A Canadian tax rule that treats a deceased person as having sold most of their capital property at fair market value immediately before death. Because the property is deemed sold, any accrued capital gain is realized and becomes taxable on the deceased's final ("terminal") return, even though nothing was actually sold. Canada has no separate inheritance or estate tax; the deemed disposition is the principal way wealth is taxed at death.
Reliefs that soften the result include the spousal rollover (which defers the gain on property passing to a surviving spouse), the principal residence exemption, and the lifetime capital gains exemption for qualifying business, farm, or fishing property.