Canada doesn't have an inheritance tax, so beneficiaries generally don't pay taxes on what they've inherited. The deceased person's legal representative is supposed to file a deceased tax return and make sure the estate pays, or secures to pay, any tax owing before the inheritance is given over to the beneficiaries. By the time the estate is settled, the beneficiaries shouldn't have to worry about taxes.
Certain exceptions are possible if an eligible person has been designated the beneficiary of a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF).
