- RPPs, RRSPs, RRIFs and TFSAs with a beneficiary designation or declaration are left out of the estate's value for the tax.
- If the estate is the beneficiary of an RRSP, RRIF or TFSA, or of insurance, it is included in the estate's value.
- Insurance paid to a named beneficiary is not counted, because the deceased no longer owned it at death.
If you are a beneficiary of a registered plan or a life insurance policy, you may be asking whether it will be eaten into by probate tax. In Ontario, the Estate Administration Tax is calculated on the value of the estate, so the key question is whether the asset is counted as part of the estate at all.
The answer usually turns on who is named as beneficiary. This article explains the rules for registered plans and insurance, other assets that are left out, and what to check if you are the estate trustee or a beneficiary.
Why the beneficiary designation matters
The Estate Administration Tax is charged only when an estate certificate (probate) is applied for and issued. It is paid by the estate. So what counts is the value of the estate for that application.
Assets the deceased no longer owned at death are left out of the estate's value, such as insurance paid to a named beneficiary. That is the general idea behind the rules below.
For estate certificates applied for on or after January 1, 2020, no tax is payable on an estate worth $50,000 or less. Above $50,000, the tax is $15 for every $1,000 (or part thereof) of the estate's value over $50,000. The estate's value is rounded up to the nearest thousand dollars to calculate the tax. Even when no tax is owed, the estate must still file an Estate Information Return after the certificate is issued.
Registered plans: RRSPs, RRIFs, RPPs and TFSAs
RPPs, RRSPs, RRIFs and TFSAs that have a beneficiary designation or declaration are left out of the estate's value.
The opposite is also true. RRSPs, RRIFs and TFSAs whose beneficiary is the estate are included in the estate's value. A lawyer or the plan issuer can confirm which applies to a given account.
This article deals only with the Estate Administration Tax. Income tax on registered plans at death is a separate subject, and an accountant can explain how it applies to your situation.
Life insurance
Insurance is included in the estate's value if the proceeds are payable to the estate. Insurance paid to a named beneficiary is left out.
| How the asset is held | Counted for the tax? |
|---|---|
| RRSP, RRIF or TFSA with a named beneficiary | No |
| RRSP, RRIF or TFSA payable to the estate | Yes |
| Insurance paid to a named beneficiary | No |
| Insurance payable to the estate | Yes |
Other assets that are in or out
The estate's value includes bank accounts (including at foreign banks), investments, vehicles and vessels wherever located, property held in another person's name, business interests and other property wherever situated. Ontario real estate is included at its appraised value on the date of death, less encumbrances such as mortgages or liens.
Some items are left out. These include real estate outside Ontario, CPP death benefits, and RDSPs where the deceased was a subscriber but not a beneficiary. Jointly owned assets that pass automatically to the surviving owner(s) are also left out.
Joint ownership depends on how the property is held. When a joint tenant dies, the surviving co-owners inherit the deceased's share. When a tenant in common dies, their share does not pass automatically to the other owners. It becomes part of their estate, so it counts toward the estate's value if probate is sought.
Only encumbrances on real property can be deducted. Funeral expenses, lawyer's fees, loans and interest, vehicle debt, credit card debt, real estate commissions, unregistered loans and lines of credit do not reduce the estate's value.
Assets are valued at their fair market value at the time of death, and estate representatives must be able to back up the values with supporting documents such as statements.
What to do next
- Get the latest statement for each RRSP, RRIF, TFSA and RPP, and find out who is named as beneficiary.
- Ask each insurer who the proceeds are payable to.
- Treat any asset payable to the estate as part of the estate's value.
- Keep statements and other records to support the values you report.
- Remember that the Estate Information Return is due within 180 calendar days after the certificate is issued.
- If information in a filed return turns out to be incorrect or incomplete, an amended return must be filed within 60 days of becoming aware of it.
If a designation looks out of date, unclear or disputed, a lawyer can explain what it means for the estate and for you as a beneficiary. How these rules apply to your own estate depends on the facts, so it is worth confirming the details with a lawyer or accountant.
Frequently asked questions
Are RRSPs counted when calculating probate tax in Ontario?
It depends on the beneficiary. RRSPs with a beneficiary designation or declaration are left out of the estate's value, while those whose beneficiary is the estate are included.
Is life insurance subject to Estate Administration Tax?
Insurance paid to a named beneficiary is left out of the estate's value. Insurance payable to the estate is counted.
Does a TFSA count toward the estate's value?
A TFSA with a beneficiary designation or declaration is left out. A TFSA whose beneficiary is the estate is included.
What about CPP death benefits?
CPP death benefits are left out of the estate's value. RDSPs are also left out where the deceased was a subscriber but not a beneficiary.
Sources
- Ontario.ca – Estate Administration Tax — ontario.ca
- Ontario.ca – Co-ownership arrangements — ontario.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a wills & estates question
Start a file online — flat, published fees, reviewed by a licensed lawyer before a dollar is owed.