Estates Under $50,000 in Ontario: Is Any Probate Tax Owing?

When a parent or relative dies leaving a modest estate, families often hear that Ontario charges a "probate tax" and wonder whether it applies to them at all. The official name is the Estate Administration Tax, and it has a built-in threshold for smaller estates.

This article explains how the first $50,000 is treated, how the value is worked out, and what paperwork remains even when no tax is owed. It is general information, not advice on your particular estate.

How the $50,000 threshold works

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.

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 before the tax is calculated.

The threshold is not a deduction that every estate gets on top of a lower tax. An estate of $50,000 or less owes nothing, while a larger estate pays tax only on the amount above $50,000.

Older applications used different rates

If you read older material, the numbers may not match. The table below shows the difference.

The tax is also paid by the estate, not personally by the estate representative.

How the rules apply in practice

These points assume the application is made on or after January 1, 2020.

• An estate worth $50,000 or less: no tax is payable.
• An estate worth more than $50,000: the tax is $15 for every $1,000 (or part thereof) of value over $50,000.
• Before the tax is calculated, the estate's value is rounded up to the nearest thousand dollars, so a value that is not a round number is treated as the next thousand up.

Assets are valued at their fair market value at the time of death. Real property is valued at its appraised value at the date of death, even if it sells for more or less shortly after the death.

What counts toward the estate's value

Whether an estate is under $50,000 depends on what is counted. The value includes Ontario real estate at its appraised value on the date of death, less encumbrances such as mortgages or liens. It also includes bank accounts, investments, vehicles, business interests and other property, and insurance proceeds if they are payable to the estate.

Some things are left out. Assets the deceased no longer owned at death, such as insurance paid to a named beneficiary, are not counted. Jointly owned assets that pass automatically to the surviving owner or owners are also left out. The exception is a tenant in common: that person's share does not pass automatically to the other owners, so it counts toward the estate's value if probate is sought. Registered plans such as RRSPs, RRIFs and TFSAs with a beneficiary designation are left out, but they are included if the estate is the beneficiary.

Only encumbrances on real property can be deducted. Funeral expenses, lawyer's fees, loans, credit card debt and similar debts do not reduce the value. A family might therefore feel an estate is small after debts, yet still be above the threshold on the value that counts.

No tax owed does not mean no paperwork

Even when the estate is worth $50,000 or less and no tax is owed, the estate must still file an Estate Information Return after the certificate is issued. The return goes to the Ministry of Finance within 180 calendar days after the certificate is issued.

If the estate is valued at $150,000 or less, a small estate process may be available, using Form 74.1A filed with Form 74.1B and a draft Small Estate Certificate (Form 74.1C). A Small Estate Certificate still carries a return: it must be filed within 180 calendar days of receiving the certificate, even if the estate is under $50,000.

The records supporting the return must be kept for four years at the estate representative's principal place of business or residence. Missing the return or making false or misleading statements can lead to a fine of at least $1,000 and up to twice the tax payable, imprisonment for up to two years, or both.

What to do next

• List everything the deceased owned and note how each item was held (alone, jointly, or with a named beneficiary).
• Gather statements and, for real estate, an appraisal at the date of death, since values must be supported by documents.
• Check whether a certificate is really needed, because the tax only arises if one is applied for.
• Calendar the 180-day return deadline once a certificate is issued.
• Speak with a lawyer or accountant if the value is close to $50,000 or the assets are hard to value.

Frequently asked questions