How to Pay Estate Administration Tax to the Court in Ontario

If you are the person applying for a certificate of appointment of estate trustee, one of the first practical questions is how and when the estate administration tax gets paid. It is not a bill that arrives later. It is dealt with at the time you file your application.

This article walks through the timing, the amount, the payment methods, and what happens if you do not yet know the exact value of the estate. Every estate is different, so a lawyer or accountant can confirm how this applies to yours.

When the tax is paid

Ontario's guidance is to calculate and pay the Estate Administration Tax when the application is filed with the Superior Court of Justice, unless the tax is not payable or a court orders deferral. The application is filed in the county or district where the deceased lived, by mail or email.

Legally, the tax is payable by the estate immediately upon the issuance of an estate certificate. In practice, you deposit an amount equal to the tax payable when you apply, and the deposit is credited against the tax. Ontario describes it this way: the payment is a deposit when you apply, it becomes the tax once the certificate is issued, and it is refunded if no certificate is issued.

The tax is paid by the estate. The estate representative is liable only in a representative capacity, and Ontario states the tax is paid by the estate rather than by the estate trustee. That is why the money normally comes from estate funds, which can raise timing questions if the estate's cash is tied up. Those are covered below.

Working out how much to pay

For applications made on or after January 1, 2020, an estate valued at $50,000 or less is exempt from the tax. Above that, the tax is $15 for each $1,000 (or part of $1,000) of value over $50,000. Values are rounded up to the nearest $1,000 before calculating.

As an example, Ontario's own worked example is a $240,000 estate: nothing on the first $50,000 and $15 per $1,000 on the remaining $190,000, for tax of $2,850.

The value comes from the application itself. Form 74A asks for the values of real property, personal property and the total estate. Some points to keep in mind when you pull the number together:

• Value is fair market value at the date of death, supported by documents such as statements or appraisals, and real estate uses its appraised value at the date of death.
• Only encumbrances on real property, such as a mortgage, reduce the value.
• Funeral expenses, lawyer fees, credit card debt, vehicle debt and unregistered loans or lines of credit cannot be deducted.
• Jointly owned assets that pass automatically to the other owner, and registered plans with a named beneficiary, are excluded.

Payment methods at the court office

At the court office, Ontario lists the following ways to pay. Cheques are payable to the Minister of Finance, and Ontario advises checking with the court first about what it will accept.

Because you may be filing by mail or email, it is sensible to phone the court office beforehand to confirm how they want payment delivered. Do not assume that a method that works in one city is available in another.

If you do not know the exact value, or cannot pay up front

If the actual value is not yet known, the deposit can be based on an estimate. If the estimate turns out too high, part of the deposit is refunded. Where an estimate is used, the applicant gives an undertaking to file a sworn statement of the actual value and pay any shortfall within six months.

There is also a narrow route for urgent cases. A Superior Court judge can be asked, without notice, to issue a certificate before the deposit is made, if the judge is satisfied that the certificate is urgently needed, financial hardship would otherwise result, and adequate security is provided. Whether your situation could qualify is a question for a lawyer.

After the certificate is issued

Paying at court is not the end of the paperwork. The Estate Information Return must be filed within 180 calendar days after the certificate is issued, even if the estate value is $0. Returns can be filed online (the fastest option), by mail, courier, in person or by fax.

If you used an estimate, amend the return within 60 days after the actual value is shared with the court. If new assets turn up later, a sworn statement of their value must be filed with the registrar within six months, and tax on them is payable when that statement is delivered. Keep your records for four years.

Failing to file, or giving false or misleading information, is an offence, with a fine of at least $1,000, up to two years' imprisonment, or both, although a reasonable-diligence defence exists.

What to do next

• Gather statements and appraisals that support the date-of-death value of each asset.
• List real estate and any registered mortgages or liens, since those reduce the value.
• Calculate the tax using the $50,000 exemption and $15 per $1,000 above it.
• Phone the court office to confirm the payment method it accepts.
• Make a note of the deadline for the Estate Information Return.
• If the numbers are uncertain or cash is tight, speak with a lawyer before you file.

Frequently asked questions