The Estate Administration Tax
The Estate Administration Tax (“EAT”) (formerly known as “probate fees”) is a tax charged on the total value of the deceased’s estate.
The current EAT rates are: $5.00 for each $1,000 (there is no EAT payable if the value of the estate is $1,000 or less) of the first $50,000 of the value of the estate, and $15 for each $1,000 of the value of the estate exceeding $50,000. Ontario’s tax rates on estates are among the highest in Canada.
Changes to the Estate Administration Tax
The 2019 Ontario Budget[1] includes changes EAT tax rates and reporting deadlines and compliance obligations. The changes are supposed to take effect on January 1, 2020 (ie, the changes would apply when an certificate of appointment to be an estate trustee is requested on January 1, 2020 or later).
Tax Rates
Ontario is planning to eliminate EAT on the first $50,000 of estate value. There would be no EAT payable on estates valued at $50,000 or less. The Estate Administration Tax would continue to apply at $15 for each $1,000 of the value of the estate exceeding $50,000.[2]
Reporting Deadlines and Compliance Obligations
Estate information returns are filed by the estate trustee(s) with the Ministry of Finance and outline the estate’s assets and their date of death values. Estate information returns are filed after the estate trustee(s) receive their certificate of appointment. Currently, Estate information returns must be filed with the Ministry 90 days within the date of appointment. In order to reduce the compliance burden on families, Ontario is intending to extend the deadline from 90 days to 180 days. Similarly, the deadline to file an amended Estate information return is to be extended from 30 days to 60 days.[3]
[1] See the 2019 Ontario Budget accessed on November 6, 2019 at http://budget.ontario.ca/2019/index.html.
[2] See “Providing Tax Relief for Families When They Need it the Most” in “Chapter 1, Section C: Protecting What Matters Most” of the 2019 Ontario Budget.
[3] See “Providing Tax Relief for Families When They Need it the Most” in “Chapter 1, Section C: Protecting What Matters Most” of the 2019 Ontario Budget.