investment property purchased for $400,000. FMV at death: $900,000. Deceased's 50% gain: $250,000. Taxable capital gain: $250,000 × 50% inclusion = $125,000. At Ontario's top marginal rate (53.53%): approximately $66,913 in capital gains tax — on top of any RRSP tax on the same terminal return.
Joint Tenancy vs Tenancy in Common: The Distinction That Changes Everything
Not all co-ownership is the same. If the property is held as tenants in common rather than joint tenants, there is no right of survivorship. The deceased's share becomes part of their estate and passes according to their will — or, if there is no will, according to Ontario's intestacy rules. For a common-law partner without a will, this means the deceased's half of the home goes to their children, parents, or siblings. The surviving common-law partner could lose half the home they've been living in.
Joint Tenancy vs Tenancy in Common: What Happens at Death
| Feature | Joint Tenancy | Tenancy in Common |
|---|---|---|
| Right of survivorship | Yes — passes automatically to survivor | No — goes through the estate |
| Probate on deceased's share | Avoided | Applies (1.5% in Ontario above $50K) |
| Needs a will for partner to inherit | No | Yes — common-law gets nothing under intestacy |
| Deemed disposition on deceased's share | Yes — s.70(5) applies | Yes — s.70(5) applies |
| PRE available on deceased's share | Yes, if principal residence | Yes, if principal residence |
| Common-law partner outcome (no will) | Keeps the home | Loses half the home to intestacy heirs |
Most Ontario couples who buy a home together default to joint tenancy — it's standard on the deed unless you specify otherwise. But if the property was purchased with unequal contributions, or if one partner already owned it and added the other to the title later, the form of ownership may not be what you assume. Check the deed. The cost to confirm with a real estate lawyer: $200–$500. The cost of discovering the wrong form of ownership after a death: potentially half the home's value.
Ontario Intestacy: The Common-Law Partner Gets Nothing
This is the fact that shocks most common-law couples in Ontario. Under the Succession Law Reform Act, the intestacy hierarchy — the rules that determine who inherits when there is no will — does not include common-law partners. At all.
If your common-law partner dies without a will in Ontario, the estate goes to:
- Children (if no surviving married spouse, children take everything)
- Parents (if no children)
- Siblings (if no parents)
- Nieces and nephews (if no siblings)
- Next of kin by degree of consanguinity
A married spouse, by contrast, receives the preferential share of $350,000 plus a proportional share of any remainder. A common-law partner of 20 years who raised children together, shared a home, merged finances — inherits exactly as much as a stranger under Ontario intestacy law: zero.
What Intestacy Actually Looks Like: A Brampton Common-Law Couple
Situation: A Brampton couple, both 58, common-law for 15 years. He has $750,000 in RRSPs (no beneficiary designated — he assumed "next of kin" would cover it), a jointly-held home worth $850,000, $40,000 in a TFSA, and a non-registered investment account worth $120,000. He has two adult children from a prior marriage. No will.
What the survivor gets:
• Home: Passes via joint tenancy — she keeps it (assuming joint tenancy, not tenancy in common)
• RRSP ($750K): No beneficiary designated → goes to the estate → children inherit under intestacy. Plus, no spousal rollover applies because the RRSP flows through the estate to non-spouse beneficiaries. Tax on the terminal return: ~$360,000. The estate (and ultimately the children) receive ~$390,000 after tax.
• TFSA ($40K): No successor holder or beneficiary designated → goes to estate → children inherit.
• Non-registered investments ($120K): Estate asset → children inherit.
She gets: The home. Nothing else. The children get approximately $550,000 from the estate after taxes.
If he had a will + RRSP beneficiary designation: She gets the home, $750,000 RRSP rolled tax-free to her RRSP, $40,000 TFSA, $120,000 non-registered. Total: the home + $910,000. Tax: approximately $0 on the RRSP (rollover), minimal on the non-registered depending on gains.
Dependant's Relief: The Expensive, Uncertain Plan B
A common-law partner shut out by intestacy does have one legal option: a dependant's relief claim under Part V of the Succession Law Reform Act. This allows a person who was financially dependent on the deceased to apply to the court for a share of the estate. The court considers the dependant's needs, the size of the estate, the relationship with the deceased, and any other claims on the estate.
The problems with relying on this as a plan:
- It requires proving financial dependence. A common-law partner who earned their own income and was not financially dependent on the deceased may not qualify — even if they shared expenses equally.
- It is discretionary. The court decides how much to award, if anything. There is no formula, no guaranteed share.
- It is expensive. Contested dependant's relief applications typically cost $30,000–$80,000 in legal fees and take 12–24 months to resolve.
- It is adversarial. The claim is made against the estate — meaning the common-law partner is litigating against the deceased's children, parents, or siblings. Family relationships rarely survive this process.
A $2,000 will eliminates the need for a $50,000 court battle. That is not a metaphor — it is the actual math.
The Three Documents That Change the Entire Outcome
The difference between a $355,000 tax bill and a $0 tax bill — between inheriting everything and inheriting nothing — comes down to three pieces of paper. For a wider look at how life insurance and RRSPs compare at death, see our life insurance vs RRSP inheritance comparison.
Document 1: RRSP Beneficiary Designation
Name your common-law partner as the direct beneficiary on your RRSP account. This is a form you get from your financial institution — it takes 15 minutes to fill out. When you die, the RRSP transfers directly to your partner's RRSP or RRIF without flowing through the estate. If your partner meets the CRA common-law definition, the rollover is tax-free under section 146(8.1). No $355,000 tax bill. No probate on the RRSP value. No estate trustee involvement.
Do the same for your TFSA. Name your partner as "successor holder" (not just beneficiary) — this allows the full TFSA balance to transfer to their TFSA without using their contribution room.
Document 2: A Will
A valid Ontario will ensures your common-law partner inherits your non-registered assets — the investment accounts, bank balances, personal property, and any real estate not held in joint tenancy. Without a will, intestacy gives them nothing. A standard will from an Ontario estate lawyer costs $800–$2,000 and can be completed in a single appointment.
The will also names an estate trustee (executor) — ideally your partner, so they control the timeline and process rather than waiting for the court to appoint a stranger.
Document 3: A Cohabitation Agreement
A domestic contract under Part IV of Ontario's Family Law Act that documents your common-law relationship. This serves two purposes: (1) it provides documentary evidence of common-law status if the CRA challenges the spousal RRSP rollover on the terminal return — the agreement proves you were in a conjugal relationship, shared finances, and presented as a couple, and (2) it clarifies property ownership and financial arrangements between you, reducing the risk of disputes with extended family after a death.
Cost: $1,500–$3,000 with independent legal advice for each partner. Each partner should have their own lawyer to ensure the agreement is enforceable.
Total cost for all three documents: $2,500–$5,000. Total cost of not having them: $355,000 in RRSP tax, loss of the non-registered assets under intestacy, and a contested dependant's relief claim that costs $50,000 and takes two years. The math here is not close. For the full picture of how Canada taxes estates compared to the US and UK, see our complete inheritance tax guide.
What Changes If You're Married Instead of Common-Law
Marriage creates immediate spousal status for all tax and estate purposes. There is no 12-month waiting period, no burden of proving conjugal relationship, no risk of CRA challenge. A marriage certificate is conclusive proof. The practical differences at death:
Common-Law vs Married: Tax and Estate Outcomes on $750K RRSP + Jointly-Held Home
| Issue | Common-Law (qualifying) | Common-Law (non-qualifying) | Married |
|---|---|---|---|
| RRSP rollover | Yes (if beneficiary designated) | No — $355K+ tax | Yes (if beneficiary designated) |
| Proof of status | Estate must prove 12+ months conjugal | N/A — doesn't qualify | Marriage certificate — conclusive |
| Intestacy (no will) | Inherits nothing | Inherits nothing | $350K preferential share + proportional remainder |
| Joint tenancy home | Passes to survivor | Passes to survivor | Passes to survivor |
| Equalization on death | No right | No right | Statutory right under Family Law Act |
I'm not saying everyone should get married for tax purposes — that would be an absurd oversimplification. But the legal gap between married and common-law in Ontario on death is wide enough that every common-law couple with significant assets should understand it, quantify it, and decide whether the three documents above (or a wedding) close it sufficiently.
The Bottom Line: $2,500 in Planning or $355,000 in Tax
What a Common-Law Couple With $750K in RRSPs and a Jointly-Held Home Should Do This Month
1. Confirm your CRA common-law status. Have you lived together for 12+ continuous months in a conjugal relationship? If you separated at any point for 90+ days, the clock restarted. If you moved in together less than a year ago, you do not yet qualify for the RRSP rollover — consider whether marriage makes sense as immediate protection.
2. Name your partner as RRSP beneficiary. Contact your financial institution and complete the beneficiary designation form. Name your partner as direct beneficiary, not "estate." This single form enables the tax-free spousal rollover and prevents the $355,000 tax bill.
3. Name your partner as TFSA successor holder. Same process, different form. "Successor holder" transfers the TFSA intact; "beneficiary" collapses it and uses up their contribution room.
4. Make a will. Your common-law partner inherits nothing under Ontario intestacy. A will costs $800–$2,000 and ensures they receive your non-registered assets, bank accounts, and personal property.
5. Sign a cohabitation agreement. This documents the relationship for CRA purposes and protects both partners on separation or death. $1,500–$3,000 with independent legal advice for each partner.
6. Check the deed on your home. Confirm it is held as joint tenants with right of survivorship — not tenants in common. If it's tenancy in common, your partner's share goes through the estate and your common-law partner gets nothing under intestacy.
Total cost: $2,500–$5,000. Time: two appointments — one with an estate lawyer, one with your financial institution. A fee-based financial planner can coordinate the beneficiary designations, will instructions, and cohabitation agreement to ensure nothing falls through the cracks.
Frequently Asked Questions
Q:Does a common-law partner automatically get the RRSP rollover in Canada?
A:No. The spousal RRSP rollover under section 146(8.1) and 60(l) of the Income Tax Act requires two conditions: (1) the survivor must meet the CRA definition of common-law partner — 12 continuous months of cohabitation in a conjugal relationship, or a shared child — and (2) the survivor must be named as the RRSP beneficiary, either directly on the RRSP account or as the beneficiary of the estate under a qualifying will. If either condition is missing, the RRSP collapses into the deceased's final T1 return as taxable income. There is no automatic rollover — it must be set up in advance through a beneficiary designation.
Q:How much tax does CRA collect on a $750,000 RRSP at death in Ontario?
A:Approximately $355,000 in combined federal and Ontario income tax. The $750,000 is added to the deceased's income on their final T1 return, where it is taxed at progressive marginal rates up to 53.53% (the top combined Ontario rate on income above approximately $253,000). The exact amount depends on other income earned in the year of death — if the deceased earned $60,000 before dying, total income on the final return would be $810,000, pushing even more into the top bracket. The estate is responsible for paying this tax before distributing any assets to beneficiaries.
Q:Does joint tenancy on a home avoid deemed disposition tax at death in Canada?
A:Joint tenancy avoids probate — the home passes automatically to the surviving co-owner outside the estate, so Ontario's estate administration tax (1.5% on assets above $50,000) does not apply to the home's value. But joint tenancy does not avoid the deemed disposition under section 70(5) of the Income Tax Act. The deceased's 50% interest in the home is deemed disposed at fair market value on the date of death. If the home qualifies as the deceased's principal residence, the Principal Residence Exemption eliminates the capital gain — no tax owing. If it does not qualify (second property, investment property, or the deceased had a different principal residence), capital gains tax applies to the gain on the deceased's half.
Q:Does a common-law partner inherit anything under Ontario intestacy law?
A:No. Ontario's Succession Law Reform Act does not include common-law partners in the intestacy distribution hierarchy. If your common-law partner dies without a will in Ontario, the estate passes to children first, then parents, then siblings, then nieces and nephews — the common-law partner receives nothing. This is different from married spouses, who receive a preferential share of $350,000 plus a proportional share of the remainder. The only recourse for a common-law partner is a dependant's relief claim under Part V of the SLRA, which requires proving you were financially dependent on the deceased and is contested at the discretion of the court.
Q:What is the difference between joint tenancy and tenancy in common for estate planning in Canada?
A:Joint tenancy includes a right of survivorship — when one owner dies, their interest automatically passes to the surviving owner(s) outside the estate. Tenancy in common does not include survivorship — each owner's share forms part of their estate and passes according to their will or intestacy rules. For a common-law couple, the distinction is critical: a jointly-held home under joint tenancy passes to the survivor automatically regardless of whether there is a will. The same home under tenancy in common means the deceased's share goes through the estate — and if there is no will, the common-law partner gets nothing under Ontario intestacy. Joint tenancy also avoids probate on the home. Tenancy in common does not.
Q:Can CRA pursue the RRSP beneficiary for the deceased's tax bill?
A:Yes. Under section 160 of the Income Tax Act, if the estate does not have sufficient assets to pay the tax owing on the RRSP deemed disposition, the CRA can assess the RRSP beneficiary directly for the tax. This means a common-law partner who receives the RRSP proceeds (because they were named as beneficiary but did not qualify for the rollover) could be on the hook for the entire $355,000 tax bill — even though they already received the $750,000. The CRA's ability to collect from the beneficiary is well-established in case law and is not limited by any time delay in assessing the estate.
Question: Does a common-law partner automatically get the RRSP rollover in Canada?
Answer: No. The spousal RRSP rollover under section 146(8.1) and 60(l) of the Income Tax Act requires two conditions: (1) the survivor must meet the CRA definition of common-law partner — 12 continuous months of cohabitation in a conjugal relationship, or a shared child — and (2) the survivor must be named as the RRSP beneficiary, either directly on the RRSP account or as the beneficiary of the estate under a qualifying will. If either condition is missing, the RRSP collapses into the deceased's final T1 return as taxable income. There is no automatic rollover — it must be set up in advance through a beneficiary designation.
Question: How much tax does CRA collect on a $750,000 RRSP at death in Ontario?
Answer: Approximately $355,000 in combined federal and Ontario income tax. The $750,000 is added to the deceased's income on their final T1 return, where it is taxed at progressive marginal rates up to 53.53% (the top combined Ontario rate on income above approximately $253,000). The exact amount depends on other income earned in the year of death — if the deceased earned $60,000 before dying, total income on the final return would be $810,000, pushing even more into the top bracket. The estate is responsible for paying this tax before distributing any assets to beneficiaries.
Question: Does joint tenancy on a home avoid deemed disposition tax at death in Canada?
Answer: Joint tenancy avoids probate — the home passes automatically to the surviving co-owner outside the estate, so Ontario's estate administration tax (1.5% on assets above $50,000) does not apply to the home's value. But joint tenancy does not avoid the deemed disposition under section 70(5) of the Income Tax Act. The deceased's 50% interest in the home is deemed disposed at fair market value on the date of death. If the home qualifies as the deceased's principal residence, the Principal Residence Exemption eliminates the capital gain — no tax owing. If it does not qualify (second property, investment property, or the deceased had a different principal residence), capital gains tax applies to the gain on the deceased's half.
Question: Does a common-law partner inherit anything under Ontario intestacy law?
Answer: No. Ontario's Succession Law Reform Act does not include common-law partners in the intestacy distribution hierarchy. If your common-law partner dies without a will in Ontario, the estate passes to children first, then parents, then siblings, then nieces and nephews — the common-law partner receives nothing. This is different from married spouses, who receive a preferential share of $350,000 plus a proportional share of the remainder. The only recourse for a common-law partner is a dependant's relief claim under Part V of the SLRA, which requires proving you were financially dependent on the deceased and is contested at the discretion of the court.
Question: What is the difference between joint tenancy and tenancy in common for estate planning in Canada?
Answer: Joint tenancy includes a right of survivorship — when one owner dies, their interest automatically passes to the surviving owner(s) outside the estate. Tenancy in common does not include survivorship — each owner's share forms part of their estate and passes according to their will or intestacy rules. For a common-law couple, the distinction is critical: a jointly-held home under joint tenancy passes to the survivor automatically regardless of whether there is a will. The same home under tenancy in common means the deceased's share goes through the estate — and if there is no will, the common-law partner gets nothing under Ontario intestacy. Joint tenancy also avoids probate on the home. Tenancy in common does not.
Question: Can CRA pursue the RRSP beneficiary for the deceased's tax bill?
Answer: Yes. Under section 160 of the Income Tax Act, if the estate does not have sufficient assets to pay the tax owing on the RRSP deemed disposition, the CRA can assess the RRSP beneficiary directly for the tax. This means a common-law partner who receives the RRSP proceeds (because they were named as beneficiary but did not qualify for the rollover) could be on the hook for the entire $355,000 tax bill — even though they already received the $750,000. The CRA's ability to collect from the beneficiary is well-established in case law and is not limited by any time delay in assessing the estate.
Related Articles
Canadian Inheritance Tax for Common-Law Partners: How $500,000 Is Treated Differently Than a Married Spouse
read →Capital Gains Deemed Disposition at Death in Canada 2026
read →$900,000 Ontario Home as Joint Tenants: On Death, Probate Avoided but Capital Gains Still Owed
read →$500,000 Life Insurance Payout vs $500,000 Inherited RRSP: Why One Is Tax-Free and the Other Triggers a Six-Figure Bill
read →Inheritance Tax Canada 2026: Complete Guide
read →Ready to Take Control of Your Financial Future?
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