Answers · US Citizens and Cross-Border Personal Tax
Can Canadians owe US estate tax on US stocks and other US assets?
Yes. A Canadian who is not a US citizen is exposed to US estate tax on US-situs assets, which include shares of US companies wherever the account sits — a Canadian brokerage, an RRSP or a TFSA — along with US real estate and tangible property kept in the US. If those assets exceed US$60,000 at death the estate must file Form 706-NA, but the Canada-US treaty gives Canadians a prorated share of the large US exemption, so tax is actually payable only where the worldwide estate is very large. Canadian-listed ETFs and mutual funds that hold US stocks are not US-situs and do not count.
By the AnalytIQ Accounting team · Last reviewed: September 6, 2026
Situs follows the issuer, so US shares count wherever you hold them
The US taxes the estates of non-residents who are not citizens only on property the US regards as located within its borders, called US-situs property. For shares, situs is decided by where the company is incorporated, not where the account is kept. Apple stock in a Toronto discount brokerage, in a RRIF or in a TFSA is a US-situs asset in exactly the same way as Apple stock held at a New York broker. Real estate in the US and tangible things physically there — a car, a boat, the furniture in the Florida condo — are US-situs too.
| US-situs (counts) | Not US-situs (does not count) |
|---|---|
| Shares of US-incorporated companies in any account, including RRSP, RRIF and TFSA | Canadian-listed ETFs and mutual funds, even when they hold only US stocks |
| US real estate, including a share of a jointly owned property | Shares of Canadian corporations, including a Canadian holding company |
| Tangible property kept in the US: vehicles, boats, art, furnishings | US bank deposits and most US government and corporate bonds, which are generally excluded |
| Certain debts owed by US persons and some US partnership interests | Life insurance proceeds on your own life |
The distinction in the first row is the one that matters for most Canadian investors. A Canadian-listed S&P 500 fund gives the same market exposure as the underlying US shares with none of the estate exposure, which is why our answer on holding US stocks in a TFSA or RRSP treats situs alongside withholding. Whether US shares in a Canadian account also belong on the T1135 is a separate question, answered in do US stocks in a Canadian brokerage count for T1135.
Filing is common; paying is rare, thanks to the treaty credit
US domestic law gives a non-resident's estate an exemption of only US$60,000. If the US-situs assets are worth more than that at death, the executor must file Form 706-NA, the US estate tax return for non-residents, within nine months of the death. US brokers and transfer agents will typically not release US assets above the threshold until the IRS has issued a transfer certificate, which is one more reason the filing cannot be skipped even when no tax is due.
What usually eliminates the tax is Article XXIX-B of the Canada-US tax treaty. It lets a Canadian resident's estate claim the same unified credit a US citizen would get, prorated by the share of the worldwide estate that is US-situs. The US exemption that credit is measured against is US$15 million per person for 2026 under the 2025 US tax legislation, indexed in later years; the figure has changed several times and should be confirmed at the time of a death. In plain terms, a Canadian whose entire worldwide estate is below the US exemption has enough prorated credit to cover the tax on the US slice, and the 706-NA is filed to claim the credit and disclose the worldwide estate rather than to pay anything.
The worldwide estate is measured by US rules, which sweep in the principal residence, RRSPs and RRIFs, business shares and life insurance you own on your own life. Where assets pass to a surviving spouse, the treaty adds a marital credit that can double the relief. Where US estate tax is actually paid, Canada allows it as a credit against the Canadian income tax on the deemed disposition of the same US assets on the final T1, so the two countries do not both take full tax from one property.
Where the real exposure sits
Because the credit is prorated, the estates that pay are those with a worldwide value above the US exemption. Suppose a Canadian dies with US$2 million of US-situs assets inside a worldwide estate of US$20 million: only one-tenth of the US exemption is available as credit, and the US-situs assets above that are taxed at graduated rates that reach 40%. Owners of significant Canadian businesses, large Ontario real estate holdings and big registered accounts can cross that line without feeling wealthy in day-to-day terms, particularly once a house that has appreciated for thirty years is counted.
US real estate raises the stakes for two reasons. It is usually the largest single US-situs asset a Canadian owns, and title structures chosen for other reasons — joint ownership, a Canadian corporation, a trust — each carry their own estate consequences. Our answer on US estate tax on a Florida condo works through the numbers for a typical winter home, and our snowbird US property tax guide covers the ownership choices.
How to reduce the exposure before it becomes an estate problem
- Swap direct US shares for Canadian-listed funds in accounts where the swap is cheap, especially TFSAs and non-registered accounts where a sale has little or no tax cost.
- Hold US investments through a Canadian holding company where one already exists for other reasons; the shares of a Canadian corporation are not US-situs, though the income tax cost of corporate investing must be weighed first.
- Use spousal planning so that US assets pass to the surviving spouse first and the marital credit applies.
- Insure the liability for large estates where restructuring is impractical, since life insurance proceeds on your own life are not US-situs and can fund the tax.
- Keep a worldwide net-worth statement current so the executor can complete the 706-NA and claim the credit without a year of reconstruction.
The inheritance side of the same picture — what the heirs face when US assets come to them — is covered in do Canadians pay tax on an inheritance from the US.
How we handle US estate exposure for clients
We inventory US-situs assets account by account, estimate the worldwide estate on US definitions, and show the client what the prorated credit covers and what it does not. From there we recommend the fund swaps, ownership changes or insurance that fit, and when a death occurs we prepare the 706-NA with the executor so the treaty credit is claimed and the transfer certificate arrives before the Canadian estate needs the assets. This planning is part of our cross-border tax services, quoted as a fixed fee after a discovery call.
Source: IRS — Estate Tax for Nonresidents not Citizens of the United States.
Related questions.
Do US stocks inside my RRSP count for US estate tax?
Yes. Situs follows the issuer, not the account, so US-incorporated shares held in an RRSP, RRIF or TFSA are US-situs assets. Replacing them with a Canadian-listed ETF that holds the same US companies removes them from the count.
Is US$60,000 the amount above which tax is owed?
No. It is the threshold above which Form 706-NA must be filed. Whether tax is owed depends on the treaty credit, which for most Canadians with a worldwide estate below the US exemption eliminates the tax entirely, though the return must still be filed to claim it.
Does Canada give credit for US estate tax paid?
Yes. Under the treaty, US estate tax paid on US-situs assets can be credited against the Canadian income tax arising on the deemed disposition of those same assets on the final T1, so the two countries do not both take full tax on one property.
Related reading
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