Estate Administration Tax 101
What is the Estate Administration Tax?
Estate Administration Tax (EAT), also known as ‘probate’, plays an important role in estate planning. You can minimize the estate’s exposure to EAT by using certain strategies.
The EAT is charged by the Ministry of Finance on the value of the deceased’s estate as of the date of death. The EAT is payable by the estate at the time of submitting the application for a Certificate of Appointment of Estate Trustee (‘probate certificate’) to the Court.
How Much is the Estate Administration Tax?
Applying for a Probate Certificate On or After January 1, 2020:
If the value of the estate is $50,000 or less, the estate is not required to pay the EAT.
If the estate is valued at more than $50,000, the EAT is calculated as $15 for every $1,000 of the value of the estate.
The tax calculator on the Ministry of Attorney General’s website is a useful tool to help you calculate the EAT owed by the estate.
How to Figure out the Value of the Estate Assets?
Generally, the EAT is calculated based on the fair market value of the assets that the deceased owned solely as of the date of death. However, not all of the deceased’s assets must be considered when valuing an estate for the purposes of calculating the EAT.
Assets not included when valuing the estate:
- Jointly held assets such as real estate and bank accounts, that automatically pass to other owner(s)
- Real estate owned outside of Ontario
- Life insurance payable to a named beneficiary
- RRSPs, RRIFs, TFSAs, and RPPs payable to a named beneficiary
- Assets that can pass under a secondary Will (depending on your assets multiple wills can be used to minimize EAT)
At eProbate we will help you figure out the value of the estate and how much EAT is owed as part of the probate application. Contact us today to obtain a probate certificate for an estate.