Tax Secrets for Ontario’s New Estate Information Returns – Part 1

Is there really a tax on dying in Ontario? New tax penalties may make executors feel that way. That’s why getting advice is more important than ever. Let me explain as I highlight the duties and risks under Ontario’s provincial estate tax rules.

Executors need advice from professionals. You don’t have to do everything yourself to save money. If you are an estate representative, you must file the new provincial tax Estate Information Return (EIR). This is required as of January 1st, 2015 if an estate certificate or court appointment is obtained.

Ontario’s Estate Administration Tax is a provincial estate tax. You may recall everyone called this probate fees and later probate taxes. It is a provincial and not a federal income tax. It is not the same estate tax as in the U.S.

Probate Tax Misconceptions

Ontario’s estate tax is 1.5% of the estate assets. Estate asset values are totalled on the application to probate the will. It is not 15% of an estate, as commonly believed.

This post covers some primary tax obligations for executors or estate trustees in Ontario.

Ontario has set up a new compliance system for provincial estate tax.

Estate trustees have always had to pay the provincial tax on estate assets. What is new is the requirement to file an EIR. You have new obligations that other executors will not yet have experienced.

My firm is available to help you if you need assistance filing an EIR. We recommend meeting to discuss your needs.

Contact us for a consultation.

New as of January 1st, 2015

You must deliver an Estate Information Return (EIR) to the Ministry of Finance. The government has a 17-page guide to explain your responsibilities.

You may locate the guide to the Estate Information Return online here.

The government states the purpose of the information return is to:

Determine the fair market value of the estate
Calculate estate administration tax the estate must pay
Assess all estate taxes due and impose penalties

You can find a blank pdf copy of the 7-page EIR here.

All estate trustees must sign the EIR. You do not have to sign the EIR in front of a lawyer or notary.

I recommend you have legal advice to complete the tax form.

You should compare your EIR figures with the values used in your application for an estate certificate.

Provincial Tax Penalties

Note the warning on the signing page of the EIR. Making a false or misleading statement is an offence under the Act.

These offences are punishable by fines and imprisonment including both:

Fines of at least $1,000, but not greater than twice the amount of the tax payable by the estate if more than $1,000; PLUS
Imprisonment for up to two years; or
A combination of both of the above.

Read more about the EIR in Part 2 of this post, Tax Secrets for Ontario’s New Estate Information Returns.

About Edward Olkovich

I am a Toronto estate lawyer and Certified Specialist in Estates and Trusts Law. I edit Carswell’s legal guide Compensation and Duties of Estate Trustees, Guardians and Attorneys. I have handled estate disputes and probate problems since 1978. © 2016