The quick answer
The estate administration tax in Ontario is paid when the estate trustee applies for the estate certificate. For applications on or after January 1, 2020 there is no tax if the estate is worth $50,000 or less. Above that the rate is $15 for every $1,000 of value. A home is valued at its appraised value on the date of death and a mortgage on it can be deducted. An Estate Information Return is due within 180 calendar days after the certificate is issued.
The short answer
The estate administration tax in Ontario is a tax paid to the province when the person handling an estate applies to the court for an estate certificate. Ontario.ca sets out the rule in plain terms. For applications on or after January 1, 2020, no tax is payable when the estate is worth $50,000 or less. Above that, the rate is $15 for every $1,000 of value.
For many families the largest asset is a house, so the first question is usually how that house is valued. This post covers the rate, what counts toward the value of an estate, how a mortgage changes the number, the Estate Information Return and a worked example.
This is general information only. It is not legal or tax advice. Every estate is different so please speak with an estates lawyer before you rely on any of it. We are a real estate team and not lawyers. We have written this from what the Government of Ontario publishes.
What is the estate administration tax?
Ontario.ca says the tax is paid as a deposit when the application for the estate certificate is made. The estate certificate is the document the court issues for the estate.
The person named to manage the estate is often called the estate trustee. In this post we use that term for the person who applies for the certificate and files the return.
What is the estate administration tax rate in Ontario?
The rate depends on the date the application is made. The figures below are the ones Ontario.ca gives for applications on or after January 1, 2020.
| Value of the estate | Tax payable |
|---|---|
| $50,000 or less | No tax |
| Above $50,000 | $15 for every $1,000 (or part thereof) of the value above $50,000 |
The words “or part thereof” matter. A partial thousand dollars is charged as a full thousand. Ontario.ca also points to an online calculator at ontario.ca/page/calculating-estate-administration-tax. Your lawyer will normally run the numbers as part of the application.
What counts as part of the estate value?
Ontario.ca says the taxable estate is the value of all assets owned by the deceased at the time of death. The assets it lists as included are:
- Real property, which includes a house or condo in Ontario
- Bank accounts
- Investments
- Vehicles
- Jointly held property that passes to other owners, as the page words it
- Insurance proceeds left to the estate
The assets it lists as excluded are:
- Accounts that name a beneficiary
- Jointly owned assets that transfer automatically
- Real estate outside Ontario
- Canada Pension Plan death benefits
A short list like this hides a lot of detail. Whether a particular account or home falls on one side of the line or the other is a question for your lawyer, not for us.
How is a house valued for the tax?
For real estate, Ontario.ca says to use the appraised value at the date of death. It adds that this applies even if the property sells for less or more shortly after the death.
That point surprises many families. If a house is appraised at one figure on the date of death and later sells for a different price, the figure on the date of death is the one the page tells you to use.
Ontario.ca notes that a professional appraiser may help with complicated valuations. If you are thinking ahead about the property, our home valuation page explains how we price a home for the market. A market opinion from a real estate team is a different thing from a formal appraisal. We are not appraisers. Ask your estates lawyer which kind of valuation they want for the application.
Does a mortgage reduce the value of the estate?
Yes, in one specific way. Ontario.ca says an encumbrance, such as a mortgage, collateral mortgage or lien, can be deducted from the value of real property. That means a mortgage registered against the house reduces the value of the house for this purpose.
The same page is just as clear about what cannot be deducted. It lists funeral costs, legal fees, loans, vehicle debt, credit card balances and realtor commissions as ineligible deductions.
| Item | Can it reduce the estate value? |
|---|---|
| Mortgage, collateral mortgage or lien on real property | Yes, per Ontario.ca |
| Funeral costs | No |
| Legal fees | No |
| Loans and credit card balances | No |
| Vehicle debt | No |
| Realtor commissions | No |
The last row is worth noticing if the home will be sold. The commission paid on a sale does not lower the value used for the tax.
A worked example
This example uses round numbers made up for illustration. It is not a real estate and it is not a prediction of what any estate will pay.
Suppose an Ontario estate has these assets on the date of death:
- A house with an appraised value of $900,000
- A mortgage registered against the house of $300,000
- Bank accounts of $60,000
The steps are as follows.
- Take the house value of $900,000 and deduct the $300,000 mortgage. The house counts as $600,000.
- Add the bank accounts of $60,000. The estate value is $660,000.
- Deduct the $50,000 threshold. The amount above it is $610,000.
- Divide $610,000 by $1,000 to get 610 units of $1,000.
- Multiply 610 by $15. The tax is $9,150.
Ontario.ca gives its own smaller example. For an estate of $240,000 there is no tax on the first $50,000 and then $15 per $1,000 on the remaining $190,000, which gives $2,850.
Notice that the funeral costs and legal fees in this family’s situation would not change the result. Your lawyer will use the actual figures and the rules that apply on the application date.
What is the Estate Information Return and when is it due?
The Estate Information Return is a form filed with the Ministry of Finance. Ontario.ca says it must be filed within 180 calendar days after the estate certificate is issued.
Ontario.ca says it can be filed online, by mail, by fax or in person. The online service is at services.fin.gov.on.ca/OTP/Gentax.
The page also describes serious consequences for people who do not file or who make false statements. It says the fine is at least $1,000 and up to twice the tax payable. It adds that imprisonment of up to two years is possible. We mention this so that the deadline is taken seriously. Ask your lawyer who will track the filing date.
How this connects to selling an estate home
If the house will be sold, the date of death value used for the tax and the later sale price are two separate numbers. Ontario.ca says to use the date of death value. Our guide to selling an estate home in Markham covers the practical side of preparing and listing a property. Our post on selling a parent’s house in Markham looks at the family side. Our estate sales service page explains how we work with trustees and their lawyers. If you are weighing a sale, you can also see how we help sellers in general.
What to do next
A short checklist makes the first meeting with a lawyer more useful.
- Gather recent statements for bank accounts and investments
- Find the mortgage statement and any other registered debts on the house
- Note which accounts name a beneficiary and which are held jointly
- Ask the lawyer how the house will be valued as of the date of death
- Ask when the estate certificate is likely to be issued and write down the 180 day return date that follows
- Confirm that the rules and rate for your application date are the ones in this post
If a Markham home is part of the estate and you would like to talk through how a sale would work, please contact us.
Common questions
Is there estate administration tax on an estate worth $50,000 or less?
No. Ontario.ca says that for applications on or after January 1, 2020 you do not need to pay the tax if the value of the estate is $50,000 or less.
What is the estate administration tax rate in Ontario?
Ontario.ca gives the rate as $15 for every $1,000 (or part thereof) of the value of the estate above $50,000, for applications on or after January 1, 2020.
How is a house valued for estate administration tax?
Ontario.ca says to use the appraised value at the date of death, even if the property sells for less or more shortly after the death. A mortgage, collateral mortgage or lien can be deducted from that value.
Can funeral costs or realtor commissions be deducted from the estate value?
Not according to Ontario.ca. It lists funeral costs, legal fees, loans, vehicle debt, credit card balances and realtor commissions as deductions that are not allowed. Only encumbrances on real property, such as a mortgage or lien, can be deducted.
When is the Estate Information Return due?
Ontario.ca says it must be filed within 180 calendar days after the estate certificate is issued. It can be filed online, by mail, by fax or in person.
Do I need a lawyer to deal with the estate administration tax?
This post is general information only and is not legal or tax advice. An estates lawyer can confirm how the tax applies to the particular estate and can help with the application and the return.
Keep exploring
- Estate Sales A sale run by an executor, usually during the hardest year of a family's life.
- Downsizing Forty years of a house and a sequence that has to work in the right order.
- Land transfer tax calculator Ontario tax on any price, with the first-time buyer refund.
- Mortgage calculator Monthly payment, minimum down payment and the stress test.
Sources
Figures and rules were checked against these sources on the date this post was published or last updated.
Not advice. This post is general information only. It is not legal, tax, mortgage or investment advice. Rules and figures change, so confirm the details for your own situation with a qualified professional before acting.
Market data. Any prices quoted are general information for the period stated. They are not an appraisal or an opinion of value for any specific property.