The Estate Administration Tax Act, 1998 (“EATA”) is responsible for governing Ontario’s probate laws. To improve the administration of Ontario’s tax system, several measures were implemented in the 2015 Ontario Budget. These changes might not have been taken carefully by advisors and those who involve in the estate planning segment.
Ontario’s Ministry of the Attorney General is currently administrating the probate fees. Due to the legislation changes in 2015, the Minister of Revenue will now be responsible for the administration of this tax. Evaluations, reassessments, objections, appeals, and enforcement will be governed by Ontario’s Retail Sales Tax Act.
Of significant note is the fact that an application for probate can now be held “open” for four years past its creation date to allow ample time for the Minister of Revenue to audit and reassess the application. Generally speaking, if an application was created on Jan 1, 2015, the file could be assessed and audited at any time until Jan 1, 2019. If there is a failure to comply, fraud, or misrepresentation, the file is accessible without any limitation of time. Fines and imprisonment powers will be provided by new provisions for certain types of non-compliance.
Practitioners in this area are expecting to find out about the new regulations and what they would refer to as “prescribed information” about the deceased. Many predictions were made such as increasing needs for valuations. According to these suggestions, the new probate process would more likely to be more expensive and time consuming due to delay in the process.
Currently, the probate fees under the Ontario EATA are as follows:
Financial planning opportunities exist to help mitigate the effect of this rule change in Ontario. Those include gifting assets to children, grandchildren or charity while you are alive (Canada currently has no gift tax); Naming joint account holders with documented intent to relinquish ownership of the asset, naming beneficiaries when possible on savings accounts, and depositing excess funds as premium to permanent life insurance.