Probate Tax on a $1 Million Estate in Ontario: Worked Examples

If you are an executor or family member dealing with an estate of roughly half a million, one million or two million dollars, you probably want to see an actual number. Ontario's estate administration tax is straightforward once you know the estate value.

Below are worked examples for each size, followed by the things that can move the starting figure up or down. The dollar amounts here come from applying the official rate, so treat them as estimates until the value is confirmed.

The formula behind every example

For applications made on or after January 1, 2020, the tax is $15 for every $1,000, or part of $1,000, of estate value, and the first $50,000 is exempt. The value is rounded up to the nearest thousand dollars before the rate is applied.

The government's own illustration is a $240,000 estate, which owes $2,850 calculated on the amount above $50,000.

Worked examples: $500,000, $1 million and $2 million

For the $1 million case, the first $50,000 is exempt and the $15-per-$1,000 rate applies to the rest, which gives $14,250.

Because the exemption comes off first, the tax grows with the value above $50,000 rather than with the whole estate.

What counts as the estate value

The figure you plug in is not simply the total net worth. Counted assets include Ontario real estate less encumbrances, bank accounts including foreign banks, investments, vehicles and vessels wherever located, property held in another person's name, and insurance proceeds payable to the estate.

Excluded items include assets held jointly that pass automatically to the surviving owner, registered plans and insurance with a named beneficiary, and the CPP death benefit. For a family with a large house held jointly and a large RRSP with a named beneficiary, the taxable estate can be much smaller than the total wealth.

RRSPs, RRIFs and TFSAs without a beneficiary designation do count. Real estate outside Ontario is excluded on a full estate certificate.

What can and cannot be deducted

• Can be deducted: registered encumbrances such as a mortgage or lien on Ontario real estate, so the tax is based on equity rather than full value.
• Cannot be deducted: funeral expenses, lawyer's fees, loans and interest, vehicle debt, credit card debt, real estate commissions, and unregistered loans or lines of credit.

For example, if the estate includes a mortgaged Ontario home, the home is counted at its value less the registered mortgage, which lowers the starting figure before the formula is applied. The exact result depends on the amounts involved.

Filing, payment and getting it right

The tax is paid as a deposit when you apply and becomes the tax when the certificate is issued. The value is measured in Canadian dollars at the date of death.

After the certificate is issued, the Estate Information Return must be filed within 180 calendar days. A representative who fails to file or files false or misleading statements may face a fine of at least $1,000 and up to twice the tax payable, imprisonment of up to two years, or both.

The Ministry of Finance may reassess within four years after the tax was due, and at any time if a required filing was missed or there was misrepresentation or fraud. That is a good reason to keep records supporting every number.

What to do next

• Write down each asset, its date-of-death value and how it is held (alone, jointly, or with a named beneficiary).
• Collect mortgage and lien documents for Ontario real property.
• Calculate the tax using the steps above and compare it to the examples.
• If you cannot pay the full amount up front, ask a lawyer about applying for a court order allowing later payment.
• Have a lawyer or accountant confirm the final value before you swear the application.

Frequently asked questions