What information is included in an Estate Information Return?
Information about the deceased and the executor is required in the Estate Information Return along with a list and description of each estate asset (some estate assets such as household contents can be grouped together).
Assets that should be included include:
- real estate in Ontario (less encumbrances)
- bank accounts
- non-registered investments (e.g., stocks, bonds, trust units, options)
- RRSPs, RRIFs, TFSAs if proceeds pass through the estate (e.g., no named beneficiary other than ‘Estate’)
- vehicles and vessels (e.g., cars, trucks, boats, ATVs, motorcycles)
- all property of which the deceased had beneficial interest even if legal title was held by someone else
- Jointly owned assets without a right of survivorship (e.g., joint tenants in common – JTIC)
- all other property, wherever situated, including:
- intangible property
- business interests, and
- insurance, if proceeds pass through the estate (e.g., no named beneficiary other than ‘Estate’).
A calculation of applicable probate tax is also included What assets are excluded?
- Real estate outside Ontario
- Canada Pension Plan (CPP) death benefits
- Assets that pass outside of the estate including:
- Jointly owned assets with a right of survivorship (JTWROS)
- RRSPs, RRIFs, TFSAs with a with a named beneficiary other than ‘Estate’
- Insurance proceeds paid to a named beneficiary other than ‘Estate’
How are RESPs and RDSPs impacted?
RESP assets belong to the plan subscriber until paid to a beneficiary for school purposes. In the case of joint RESP subscribers (spouses only), the RESP is not included in the estate of a deceased subscriber as his/her spouse or common-law partner, as joint subscriber, will continue to manage the plan. In the case of a single subscriber, death of the subscriber will require the RESP to be part of the deceased’s estate which would normally require probate tax and inclusion in the Estate Information Return. Because RESP assets do not belong to RESP beneficiaries until paid from the plan for school purposes, death of an RESP beneficiary does not require RESP proceeds to be part of the deceased’s estate. RDSP assets belong to the RDSP beneficiary. Death of an RDSP beneficiary requires RDSP assets to be part of the deceased’s estate, meaning probate tax and inclusion in an Estate Information Return.
How do executors file an Estate Information Return?
Estate Information Returns can be filed by mail or courier, fax or in person. Details can be found here: http://www.fin.gov.on.ca/en/tax/eat/index.html.
With the new process, is there a change to probate rates?
No. The probate rates and the way they are applied remain the same. Current 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.
No probate tax is payable if the value of the estate is $1,000 or less.
What happens if estate values are understated or if an Estate Information Return is not filed?
If, within four years of receiving a Probate Certificate, an executor realizes that an Estate Information Return was incorrect or incomplete, an amended Estate Information Return must be received by the Ministry of Finance within 30 calendar days of the executor becoming aware of the incorrect or incomplete information. If an executor becomes aware of incorrect or incomplete information after four years has passed, there is no requirement to file an amended Estate Information Return. If the Ministry of Finance determines, through audit, that estate values were underestimated, the Ministry will issue an assessment or reassessment notice, typically within four years after the day estate tax became payable (ie. the day a Probate Certificate was issued). Despite the above four year time limit, the Ministry of Finance can, at any time, assess or reassess an estate where it is determined that an executor has (1) failed to file an Estate Information Return on time or (2) made a misrepresentation through neglect, carelessness or willful default, or committed fraud in supplying or omitting information regarding the estate. Executors who fail to file an Estate Information Return as required, or who make false or misleading statements on the return, can be liable to a fine of at least $1,000 and up to twice the tax payable by the estate and/or imprisonment of up to two years.