Death and Taxes

A newly appointed Executor will want to understand their obligation to tax authorities.

Income Taxes

• Fortunately in Canada there are no taxes commonly known as death taxes in the U.S.
• There are obligations however. The final income tax return(s) are the responsibility of the Executor; as may be Trust income tax returns for the Estate created at death.
• There might be significant tax liabilities at death. Assets which don’t qualify for tax deferred roll-over are deemed to be disposed of at the date of death. This includes all RRSP’s and RRIF’s. The Executor is legally responsible for payment of the resulting tax liability.

Probate (Estate Administration Tax)

• While still commonly referred to as “Probate”, in Ontario probate has been replaced by an Estate Administration Tax (E.A.T.) E.A.T. is payable upon application for a “Certificate of Appointment of Estate Trustee”. Some Estates may be able to avoid obtaining a Certificate of Appointment (therefore no E.A.T.). However in order to deal with most real estate and financial transactions the Executor (Trustee) will need this certificate. E.A.T. is based on a percentage of the value of the Estate. The tax is calculated 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. There is no estate administration tax payable if the value of the estate is $1,000 or less.