Ontario Estate Administration Tax Act Explained Simply

If you are handling an estate in Ontario, you may hear about a tax connected to probate. It is called the Estate Administration Tax, and it works differently from income tax or a tax on inheritances.

This article summarizes who the tax applies to, how it is calculated, what you must file afterward and what can happen if something is missed. For the exact wording of the Act, or if your situation is unusual, a lawyer or accountant can confirm the details.

When the tax applies

The tax is charged only when an estate certificate (probate) is applied for and issued. If no certificate is applied for or issued, no tax is owed.

The tax is paid as a deposit when the probate application is filed with the court. Once the certificate is issued, the deposit becomes the Estate Administration Tax. The estate pays the tax, not the estate representative personally.

How the tax is calculated

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.

Applications made before January 1, 2020 used older rates: $5 per $1,000 (or part thereof) on the first $50,000 and $15 per $1,000 on the amount above that.

Small estates, valued at $150,000 or less since April 1, 2021, still pay tax on the value over $50,000, up to the $150,000 cap.

Filing the Estate Information Return

The estate representative must file an Estate Information Return with the Ministry of Finance within 180 calendar days after the estate certificate is issued. This is required even when the estate is worth $50,000 or less and no tax is owed. If the deadline falls on a weekend or holiday, it moves to the next business day.

Filing online is recommended, but the return can also be filed by mail, courier, fax or in person. Keep the records supporting the return for four years at your principal place of business or residence.

• A corrected return is due within 60 days of becoming aware that information was incorrect or incomplete, and this duty applies within four years of the certificate being issued.
• If an estimated value was used on the application, an amended return is due within 60 calendar days after the actual value is given to the court.
• If assets are found after the certificate is issued, an amended return is due within 60 days after the statement of that property is delivered to the court.

Certificates with no tax or no return

No tax is payable on a Certificate of Appointment of Succeeding Estate Trustee (with a will, with a will limited to the assets referred to in the will, or without a will). The same applies to a Certificate of Appointment of Estate Trustee During Litigation. No Estate Information Return is required for those certificates.

Penalties, reassessment and next steps

An estate representative who fails to file the return, or who makes false or misleading statements, may be fined at least $1,000 and up to twice the tax payable, imprisoned for up to two years, or both. The Ministry of Finance may assess or reassess the tax within four years after the day it was due. If a return was late or a misrepresentation was made, there is no four-year limit. To dispute an assessment, a Notice of Objection must be filed within 180 days from the day the Notice of Assessment was issued.

• Gather statements and appraisals that support the value of each asset.
• Note the date the certificate is issued and diarize the 180-day filing deadline.
• Keep your supporting records for four years.
• Speak to a lawyer or accountant if values change or assets turn up later.

Frequently asked questions