Money received from an inheritance, like most gifts and life insurance benefits, is not considered taxable income by the Canada Revenue Agency, so you don’t have to pay taxes on that money. Of course, this doesn’t mean that an inheritance is immune from Canadian tax laws. The deceased person’s legal representative or estate may have to pay taxes on the estate’s income before the money is released to you.

Also, if you invest your inheritance money, and earn income (such as interest or dividends) on that investment, you will be taxed on the income earned. The same rules apply if you sell a capital asset and it increases in value from the time you inherited it.

Clarification of this can be found in this Canada Revenue Agency article: Amounts That Are Not Taxed