By Danna Fichtenbaum, Wills and Estates Planning Lawyer 

Adding to the anticipated 2018-2019 deficit, Doug Ford’s provincial government has provided a $250 tax break to estates which will be probated on or after January 1, 2020.[1]

On Applications for Probate, [2] probate tax [3] is owed by the estate at issue. This tax is calculated on the basis of the value of the assets being probated.

If a probate application is commenced prior to January 1, 2020, the tax rates are as follows:

• $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.

By way of example, a $1 million estate, if submitted for probate before the new year, would pay $14,500 in probate tax to the Minister of Finance, as follows:

• $5 per thousand for the first $50,000 of the value of the estate = $250; and
• $15 per thousand for the remaining $950,000 of the value of the estate = $14,250.

If submitted for probate after the new year, the probate tax owing for the same estate would only be $14,250 (there is no “charge” for the first $50,000 of assets, but the tax on the balance of the value of the estate remains unchanged).

Probate tax owing on estates valued at $50,000 or less would be zero. [4]

Ford’s 2019 Ontario Budget Speech claimed that this tax break, among others, puts “people first by making life more affordable and convenient.” The extent to which a savings of $250 in the hands of an estate impacts the affordability of life is, of course, yet to be seen.

The legislation responsible for these changes is the Estate Administration Tax Act, 1998, SO 1998, c 34.

If you have any questions about the information in this article or your own will or estate planning or conflict, please contact Danna Fichtenbaum, Wills and Estates Planning lawyer, at dfichtenbaum@mindengross.com.

[1] The maximum tax break of $250 only applies to estates valued at more than $50,000. The savings apply incrementally to estates valued at $50,000 or less.

[2] Technically referred to as “Applications for Certificates of Appointment of Estate Trustee”.

[3] Technically referred to as “Estate Administration Tax”.

[4] It is important to note that these “exempt” estates will still be required to file an Estate Information Return in the ordinary course, though the deadlines for such filings will be extended, also in the new year.