Estate Administration Tax on Investments and Stocks at Death

If you are the estate trustee and the deceased held a non-registered portfolio of shares, mutual funds or similar investments, prices will have moved between the date of death and the day you apply to court. That raises the natural question of which price counts for estate administration tax.

This article explains the date and standard Ontario uses, which investments are in and out, how estimates and later corrections work, and what the tax looks like at different values. Specific questions about unusual securities are worth confirming with a lawyer or accountant.

Which date and which value

Ontario's guidance says the value is fair market value at the date of death, supported by documents such as statements or appraisals. The statement given to the court covers the property that belonged to the deceased at the time of death.

That points to the date of death as the measuring point. Later rises or falls in market prices while you wait for the certificate are not what the statement is about. The guidance we rely on does not set out a more detailed rule for particular securities, such as which closing price to use, so confirm the method with your lawyer or accountant and the financial institution's date-of-death valuation.

A practical step is to ask each institution for a date-of-death statement. That is the kind of supporting document the guidance points to.

Which investments count

Investments are included in the estate value, including TFSAs, RRSPs and RRIFs, along with bank accounts (even at foreign banks) and insurance proceeds payable to the estate. Property held in another person's name can be included as well.

Registered plans depend on whether a beneficiary is named. They are counted where there is no beneficiary designation, for example when payable to the estate, and excluded where a beneficiary is designated.

Debts against the portfolio

Only encumbrances on real property reduce the estate value. A margin loan, personal loan, credit card balance or line of credit cannot be subtracted from the value of the investments, nor can funeral expenses or lawyer fees.

This means that an estate with a large portfolio and large debts can have a taxable value higher than its net worth. It is useful to know that before you start planning for cash needs.

Estimates, deposits and corrections

The applicant deposits an amount equal to the tax payable, using an estimate if the actual value is unknown. The deposit is credited against the tax, and partly refunded if the estimate was too high. When you use an estimate, you undertake to file a sworn statement of the actual value and pay any shortfall within six months.

On the Estate Information Return side, if an estimated value was used you amend the return within 60 days after the actual value is shared with the court. If information was wrong or incomplete, you amend within 60 days of discovering it.

If you overpaid, a refund is available where 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.

What the tax looks like

For applications on or after January 1, 2020, estates of $50,000 or less pay no tax, and the rate above that is $15 per $1,000 or part of $1,000. Values are rounded up to the nearest $1,000 before the calculation.

What to do next

• List every account and investment held in the deceased's name, and note whether a beneficiary was designated.
• Request date-of-death statements from each institution to support fair market value.
• Exclude jointly owned accounts that pass automatically, and confirm the ownership.
• Do not subtract margin loans, credit cards or other debts.
• Decide whether to use an estimate, and diarize the six-month undertaking and 60-day amendment deadlines.
• File the Estate Information Return within 180 days of the certificate.
• Ask a lawyer or accountant about unusual securities, foreign holdings or unlisted shares.

Frequently asked questions