Correcting an Estate Administration Tax Error in Ontario

Estate trustees sometimes discover after paying probate tax that the estate was valued too high or too low. A debt was wrongly deducted, a property was missed, or an estimate turned out to be off.

This article explains how the tax is worked out, how to correct an underpayment, and how to ask for a refund of an overpayment. The right step depends on timing, so a lawyer or accountant can confirm what applies to your estate.

How the tax is worked out

For applications made on or after January 1, 2020, no tax is payable if the estate is worth $50,000 or less. Above that, the tax is $15 for each $1,000 or part of $1,000 by which the value exceeds $50,000, and the value is rounded up to the nearest thousand. Applications made before January 1, 2020 followed a different exemption and different rates.

The estate pays the tax, not the estate representative personally. It is paid as a deposit when the application is filed and becomes payable when the certificate is issued.

Because the tax depends on value, a small change in how one asset is counted can change the amount owed. That is why it helps to keep clear records of how each figure was reached, so that you can explain it later if a correction is needed.

Where errors usually come from

• Real estate outside Ontario was included, although it is not part of the value for this tax.
• Other worldwide property, such as foreign bank accounts, investments, vehicles and business interests, was left out, although it is included.
• A mortgage, collateral mortgage or lien on Ontario real estate was not subtracted, although those encumbrances reduce the value.
• Credit card balances, loans, interest or lines of credit were deducted, although unsecured debts cannot reduce the value.
• Assets such as private company shares were not valued at fair market value at the date of death.

The representative should be able to support each value with documents such as statements or an appraiser's opinion.

Correcting an underpayment

If the deposit was based on an estimated value, the applicant must undertake to file a sworn statement of the actual value and pay any additional tax within six months. Do not wait if you already know the figure was low.

The Estate Information Return must be filed with the Ministry of Finance within 180 calendar days after the certificate is issued, even if no tax is payable. If you become aware that the information is incomplete or inaccurate, an amended return must be filed within 60 days.

Failing to file required information, or making false or misleading statements, is an offence, with a fine of at least $1,000 (up to twice the tax if the tax exceeds $1,000), imprisonment of up to two years, or both. It is not an offence if the person did not know, and could not reasonably have known, that a statement was false.

Asking for a refund of an overpayment

The route depends on timing.

For a request to the Ministry, the written request must be received within 12 years after the certificate was issued, or within 2 years after a notice of assessment or reassessment. The request goes to the Ministry of Finance, not the courthouse.

Because the two routes are different, confirm first whether the certificate has been issued. Sending a request to the wrong office can cost you time, and the deadlines above still apply while you wait.

What to do next

• Write down the value used and the date the certificate was issued.
• Rebuild the asset list using the categories above and note where it differs.
• Gather statements, appraisals and mortgage balances that support each value.
• Calendar the 180-day, 60-day and six-month deadlines that apply.
• Decide whether a court refund or a Ministry refund applies.
• Speak to a lawyer or accountant before filing an amended return.

Once you have the documents together, compare the original value with the corrected one and note the reason for each difference. A short written summary makes it easier to complete an amended return and to answer questions if they come up. How this applies depends on your situation, so it is worth confirming with a lawyer or accountant.

Frequently asked questions