Estate Administration Tax Act Ontario: What It Requires

If you have been named as an estate trustee in Ontario, you will probably hear about the Estate Administration Tax Act, 1998 early on. It is the law that sets out the tax an estate pays when a court issues a certificate allowing the trustee to deal with the deceased person's assets, and it also sets out the paperwork that follows.

This article walks through what the Act requires in plain language: when tax arises, how value is measured, what you pay when you apply, what you must file afterward, and what can happen if something is missed. It is general information, not advice on your particular estate.

What the Act does and when the tax arises

The Act makes the tax payable to the Crown in right of Ontario by the estate, immediately upon the issuance of an estate certificate. In other words, the tax is tied to the court's certificate, not to the date of death or the date you start collecting documents.

The term estate certificate is broad. It includes a certificate of appointment of estate trustee, including a small estate certificate, and pre-1995 grants of probate or administration. The term estate representative includes executors, administrators and estate trustees. If you are the person applying, you are the estate representative the Act speaks to.

One point trustees often worry about is personal liability. The Act makes the estate representative liable for the tax only in a representative capacity, and Ontario states that the tax is paid by the estate, not by the estate representative.

How the value of the estate is measured

The tax depends on the value of the estate. Under the Act, that is the value you must disclose under section 32 of the Estates Act, less the actual value of encumbrances on real property. Section 32(1) of the Estates Act requires the applicant, before a grant is issued, to give the registrar a sworn or affirmed statement of the total value of all the property that belonged to the deceased at the time of death.

For a limited grant, the statement need only cover the property the grant affects. Value is fair market value at the date of death, supported by documents such as statements or appraisals, and real estate uses appraised value at the date of death.

Only encumbrances on real property reduce the value. Funeral expenses, lawyer fees, loans and interest, vehicle debt, credit card debt, real estate commissions, unregistered loans and lines of credit cannot be deducted.

Paying when you apply for the certificate

Section 3 of the Act requires the applicant to deposit an amount equal to the tax payable, using an estimate if the actual value is not yet known. The deposit is credited against the tax, refunded if no certificate is issued, and partly refunded if the estimate turns out to be too high. Ontario's guidance is to calculate and pay the tax when the application is filed with the Superior Court of Justice, unless no tax is payable or a court orders deferral.

Section 4 offers a narrow exception. An applicant can ask a Superior Court judge, without notice, for a certificate before making the deposit, if the judge is satisfied that the certificate is urgently needed, that financial hardship would otherwise result, and that adequate security is provided. Where the deposit is based on an estimate, the applicant gives an undertaking to file a sworn statement of the actual value and pay any shortfall within six months.

At the court office, accepted payment methods include cash or debit where available, a certified cheque, a solicitor or firm trust account cheque, a trust company cheque or a bank draft, with cheques payable to the Minister of Finance. Ontario advises checking with the court first.

The Estate Information Return and later corrections

Section 4.1 of the Act requires the estate representative to give the Minister prescribed information about the deceased and the estate, within the prescribed time and manner. The Estate Information Return must be filed within 180 calendar days after the certificate is issued, even if the estate value is $0. It is not required for succeeding trustee certificates or litigation certificates, and records must be kept for four years.

The 180-day figure reflects a regulation that changed the return rules from January 1, 2020, moving 90 days to 180 days for the initial return and 30 days to 60 days for revised returns. If you come across older material quoting 90 or 30 days, treat it with caution.

• If an estimated value was used, amend within 60 days after the actual value is shared with the court.
• If information was wrong or incomplete, amend within 60 days of discovery, within four years of the certificate.
• If new assets are found, report and amend within 60 days after the statement is delivered to the court.
• If property is discovered after the certificate issues, a sworn statement of its value must be filed with the registrar within six months, and tax on it is payable when that statement is delivered.

Returns can be filed online (the fastest route), by mail, courier, in person or fax.

Assessments, penalties and refunds

The Minister of Revenue may assess or reassess the tax. Assessments are generally allowed within four years after the tax became payable, with no such limit where there was a failure to comply with section 4.1, misrepresentation or fraud. A Notice of Objection to an assessment must be filed within 180 days of the Notice of Assessment. The Minister may also appoint inspectors, and estate representatives must keep records that allow the tax to be accurately determined.

Failing to file, or giving false or misleading information, is an offence carrying a fine of at least $1,000 (up to twice the tax if more), up to two years' imprisonment, or both, although a reasonable-diligence defence exists.

If too much tax was paid, it is refundable if the return was filed or amended within four years of the certificate, and the request must be made within 12 years of the certificate or two years of a notice of assessment, to the Ministry of Finance.

What to do next

• List every asset and debt, noting which assets pass by joint ownership or beneficiary designation.
• Gather statements and appraisals that support date-of-death values.
• Work out whether the estate is likely to need a full certificate or a small estate certificate, and calculate the tax or a careful estimate.
• Arrange payment in a form the court office accepts, and confirm with the court first.
• Diary the 180-day return deadline from the date the certificate is issued.
• Keep your records and any later-discovered assets in one file, since amendments have their own deadlines.
• Speak with a lawyer or accountant if values are uncertain, if assets are outside Ontario or if you think a return was wrong.

Frequently asked questions