What You Need To Know About “Probate Taxes”

July 22, 2020

By Margaret Waddington

The Basics:

First and foremost what used to be called “Letters Probate” is now called a Certificate of Appointment of Estate Trustee with a Will (or Without a Will) and the former “Probate Tax” is now called the Estate Administration Tax. The Estate Administration Tax is only paid when an Application for a Certificate of Appointment is made.

An Application for a Certificate of Appointment is only required when there is no Will or when there are assets of the Estate that require the courts approval to be administered.

(See our related article: What is a Certificate of Appointment? And do I need one? For a more detailed look at Certificates of Appointment and the Application process)

Taxes:

If a Certificate of Appointment of Estate Trustee is necessary, you will have to pay the Estate Administration Tax at the time of the Application. The total value of the deceased’s assets (including cash) at the date of death will be used to calculate the amount of tax paid to the Court. You are not entitled to deduct any debts of the deceased in calculating the value of the estate, with the exception of any mortgages on real property.

As of January 1, 2020 the Estate Administration Tax is calculated as follows:

  1. $0.00 on the first $50,000 of the estate; and
  2. $15 for each $1,000 (or part thereof) on any amount over $50,000.

Bank drafts or Certified Cheques for paying the Estate Administration Tax are made payable to the Minister of Finance and are included with the court Application. There are currently no other court fees payable for filing the Application.

Following the issuing of a Certificate of Appointment (approval of the court) the Estate Trustee is responsible for filing an Estate Information Return with the Ministry of Finance. As of January 1, 2020 the Return must be received by the Ontario Ministry of Finance within 180 calendar days of the Certificate of Appointment being issued by the Court.  If the date falls on a weekend or a holiday, the due date is extended to the next business day.

The Estate Information Form is a more detailed accounting of the estate assets and reconciles the amount of tax paid with the amount owed to determine whether too much tax was paid, at which point you can request a refund, or if more tax must be paid. This can happen especially when not all assets of the estate are available to the Trustee before they make the Application or if new assets are discovered afterwards.

Revisions:

If you, as Estate Trustee, later discover additional property not disclosed, you must file an Affidavit with the Court disclosing the discovered property within six months of the discovery. At the time of filing the Affidavit any additional Estate Administration Tax would be paid, and an amended Estate Information Form must be received by the Ministry of Finance within 30 calendar days of the filing.

If within four years of the issuance of the Certificate of Appointment, you become aware that any information on an Estate Information Return is incorrect or incomplete, an amended Return must be received by the Ministry of Finance within 30 calendar days of becoming aware that the information is incomplete or inaccurate.

 A copy of the Ontario Ministry of Finance Guide to the Estate Information Return, the Estate Information Return Form itself is also available online at the Ontario Ministry of Finance website.

If you have any questions regarding the administration of an estate, Estate Administration Taxes, or Estate information Returns please do not hesitate to contact any member of our Estate Team.