Estate Administration Tax: An Overview Before Applying for a Certificate of appointment of Estate Trustee

If you require a Certificate of Appointment of Estate Trustee, the estate administration tax (EAT) must also accompany the application to the Ontario Superior Court of Justice. There are a few exceptions for paying EAT, as outlined under Rule 74.13(2)-(4) of the Rules of Civil Procedure. The EAT is paid to the Minister of Finance and is based on the value of the deceased’s property at the time of death. 

The Estate Trustee is obligated to pay a higher tax if it is established later on that the value of the estate is greater than what was originally submitted. The Estate Trustee may also get a refund if EAT was based on an estimate and was overpaid (s 3 of the Estate Administration Tax Act, 1998)

What is included in calculating the Estate Administration Tax? 

Generally, the fees are based on the deceased’s assets under his or her name alone. As an example, jointly held property that passes by right of survivorship is excluded from the calculation. Benefits payable to a designated beneficiary under a “plan,” as defined by Part III of the Succession Law Reform Act and proceeds from life insurance on the deceased payable to a designated beneficiary are excluded. Real property that is located outside of Ontario is also excluded from EAT calculations. Most debts and liabilities will not reduce the value of the estate for EAT purposes, with the exception of an encumbrance registered against the real property of the deceased: s 1 of the Estate Administration Tax Act, 1998. 

How are these taxes calculated? 

Section 2 of the Estate Administration Tax Act, 1998 states that if the value of an estate does not exceed $1,000, then no EAT is paid. 

The formula for calculating the EAT is as follows (s 2(6) of the Estate Administration Tax Act)

$5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate; and 

$15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000. 

The Ontario Ministry of Attorney General provides a chart detailing EAT amounts based on estates valued from $1,000 to $5 million: 

http://www.attorneygeneral.jus.gov.on.ca/english/estates/pre_calculated_estate_administration_tax_table.pdf

Written by Laura Chiu, Reilly and Partners. Laura joined Reilly & Partners Professional Corporation as an associate after her call to the bar in 2013. Prior to this, Laura gained experience as a summer and articling student in the areas of real estate, administrative law, commercial and civil litigation, and estates and trusts.