Discover the New Name for Ontario’s Probate Tax: Essentials of EAT

The Estate Administration Tax (EAT) in Ontario is essentially what was previously called Ontario’s probate tax. When a person dies with assets in Ontario, whether or not there is a valid will, EAT is payable when estate court certificates are required.

Ontario’s government charges a provincial estate administration tax (EAT) based on the value of the estate. Most people still refer to this as provincial estate or probate tax. There is, however, only one estate tax in Ontario generally referred to by either of these names.

The way EAT is calculated is straightforward. The first $50,000 of an estate’s value is exempt from tax as of January 1, 2020. For the remaining value, the tax is assessed at $15 for every $1,000 (or fraction thereof). For instance, if an estate is valued at $100,000, only the amount beyond the initial $50,000 is taxed. This results in a tax of $750 payable to the Minister of Finance.

The EAT is paid in advance at the time an application for an estate certificate is made, with or without a will. In Ontario, separate application forms are used for estates under $150,000. Use the government website at Ontario.ca to calculate the EAT.

When you hear someone discussing Ontario probate tax or Ontario’s Estate Administration Tax, they are referring to the same provincial estate tax obligation imposed on the value of a deceased person’s estate. Federal income tax is different and is paid to Ottawa on income on a person’s passing.

Estate planning can reduce the amount of provincial estate administration tax paid when a person dies.

When you do your estate planning, you must understand what assets are subject to EAT. For example, what types of real estate, personal property or investments are included. These are assets that may be excluded, such as those with designated beneficiaries.

Knowing the exclusions can have significant implications to reduce Ontario’s estate taxes and ensuring that the overall administration costs are minimized. This is one of the benefits of doing estate planning with your will. Remember, only a lawyer can give you legal advice about your estate plan and will.

Do you need help understanding provincial estate taxes? Are you an executor stuck getting started? I can help.

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