Death and Taxes



ACB Adjusted Cost Base

FMV Fair Market Value

UCC Undepreciated Capital Cost



Adjusted Cost Base (ACB): the price paid for a property, plus the expenses incurred to buy it. Expenses include commissions, legal fees, additions and taxes. The actual cost to the taxpayer adjusted for any of the numerous adjustments in subsections 53(1) and 53(2) of the Income Tax Act.

Adjusted Net Capital Loss: the amount of a net capital loss adjusted to reflect the capital gains inclusion rate.

Administrator: in an intestacy, an individual who has been appointed by the courts to administer the estate of the deceased, with duties similar to an executor or personal representative.

Allowable Capital Loss: a capital loss adjusted to reflect the capital gains inclusion rate.


Basic Activities of Daily Living: include perceiving, thinking and remembering, feeding and dressing oneself, speaking, hearing, eliminating and walking. An individual’s ability to perform these activities is markedly restricted only where, even with the use of appropriate devices, medication and therapy, the individual is blind, or unable to perform the activity.


Capital Cost Allowance: a deduction permitted under the Income Tax Act for the cost of a depreciable property that recognizes the decline in value due to depreciation and obsolescence. The annual deduction is calculated based upon the class of property, the rate for that class of property, and either the undepreciated capital cost or the adjusted cost base of the property.

Capital Gain: the excess of the deemed proceeds of disposition of a capital property over its adjusted cost base.

Capital Gains Deduction: a deduction you can claim for the deceased person against taxable capital gains realized from the disposition and deemed disposition of capital property.

Capital Loss: except for depreciable property, the excess of the adjusted cost base of a capital property over the deemed proceeds.

Capital Property: depreciable property, and any property, which, if sold, would result in a capital gain or a capital loss.


Deemed Allowable Capital Loss: the deemed capital loss adjusted to reflect the capital gains inclusion rate.

Deemed Capital Gain: any excess of the deemed proceeds, which are the FMV immediately before death over the ACB of the property.

Deemed Capital Loss: any excess of the ACB over the deemed proceeds.

Deemed Disposition: a person is considered to have disposed of a property, even though a sale did not take place.

Deemed Proceeds of Disposition: a person is deemed to have received the fair market vale (FMV) of each capital property owned immediately before death, even though the person did not receive this amount.

Deemed Taxable Capital Gain: the deemed capital gain adjusted to reflect the capital gains inclusion rate.

Depreciable Property: capital property, used to earn income, on which you can claim capital cost allowance.


Executor: someone named in a will to act as the legal representative to handle a deceased person’s estate.


Fair Market Value (FMV): the highest dollar value that you can get for your property in an open and unrestricted market, where the parties of the transaction deal at arm’s length with each other and are nor forced to buy or sell.

Final Return: see Terminal Period Return.


Legal Representative: a person who has the authority to act on behalf of the deceased in matters including the filing of the deceased’s final return and other income tax returns.

Liquidator: a person responsible for liquidating all estates established after December 31, 1993. For estates with a will, the liquidator’s role is similar to that of an executor.

Locked-in: the beneficiary, who is to receive the property, has a right to absolute ownership of it.


Medical Expense Tax Credit (METC)): provides tax recognition for above-average medical expenses incurred by individuals.


Net Capital Loss: any excess of the total of deemed and actual allowable capital losses over the total of deemed and actual taxable capital gains. Technically this is a net allowable capital loss, but it is called simply, a net capital loss.


Spousal Trust: a trust set up under the deceased’s will, or a court order, for the surviving spouse.


Tax Planning: arranging one’s affairs in order to minimize the amount of income tax payable.

Taxable Capital Gain: the capital gain adjusted to reflect the capital gains inclusion rate.

Terminal Loss: for depreciable property, the excess of the undepreciated capital cost over the deemed proceeds.

Terminal Period: the period from January 1 of the year of death up to the date of death.

Terminal Period Return: the income tax return for the terminal period. Also called Final Return.


Undepreciated Capital Cost (UCC): the amount of the cost of a depreciable property for which a deduction for capital cost allowance has not yet been claimed, calculated as cost less accumulated capital cost allowance.