Is Survivorship Property Subject to Estate Administration Tax in Ontario?

As an estate trustee, you may be looking at a list of assets and wondering which ones count when the estate administration tax (often called probate fees) is worked out. Joint property often raises questions, but survivorship is not automatic just because land is in two or more names: under the Conveyancing and Law of Property Act, land granted, conveyed or devised to two or more persons, other than executors or trustees, is held as tenants in common unless the document shows on its face that they are to take as joint tenants, and a tenant in common's share does not pass by survivorship.

The short answer is that true survivorship property is generally left out, but there are important exceptions. This article explains the rule, the situations where a joint asset is still taxed, and what to keep in mind for the Estate Information Return.

The general rule: survivorship property sits outside the estate

When someone dies, property passes to their estate trustee only if no one else has a right to take it by survivorship. Property that passes by survivorship goes straight to the surviving owner, whether or not there is a will. A will cannot redirect it to the beneficiaries.

For estate administration tax, Ontario lists jointly owned property that passes automatically to the other owner as something that is not included in the estate's value. The same list excludes insurance paid to a named beneficiary, real estate outside Ontario, the CPP death benefit, and registered plans (RPPs, RRSPs, RRIFs and TFSAs) that have a beneficiary designation.

When a joint asset can still be taxed

The word "joint" on a title or account is not the end of the question. The estate's value includes property held in another person's name that actually belongs to the deceased. A joint asset that the survivor holds on resulting trust for the estate does not escape the tax.

This often arises when a parent adds an adult child to an account or a property without payment. For gratuitous transfers, the presumption of resulting trust is the general rule, and the person receiving the transfer must show that a gift was intended. An adult child added in this way is presumed to hold the asset in trust for the parent and, on death, for the estate. The presumption of advancement (a gift) is confined to minor children, and an adult child's financial dependency does not trigger it, though it can be strong evidence against a resulting trust.

Courts may look at the wording of the bank documents, who controlled and used the funds, whether a power of attorney was granted, the tax treatment of the joint account, and later evidence that bears on the transferor's intention at the time of the transfer.

• Joint with a spouse: whether a joint asset is taxed depends on how it was held, and between spouses, property in both names as joint tenants is proof, without evidence to the contrary, that they intended to own it as joint tenants, while money on deposit in both names is deemed held as joint tenants.
• Joint with an adult child: the presumption runs the other way, so the child may need to show a gift was intended.
• Tenants in common: a tenant in common's share does not pass by survivorship.

How the tax is calculated

For applications on or after January 1, 2020, there is no tax on an estate worth $50,000 or less, although the return is still required. Above $50,000, the tax is $15 for every $1,000 (or part) of the estate's value, and it is due on the day the estate certificate is issued.

Bank accounts, including those at foreign banks, and Ontario real estate (less mortgages) are included in the estate value. That means a joint asset that is wrongly treated as survivorship property can leave the tax underpaid, so it is worth sorting out early.

The Estate Information Return and joint assets

The Estate Information Return must be filed within 180 calendar days after the estate certificate is issued. An amended return is due within 60 calendar days in the cases set out, for example after newly found assets or after errors discovered within four years.

Which joint assets belong on the return depends on the facts, including whether the survivor holds the asset beneficially or on resulting trust for the estate. If you are unsure how to treat a particular joint asset, confirm the position with a lawyer or accountant before you file.

What to do next

• List every asset the deceased held jointly, and note who is on title or on the account.
• Check whether each property is held as joint tenants or tenants in common; you can search Ontario land records through OnLand.
• Find out when and how each joint owner was added, and whether they paid for or contributed to the asset.
• Ask the bank how it treats the account on the death of a holder, since its documentation requirements are its own.
• Gather the bank documents and any other evidence of the deceased's intention.
• Diarize the return deadline once the estate certificate is issued.

Where a joint asset might be held for the estate, or heirs and survivors disagree, get legal advice before you distribute anything or file the return.

Frequently asked questions