Is Estate Administration Tax Payable on Joint Property in Ontario?

A parent has died, and the house and the bank account were in joint names with a child. You may be wondering whether those assets are added to the value of the estate when the estate administration tax (often called probate tax) is calculated.

The short answer is that true survivorship assets are generally left out, but not every asset with two names on it is true survivorship property. This article explains the usual rule, the exceptions, and what to check before you file.

How the tax is calculated

There is no estate administration tax on an estate worth $50,000 or less for applications made on or after January 1, 2020, although the return is still required. Above $50,000, the tax is $15 for every $1,000 (or part) of the estate's value, and it is due on the day the estate certificate is issued.

So the question of what counts as part of the estate directly affects the amount payable.

Why true joint property is usually left out

When someone dies, property passes to the estate trustee only if no other person has a right to take it by survivorship. Property with a right of survivorship goes straight to the surviving owner, whether or not there is a will.

Ontario's list of items not counted in the estate value includes jointly owned property that passes automatically to the other owner. Other items on that list include:

• Insurance paid to a named beneficiary.
• Real estate outside Ontario.
• The CPP death benefit.
• Registered plans (RPPs, RRSPs, RRIFs, TFSAs) with a beneficiary designation.

When joint property is still counted

The estate value includes property held in another person's name that actually belongs to the deceased. A joint asset that the survivor holds on a resulting trust for the estate does not escape the tax.

This often comes up with an adult child added to a parent's account or asset without paying for it. That child is presumed to hold the asset in trust for the parent and, on death, for the estate. The child can try to show that a gift was intended, since the person receiving the transfer carries that burden.

A court looking at intent may consider the wording of the bank documents, who controlled and used the funds, whether a power of attorney was granted, and how the account was treated for tax. Adult financial dependency does not create a presumption of gift, though it can be strong evidence against a resulting trust.

Other points that affect what is counted

• Bank accounts, including foreign bank accounts, and Ontario real estate (less mortgages) are included in the estate value.
• Land in two names is not automatically joint. Co-owners are presumed to be tenants in common unless the document shows they take as joint tenants.
• Spouses and common-law partners also hold as joint tenants only if the deed says so.
• If the last joint owner dies, nobody is left to take by survivorship, and the land goes to that person's estate trustee.
• A tenant in common's share does not pass by survivorship.

For a survivor who is a spouse, there can also be a separate effect on the equalization calculation, which is a different question from the tax.

What to do next

• Find out how each asset is held: the deed or parcel register for land, and the account agreement for bank accounts.
• Search the parcel register through OnLand if you need to confirm how title was held.
• Ask the bank what it needs from a surviving joint holder, since requirements vary by institution.
• Record whether the survivor paid for the asset or whether it was a gratuitous transfer from the deceased.
• Keep the Estate Information Return in mind: it is due within 180 calendar days after the estate certificate is issued.

If a joint asset is large or its ownership is disputed, speak with a lawyer before filing, because the value you report affects the tax.

Frequently asked questions