What is the estate administration tax?

Understanding Estate Administration Tax in Ontario

When administering the estate of a deceased person in Ontario, one important aspect to be aware of is the Estate Administration Tax (EAT). This tax, sometimes known as probate tax, is a fee levied by the provincial government to process the probate application and grant legal authority to execute the estate. Here’s a straightforward guide to understanding this tax.

What is Estate Administration Tax?

Estate Administration Tax is a fee charged by the Ontario government on the value of an estate that goes through the probate process. This tax is required to obtain a Certificate of Appointment of Estate Trustee (often referred to as a “grant of probate”), which legally authorizes the executor or administrator to manage and distribute the deceased’s assets. When estate planners peak about probate tax planning, we mean arranging your affairs to reduce the amount of this tax that will be payable. 

How is the Tax Calculated?

The amount of Estate Administration Tax is based on the value of the estate. As of 2024, the tax rates are:

  • $0 per $1,000 of the first $50,000 of the estate’s value.
  • $15 per $1,000 for the value exceeding $50,000.

For example, if an estate is valued at $200,000, the tax would be calculated as follows:

  • $0 per $1,000 for the first $50,000: $0
  • $15 per $1,000 for the remaining $150,000: $2,250
  • Total Tax: $2,250

When is the Tax Due?

The Estate Administration Tax is due when submitting the probate application to the court. The tax is generally calculated based on the estimated value of the estate. In some circumstances an executor may ask the court to defer the payment of tax until after probate is obtained (but must undertake to pay it forthwith).  

Exemptions and Relief

Certain assets might be exempt from the Estate Administration Tax, such as jointly owned property or assets passing directly to beneficiaries outside of probate. Additionally, there are specific rules and possible reliefs for estates of minimal value, which might impact the overall tax liability.

Takeaway

Estate Administration Tax is an important consideration in the probate process in Ontario. Executors and administrators should factor this tax into their planning to avoid delays in the estate settlement. Consulting with a legal professional can help navigate this aspect of estate administration and ensure compliance with all relevant requirements.

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