New “Estate Information Return” Required Under The Estate Administration Tax Act Of Ontario
By James Tait 2015/08/23
The Personal Representative of an Estate (Estate Trustee, also known as an Executor or Executrix) is now required to perform one more task in the administration of an Estate in the Province of Ontario.
As before, when dealing with Estate assets, the Personal Representative may need to make an Application for Certificate of Appointment of Estate Trustee With (or Without) a Will, formerly known as “Probate” to the Superior Court of Ontario. The Application requires a statement of value of the personalty and real estate holdings of the deceased. “Personalty” includes personal property like jewelry, furniture, art, etc. For Applications made after January 1, 2015, a deposit is paid with the Application based on the total Estate value under the Application, and upon issuance, the deposit becomes “Estate Administration Tax” (E.A.T.) (formerly known as probate fees).
The E.A.T. rate remains the same as prior to January 1, 2015, and is payable by the Personal Representative in his/her or its representative capacity only. The amount of E.A.T. is $5.00 for each $1,000.00 of Estate assets up to $50,000.00, and $15.00 for each $1,000.00 of Estate assets over $50,000.00.
Generally, the assets subject to E.A.T. include real estate in Ontario (less encumbrances), bank accounts, investments (stocks and bonds), valuables, automobiles, boats, household contents and property held for the deceased by another party, and all property wherever situated. Note that certain assets designating a beneficiary (i.e. insurance policies, R.R.S.P.s, tax free savings accounts), joint assets with right of survivorship, and assets covered under a Secondary Will, are excluded.
Prior to the new Regulation, there was no formal requirement to substantiate the values stated in the Application. Now, effective January 1, 2015, there is a strict requirement as set out in the Regulation, to file an Estate Information Return (E.I. Return) stating the value of Estate assets at the time of death, within 90 days after the Certificate of Appointment is issued by the Court.
The E.I. Return requires particulars of the Certificate of Appointment, the deceased and the Personal Representative. There is also a requirement for full particulars of each asset included in the Estate and the valuation assigned to that asset. For example, real estate in Ontario requires the assessment roll number, the property identifier No. (PIN), address, and postal code, together with the fair market value.
Some E.I. Returns may be audited by the Ministry of Finance and the Personal Representative will be required to substantiate the value of the assets as stated in the Return. There are procedures for dealing with assessments which are governed by the Retail Sales Tax Act of Ontario.
The Act sets out two further requirements, if applicable. The Personal Representative is required to file an amended E.I. Return within 30 days of the Personal Representative becoming aware that the information in the E.I. Return is incorrect or incomplete, or if the initial E.I. Return was based on estimated values. The Personal Representative’s obligation continues for four years from the date that the Certificate of Appointment was issued.
The second responsibility relates to subsequently discovered property, of which the Personal Representative must inform the Court and file a revised E.I. Return. This obligation continues indefinitely.
The Act now provides serious penalties for failing to file an E.I. Return or making false or misleading statements. The penalty may be a fine of at least $1,000.00 but not exceeding twice the amount of the E.A.T. payable by the Estate if that amount is greater than $1,000.00, and in extreme circumstances, possible imprisonment for a term of not more than two years, or both. There is a saving provision for any person who did not know that the statement or omission was false or misleading and in the exercise of a reasonable diligence, could not have known that the statement or omission was false or misleading.
When appointing a Personal Representative, it is important that the representative has interest in, and is capable of carrying out the duties and responsibilities of a Personal Representative, is in good health, and has the time to do so. The Personal Representative must be aware of the duties and responsibilities of a Personal Representative, and be given in the Will the powers to obtain legal, tax and investment advice as required in the administration of the Estate according to law. It is important these matters be considered when planning your Estate and that they be addressed in your Will.
For advice on this topic and all Estate matters, please contact a lawyer in the Sorbara Law Estates Group.