- Two separate amounts usually matter: income tax on the deceased's final return and Ontario Estate Administration Tax on the estate's value.
- An unmatured RRSP is generally counted as income on the final return at its fair market value, but a refund of premiums paid to a qualifying survivor can reduce the amount taxed there.
- Ontario Estate Administration Tax is nil at $50,000 or less and $15 per $1,000 above that for certificates applied for on or after January 1, 2020.
- Any figure you get before the returns are prepared is a rough estimate, not the amount the CRA will assess.
If someone in your family has died, you may want a rough idea of how much tax the estate will owe before you decide what to sell, what to keep and how much cash to hold back. Online calculators can help, but they are only as good as the numbers you put in.
This article walks through the inputs that matter most in Ontario and how to build a simple estimate by hand. It explains how the pieces fit together. It does not replace the actual returns, which an accountant or lawyer can prepare.
Two different amounts people call estate tax
When people ask about tax owing at death, they are usually mixing up two charges. The first is income tax. A final T1 return must be filed for every person who dies, and it is filed by the deceased's legal representative. The second is Ontario Estate Administration Tax, often called probate tax, which is charged on the total value of the estate.
A good estimate treats these separately and then adds them up. Funeral costs, probate fees and fees to administer the estate cannot be deducted as personal expenses on the deceased's returns, so do not subtract them when you estimate income tax.
The inputs that move the number most
Most of the swing in an estimate comes from a handful of items. Gather statements and values as of the date of death before you start.
| Input | How it is treated | Why it matters |
|---|---|---|
| Unmatured RRSP | The annuitant is treated as having received its fair market value just before death, included on the final return (line 12900) | Often the largest single item of income |
| RRIF and refund of premiums | A refund of premiums to a qualifying survivor can reduce the final return, with the income taxed to the survivor instead | Who receives the money changes who pays the tax |
| Investments and other capital property | Treated as sold just before death at fair market value; gain is proceeds minus adjusted cost base, reported on Schedule 3 | Large unrealized gains can create tax even though nothing was sold |
| Property going to a spouse or partner | May roll over with no gain or loss if it vests in the spouse or partner within 36 months of death; the legal representative can elect out | Can defer tax or change the result |
| Principal residence | The designation applies only until death, and the disposition must still be reported on Schedule 3 and the property designated on Form T1255 | The gain may be exempt, but the paperwork is still required |
| Regular income to date of death | Reported on the final return, with some income eligible for optional returns | Splitting income can reduce the total tax |
A step-by-step way to estimate income tax
- List the deceased's income from January 1 to the date of death: pensions, employment, interest and similar items.
- Add the fair market value of any unmatured RRSP, and note whether a spouse, common-law partner or qualifying dependent will receive it.
- For each investment, real estate holding or other capital property, subtract the adjusted cost base from the value at death to find the gain or loss.
- Mark which assets go to a surviving spouse or partner and may roll over, and which the legal representative might elect out of rolling over.
- Add up credits and claims you can use, such as medical expenses, donations and the Canada workers benefit.
- Run the total through tax software or give it to an accountant, since federal and provincial tax rates are applied on the return itself and Ontario tax is calculated on Form 428.
Capital losses can matter too. Net capital losses in the final return and the prior-year return can also be applied against income other than capital gains. Check the current inclusion rate on the CRA's Schedule 3 and line 12700 guidance before using any rate in your own worked example.
Estimating Ontario Estate Administration Tax
This part is simpler. For estate certificates applied for on or after January 1, 2020, there is no tax if the estate is $50,000 or less, and above that the rate is $15 per $1,000 (or part) of the total value. As an example, a $240,000 estate owes $2,850.
What counts toward the value matters as much as the rate. Ontario real estate (less mortgages and liens), bank accounts, investments, and RRSPs, RRIFs and TFSAs with no beneficiary designation are included. Jointly owned assets that pass automatically to the surviving owner, and assets with a named beneficiary such as insurance, are excluded. Funeral costs, lawyer fees, loans and credit card debts cannot be deducted, though mortgages on real property can.
An Estate Information Return is due within 180 calendar days after the certificate is issued, even if no tax is payable.
What a rough figure leaves out and what to do next
An estimate will not capture everything. Optional returns, the estate's own tax return on income earned after death, penalties and interest if filings are late, and medical expense limits all affect the final bill. Medical expense claims are reduced by a year-specific threshold, so confirm the figures for the year of death.
- Collect date-of-death values and cost information for every asset.
- Find out which accounts have named beneficiaries, since that affects the value used for Estate Administration Tax. How it affects income tax depends on the account, so it is worth confirming with an accountant.
- Ask an accountant to prepare the final return and any optional returns.
- Ask a lawyer about the estate certificate and whether any rollover election makes sense.
- Keep a cash reserve until the CRA has assessed the returns.
Frequently asked questions
Is there one online calculator that gives the full tax owing at death?
Not reliably. The income tax on the final return and the Ontario Estate Administration Tax are calculated differently, so a single figure can hide assumptions. Use a calculator for each part and treat the results as rough.
Does an RRSP always get taxed at death?
The deceased includes the fair market value of an unmatured RRSP in income on the final return. A refund of premiums paid to a qualifying survivor can reduce that amount, with the income taxed to the survivor instead. Who qualifies and how to designate is worth confirming with an accountant.
Do I pay probate tax on a house held jointly with a spouse?
Jointly owned assets that pass automatically to the surviving owner are excluded from the estate value for Ontario Estate Administration Tax. Whether the ownership is truly joint depends on how title is held, so confirm it with a lawyer.
Can I deduct funeral costs to lower the tax?
Funeral expenses, probate fees and fees to administer the estate cannot be deducted as personal expenses on the deceased's returns. They also cannot be deducted when calculating the estate's value for Estate Administration Tax.
Sources
- CRA – What returns you need to file — canada.ca
- CRA – Filing and payment due dates — canada.ca
- CRA – Taxable capital gains on property, investments and belongings — canada.ca
- CRA – RC4177 Death of an RRSP annuitant — canada.ca
- CRA – Claim deductions and tax credits — canada.ca
- Ontario – Estate Administration Tax — ontario.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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