Foreign Beneficiaries: It's Complicated

Foreign beneficiaries

Various tax and non-tax related issues arise during the administration of an estate which has foreign beneficiaries, including:

• withholding tax on payments made to a foreign beneficiary;
• the characterization of distributions made to non-resident beneficiaries, including whether capital distributions can be made tax-free to a nonresident beneficiary or are subject to tax on capital gains;
• requirements to obtain a tax certificate from Canada Revenue Agency (CRA) prior to making distributions to a non-resident beneficiary;
• multiple taxation on death;
• foreign currency and exchange;
• transfers of interests in domestic corporations; and
• payment of a deceased beneficiary's share to a non-resident legal representative.