In Ontario, when handling a deceased person's real estate, bank accounts and other assets, an estate certificate may be needed from the court, and the Estate Administration Tax is paid on the value of the estate when applying. The tax is administered by the Ontario Ministry of Finance, while the application is filed with the Superior Court of Justice.
What an estate certificate is
The certificate has two formal names: Certificate of Appointment of Estate Trustee and Small Estate Certificate, both known as an estate certificate, previously called letters probate or letters of administration.
Whether a certificate is needed depends on the assets involved. The Ontario website states that you may want to contact a lawyer for legal advice about whether you need to apply.
The application is filed at a local Superior Court of Justice. If the deceased had no permanent residence in Ontario, the application must be filed at the Superior Court of Justice in the county or district where the deceased's property is located.
Who pays the Estate Administration Tax
The tax is paid as a deposit when applying for an estate certificate. Once the certificate is issued, that deposit becomes the Estate Administration Tax.
- If an estate certificate is not applied for or is not issued, no tax is owed.
- If you applied but no certificate is issued, your deposit will be refunded.
- The tax is paid by the estate, not by the estate representative.
- Cheques must be payable to the Minister of Finance.
No Estate Administration Tax is payable if any of the following certificates are issued:
- Certificate of Appointment of Succeeding Estate Trustee with a Will
- Certificate of Appointment of Succeeding Estate Trustee with a Will Limited to the Assets Referred to in the Will
- Certificate of Appointment of Succeeding Estate Trustee without a Will
- Certificate of Appointment of Estate Trustee During Litigation
Determining the value of the estate
The tax is based on the value of all assets owned by the deceased at the time of death.
Assets to include:
- Real estate in Ontario, less encumbrances such as a mortgage, collateral mortgage or lien
- Bank accounts, including foreign banks
- Investments such as stocks, bonds, trust units, options, mutual funds, TFSA, RRSP, RRIF, the part of an RESP the deceased subscriber was entitled to, and an RDSP for which the deceased was a beneficiary
- Vehicles and vessels such as cars, trucks, boats, ATVs, motorcycles and trailers, situated in or outside Ontario
- All property of the deceased held in another person's name
- All other property wherever situated, including goods, intangible property, business interests, and insurance if proceeds are left to the estate
The website notes that the appraised value at the date of death is used even if the property sells for less or more shortly after death. The first dealings exemption for Land Titles Conversion Qualified properties does not affect the tax; the property value must be included and the applicable tax paid.
Assets not to include:
- Assets the deceased had before death but not at the time of death, such as insurance paid to a named beneficiary
- Jointly owned assets that automatically become assets of the other owner
- Real estate outside Ontario
- CPP Death Benefit
- RPPs, RRSPs, RRIFs and TFSAs with a beneficiary designation or declaration
- RDSPs to which the deceased subscribed but was not a beneficiary
Expenses and debts that cannot be deducted
Funeral expenses, lawyer's fees, loans and interest payments, debt owed on a vehicle, credit card debts, real estate commissions, unregistered loans and lines of credit cannot be deducted to reduce the total value of the estate.
An encumbrance such as a mortgage, collateral mortgage or lien can be deducted from the value of real property if the property is included in the estate assets.
Calculating the tax
For applications on or after January 1, 2020:
- No tax if the estate is valued at $50,000 or less, but an Estate Information Return must still be filed within 180 calendar days after the certificate is issued.
- For estates over $50,000, the tax is $15 for every $1,000 or part thereof. The estate value is rounded up to the nearest thousand. For example, an estate valued at $239,250 is calculated on $240,000.
Example from the website: for an estate valued at $240,000, the first $50,000 is taxed at $0 per $1,000, and the remaining $190,000 at $15 per $1,000, giving 190 × $15 = $2,850 payable to the Minister of Finance.
For applications before January 1, 2020:
- $5 for each $1,000 or part thereof of the first $50,000
- $15 for each $1,000 or part thereof exceeding $50,000
- No tax if the estate is valued at $1,000 or less
A tax calculator is available on the website.
Filing an Estate Information Return
The return must be filed with the Ministry of Finance within 180 calendar days after the certificate is issued, even if the calculated value is $0. If the due date falls on a weekend or holiday, it is extended to the next business day.
No return is needed if the court has issued any of the four succeeding trustee or litigation trustee certificates listed above.
The return can be filed online, by mail, by courier, in person or by fax. The website states that filing online is the fastest and easiest way.
Online steps:
- Visit the Ministry of Finance's online services webpage.
- Select Estate Information Return under File your Estate Information Return.
- Complete the online return. You can select Save Draft and finish later. An Estate Information Return Access Code is sent by email; your email address and access code are needed to resume a saved return.
- Submit the return. The estate representative receives an email acknowledging receipt by the next business day.
Filing online requires no login, password or signature, works from any device, allows uploading supporting documents, gives immediate confirmation and lets you print a copy.
If you cannot file online, you can mail the return to Ministry of Finance, 33 King Street West, PO Box 625, Oshawa, ON L1H 8H9; fax to 1-866-888-3850; or deliver in person at Ministry of Finance, 33 King Street West, Oshawa, or at certain ServiceOntario locations.
If additional tax is owed when filing the return, it can be paid to the Superior Court of Justice where the certificate was issued, or to the Ministry of Finance. Payment to the court must include an affidavit attesting to the revised value of the estate at the time of death and an explanation of why the estate value has changed. If you pay the ministry, it sends a confirmation of receipt that can be given to the court as proof of payment and must be submitted with your affidavit.
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