Ontario Executors New Estate Tax Duties

I will try to make this simple. Any talk of taxes usually can make you fall into a coma. But stay with me to avoid estate tax audits and costly penalties.

Being an estate trustee in Ontario was complicated enough. As of January 1, 2015, the job became more complicated. Don’t worry. I’ll cover the essential deadlines and deliveries.

Before you take on the job of being an estate trustee, check with a lawyer. Sure, if you are the estate beneficiary you must act as executor. You do not have many alternatives. But you can make it easier for yourself.

Getting the right advice may make a world of difference. Especially when you try to get to sleep at night.

You want to do things economically, efficiently and easily. Advice may cost you money but these new rules will create problems. These can hold up the estate administration. Invest in proper advice to avoid going backwards.

So let’s begin by explaining what your new duties as an Ontario estate trustee are.

The province of Ontario requires you to file estate information returns.

Estate Information Return (EIR)

Estate representatives in Ontario must deliver this new form to the Ministry of Finance. That doesn’t sound dangerous by itself. But I’ll tell you about the penalties in a moment.

The EIR is signed by all estate trustees and must be delivered to the Ministry of Finance.

What’s it for?

Well, the government states the reason it needs EIR’s is to determine:

  1. The value of an estate for tax calculation
  2. The amount of provincial estate tax that estates must pay
  3. What enforcement, collection and penalties are required

I’ll try to explain these three functions by first answering these questions.

What is Ontario’s estate tax?

This tax used to be called probate fees and probate taxes. The tax is imposed under the Estate Administration Tax Act, 1998.

How much provincial tax is payable?

The provincial tax rate has not changed—not yet, that is. No, I have no secret insider info. But taxes seldom go down.

The tax is calculated like this:

  • $5 for every thousand of estate assets to $50,000. That is $250; plus
  • $15 for each thousand dollars of estate assets over the $50,000 or 1.5% of additional assets.

When did this new tax filing start?
New estate tax regulations require new EIR filing after January 1, 2015.

The EIR must be signed by each estate representative to certify the information return is true and correct.

What info is included in the EIR?

The government now wants a breakdown of all estate assets into these five categories:

  1. Real estate in Ontario
  2. Bank accounts
  3. Investments
  4. Vehicles and vessels
  5. Other property

Other property is a catchall. It includes: business interests, copyrights, patents, trademarks, household contents, art, jewelry and loans that were owed to the deceased.

I’ve written another blog post about of the detail required about real estate in Ontario.

Do I need appraisals for everything on the EIR?

Fair market values are required to be included on the EIR. This will mean you need to get advice from your estate lawyer. There are assessment audits and reassessments to worry about. Not to mention fines. I’ll get into this in the next post.

The government wants the fair market value for real estate. This is as of the date of death.

You have an obligation to determine the percentage of ownership for the property.

What if the property is jointly-owned or held as tenants-in-common? You need to include the total value and what percentage is owned by the estate.

These rules apply to anyone who is applying for a certificate of estate appointment after January 1, 2015. This means you if you are applying to be

Deadlines for Delivery of estate information returns

The EIR must be delivered to the Ministry of Finance within 90 days of the issuance of the estate certificate. This is not 90 days after the estate application is filed.

If you need to make a correction or add to an incomplete EIR, you must deliver this within 30 days of learning of the error.
I will write more about your estate tax duties shortly.