Estate Administration Tax in Ontario: What It Is and How to Reduce It

The short answer: Estate Administration Tax (EAT), often called probate fees, is a tax Ontario charges on the value of an estate when an estate certificate is issued. There's no tax on the first $50,000, and $15 per $1,000 above that. Naming beneficiaries and holding assets jointly can reduce how much of your estate is subject to it.

A Globe and Mail article reports that 61 percent of Canadians say they don't feel knowledgeable about topics like probate, the legal process of validating a will in court and distributing assets.

We're firm believers that knowledge is power. The more you understand, the more prepared you'll be for the future, and the simpler the process will be for your loved ones after you're gone. Here's what you need to know about Estate Administration Tax.

What is Estate Administration Tax (EAT) in Ontario?

Estate Administration Tax (EAT) is also known as probate fees. It's a tax imposed by the Government of Ontario, based on the value of the estate at the time of the estate holder's death.

There's no way to be exempt from paying it on assets that go through probate, but there are a few things to consider that may reduce the amount your beneficiaries will have to pay from your estate after you're gone.

How much is Estate Administration Tax in Ontario?

In Ontario, there's no EAT on the first $50,000 of an estate. Above that, the tax is $15 for every $1,000 of estate value (1.5%).

For example, on a $500,000 estate, the EAT would be $6,750: $0 on the first $50,000, plus $15 for each of the remaining 450 thousand-dollar increments.

The Government of Ontario has a detailed explanation of Estate Administration Tax and a handy Calculating the Estate Administration Tax tool, which we encourage you to use.

When does EAT apply?

EAT only applies to estates that go through probate. That happens in these circumstances:

1. The deceased has no will and owns assets that require probate to administer.
2. The deceased has a will and owns assets that require probate to administer.

Which assets are subject to EAT?

Assets that require probate to administer are assets in the estate that are not jointly owned with a survivor and do not have a designated beneficiary.

Assets that generally pass outside the estate, and so are not subject to EAT, include:

• Assets held jointly with a survivor
• Assets with a designated beneficiary, such as registered investment plans, TFSAs, pensions, and life insurance

How can you reduce the amount of EAT payable?

As we've pointed out, you can't get out of paying EAT or probate fees on assets that go through probate, but there are steps you can take to minimize the impact after you're gone:

1. Write a will with a trusted estate planning lawyer. While this may not reduce the amount of EAT payable, it will simplify the probate process for your loved ones. Here are the basics you need to know about writing your will.
2. Name a beneficiary on your registered financial accounts. Many accounts let you name your spouse or children as direct beneficiaries. When you designate a beneficiary, the asset isn't part of your estate, and therefore isn't subject to Estate Administration Tax.
3. Review how you hold your assets. Property held jointly with a survivor also passes outside the estate, but joint ownership has its own legal and tax implications. See why we generally advise against adding your child to your home's title.
4. Get personalized advice. Your situation is different from your neighbour's or a family member's, so speak with a trusted estate planning lawyer.

For more on how EAT interacts with other taxes, read Estate Administration Tax and Capital Gains in Ontario.

Are there exceptions to the EAT rules?

As with so many rules, there are exceptions. Some assets pass outside the estate, and the details depend on how each asset is held and who is named. Your personal and estate situation is going to be different from anyone else's, so we always recommend reaching out to your trusted estate planning lawyer for advice that works for you and your assets, so there are no unexpected or nasty surprises.

Frequently asked questions

What is Estate Administration Tax in Ontario?
It's the official name for probate fees, a tax imposed by the Government of Ontario based on the value of the estate at the time of death.

How much is Estate Administration Tax in Ontario?
There's no tax on the first $50,000 of an estate, and $15 per $1,000 above that. Use the Government of Ontario's calculator to confirm the current amount for your situation.

Do all estates pay Estate Administration Tax?
No. It applies only to estates that go through probate, and only to assets that require probate to administer.

Which assets don't require probate?
Assets held jointly with a survivor, and assets with a designated beneficiary, generally pass outside the estate.

Can you avoid Estate Administration Tax?
There's no way to be exempt from it on assets that go through probate, but a will, beneficiary designations, and careful planning can reduce how much of your estate is subject to it.

Does having a will reduce Estate Administration Tax?
Not necessarily. A will may not reduce the amount payable, but it simplifies the probate process for your loved ones.

Contact

Brian McMurter is a real estate and estate planning lawyer at McMurter & Associates in Whitby, helping Durham Region, Ontario residents with estate planning and real estate law. 

Contact McMurter & Associates Monday to Friday, 9 a.m. to 5 p.m. at info@mcmurter.com or call 1 800 756 7138 or 905 666 9200 to schedule a consultation.

Disclaimer: This article provides general information about Ontario law and is not a substitute for legal advice. Please speak with a lawyer about your specific circumstances before making decisions about real estate law and estate planning.