Is There an Inheritance Tax in Newfoundland and Labrador?

When someone dies, many people ask whether the province takes a tax out of what a beneficiary receives. The answer is easy to confuse with the charges that do apply to an estate, so it helps to separate court charges from tax.

This article explains the court charge on a grant in Newfoundland and Labrador, the other estate costs that come up, and how debts are dealt with before beneficiaries are paid. For income tax on the estate, it explains why you should involve an accountant.

This article covers the law of Newfoundland and Labrador.

Court charges are not the same as tax

People often use the phrase inheritance tax to describe any cost that reduces what a beneficiary receives. In practice, the most visible cost in this province is the court charge on a grant of letters of probate or administration.

Probate is not legally required in Newfoundland and Labrador, but an executor who wants to dispose of estate assets needs Letters of Probate to prove the right to do so. The Supreme Court says the type of assets, not their value, usually decides whether an estate should be probated or administered, while fees depend on value.

How the court charge on a grant is worked out

The charge on a grant of letters of probate or administration is $60 where the estate does not exceed $1,000, plus $0.60 for each additional $100 of estate value. The fee is based on the value shown in the inventory and valuation (Form 56.10A) of property in Newfoundland and Labrador.

As an illustration of the arithmetic under section 4 of the Services Charges Act, a $250,000 estate is $60 plus (2,490 × $0.60 = $1,494), which is $1,554. The statute does not say how part-$100 amounts are treated.

For grants made before June 23, 2015, the additional rate was $0.50 per $100.

Who pays, and what if the value changes

• The charge is payable by the executor or administrator in his or her representative capacity only, meaning as the estate's representative rather than personally.
• If the estate is later valued lower than first certified, the representative may apply for a refund of the overpayment.
• If the estate is later valued higher, an additional amount must be paid on the difference.
• The fee is set from the inventory at the time of application.

The court's published material does not state a due date for the fee, so ask the Probate Registry how and when payment is expected in your case.

Other court fees and debts that come before beneficiaries

Other estate-related court fees include $50 for exemplification of letters, $50 for Letters of Administration DBN, $30 for a certified copy, $20 for a search, and $60 for orders other than default orders. The court accepts cash, debit, Visa, Mastercard and cheque, but not American Express.

Within 1 year after a grant issues, the holder must file an inventory and valuation and statements of the estate received, the disbursements (funeral expenses, debts and the estate) and the estate still outstanding. Before distributing, the executor notifies known creditors.

Income tax and what to do next

Whether the deceased's final income tax return is needed, what it must include, and whether the estate owes anything or must file its own returns all depend on the facts. These are questions for an accountant, and how they apply to your situation is worth confirming before you distribute any assets.

• Gather the will, recent bank and investment statements, and any prior tax returns.
• List the assets and note which ones need a grant before they can be dealt with.
• Ask a lawyer or accountant which tax returns apply and when they are due.
• Keep records of every payment made from the estate for the later accounting.
• Confirm the court fee with the Probate Registry once the inventory is ready.

Frequently asked questions