Does Real Estate Outside Ontario Count for Estate Administration Tax?

If your parent owned a cottage in another province, or an apartment abroad, you may wonder whether its value adds to the Ontario tax bill when you apply for probate. The answer is helpful for real estate, but it does not cover every kind of foreign asset.

This article explains what is excluded, what is still counted, and how to keep your valuation organized. Other jurisdictions have their own rules, so this covers only the Ontario tax.

The basic rule for real estate

Real estate outside Ontario is left out of the estate's value when calculating the Estate Administration Tax. That applies whether the property is in another province or in another country, since the rule refers to real estate outside Ontario.

By contrast, Ontario real estate is included at its appraised value on the date of death, less encumbrances such as mortgages or liens.

Keep in mind that the tax is only charged when an estate certificate is applied for and issued. It is paid by the estate, not personally by the estate representative.

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 for this calculation. The tax is paid as a deposit when the probate application is filed with the court. Because real estate outside Ontario is left out, it is not part of the figure that this calculation uses.

Other foreign assets are different

The exclusion is for real estate. Many other assets are counted wherever they are. The estate's value includes bank accounts, including those at foreign banks, as well as investments, vehicles and vessels wherever located, property held in another person's name, business interests and other property wherever situated.

So a parent with a vacation home abroad and a bank account in the same country would see the home excluded but the account counted.

A few other exclusions and inclusions are worth knowing about when you build your list. Assets the deceased no longer owned at death, such as insurance paid to a named beneficiary, are left out. Jointly owned assets that pass automatically to the surviving owner or owners are left out. RPPs, RRSPs, RRIFs and TFSAs with a beneficiary designation or declaration are left out, but RRSPs, RRIFs and TFSAs whose beneficiary is the estate are included. Insurance is counted if it is left to the estate. When a tenant in common dies, their share does not pass automatically to the other owners, so it counts toward the estate's value if probate is sought.

When a certificate comes from another place

Sometimes the main estate is administered elsewhere and an Ontario certificate is needed for assets here. For resealing, ancillary and foreign nominee certificates, only assets located in Ontario are used to calculate the tax.

If the court issues a certificate limited to the assets in a specific will, only the assets in that will count toward the estate's value. Whether any of these options fits your family depends on the facts, and a lawyer can confirm.

Valuing what does count

Assets are valued at their fair market value at the time of death. Estate representatives must be able to back up the values with supporting documents, such as statements or an appraiser's opinion of value.

Form 74A asks for the total value of real property, the total value of personal property, and the total estate value. Foreign bank accounts count toward the estate's value, so it helps to record the date-of-death balance and keep the statement as backup.

Only encumbrances on real property can be deducted. Loans, credit card debt and funeral expenses do not reduce the value. Whether a mortgage on a property outside Ontario matters is not something to assume; since that property is left out altogether, check the point with a lawyer or accountant.

What to do next

• Make a list of every asset and where it is located.
• Separate real estate outside Ontario from everything else.
• Get date-of-death statements for all accounts, including foreign ones, and an appraisal for Ontario real estate.
• Ask a lawyer whether the other jurisdiction requires its own process for the property there.
• File the Estate Information Return with the Ministry of Finance within 180 calendar days after the certificate is issued.

The return can be filed online, which is recommended, or by mail, courier, fax or in person. The records supporting the return must be kept for four years at the estate representative's principal place of business or residence. An estate representative who fails to file the return, or who makes false or misleading statements, may be fined at least $1,000 and up to twice the tax payable by the estate, imprisoned for up to two years, or both.

• If an estimated value was used on the application, an amended return is due within 60 calendar days after the actual value is given to the court under the undertaking.
• If information in a filed return turns out to be incorrect or incomplete, an amended return must be filed within 60 days of becoming aware of it, and this duty applies within four years of the certificate being issued.
• If assets are discovered after the certificate is issued, an amended return listing them is due within 60 days after the statement of that property is delivered to the court.

Frequently asked questions