When applying for probate in Ontario, you must pay Estate Administration Tax (EAT) on the deceased’s worldwide personal property, such as an Alberta bank account. However, you are strictly exempt from paying Ontario EAT on real estate physically located outside of Ontario, like an Alberta condo.
Calculating the Estate Administration Tax (EAT) is one of the most confusing tasks for an executor in Ontario. When a deceased person leaves behind assets scattered across different Canadian provinces, determining what is taxed locally and what is exempt requires a solid understanding of legal “situs” (the legal location of an asset). If the deceased lived in Toronto but owned a vacation home in British Columbia and an investment account in Alberta, the rules change depending on the type of asset.
In Ontario, the law makes a strict distinction between “personal property” and “real property.” 📈 Personal property follows the deceased, meaning if they were an Ontario resident, their bank accounts, investments, and vehicles are taxed in Ontario, regardless of where those assets are physically sitting. Real property, however, is tied to the land. This guide will clarify the rules of situs and help you accurately calculate what you owe to the Superior Court of Justice.
Step-by-Step Process for Valuing Out-of-Province Assets
Failing to properly declare out-of-province assets can lead to severe penalties from the Ministry of Finance. Most applicants in this province rely on a structured approach to ensure their Estate Information Return is perfectly accurate.
Step 1: Auditing the Deceased’s Worldwide Assets
The first step is to conduct a comprehensive audit of everything the deceased owned at the time of death. 🔍 You must track down every bank account, vehicle, piece of art, and parcel of real estate. Do not ignore out-of-province accounts just because the physical branch is in Calgary or Halifax. All assets must be listed out for a preliminary valuation.
Step 2: Categorizing Personal vs. Real Property
Next, you must separate the assets into two distinct categories based on legal definitions. Personal property includes cash, bank accounts, stocks, bonds, vehicles, and business shares. Real property strictly refers to real estate (land, houses, condos). If the deceased owned an Alberta bank account, it is personal property. If they owned a condo in Alberta, it is real property.
Step 3: Applying the Rules of Situs for Ontario EAT
Now, apply the Ontario taxation rules. 💵 Ontario requires you to pay EAT on all personal property, regardless of where it is located in the world. Therefore, you must include the value of the Alberta bank account in your Ontario probate application. However, Ontario law exempts real estate located outside the province. You will completely exclude the value of the Alberta condo from your Ontario EAT calculation.
Step 4: Submitting the Application to the Superior Court of Justice
With your calculations finalized, you will file your Form 74A Application for a Certificate of Appointment of Estate Trustee at the local Superior Court of Justice. When you submit this application, you must pay the total calculated EAT upfront. The court will not process your application or issue the certificate until this tax is paid in full.
Step 5: Filing the Estate Information Return (EIR)
Receiving the Certificate of Appointment is not the final step. 📋 Within 180 calendar days of the certificate being issued, you must file an Estate Information Return (EIR) with the Ontario Ministry of Finance. This document breaks down the exact details and values of the assets you used to calculate the EAT, serving as a formal declaration that your out-of-province exclusions are legally justified.
How Much Does it Cost in Ontario?
The cost of probate in Ontario is directly tied to the total value of the estate’s included assets. Understanding what to exclude (like out-of-province real estate) can save the estate thousands of dollars. Here is how the costs break down in CAD:
| Asset Type / Expense | Included in Ontario EAT? | Estimated Value/Cost (CAD) |
|---|---|---|
| Alberta Bank Account ($100k) | Yes (Personal Property) | Adds $1,500 to EAT |
| Alberta Condo ($400k) | No (Out-of-province Real Property) | $0 EAT in Ontario |
| Ontario Estate Administration Tax | First $50,000 is Exempt | $15 per $1,000 thereafter |
| Lawyer Fees (Probate Application) | N/A | $2,500 – $5,000+ |
- Out-of-Province Legal Fees: While you do not pay Ontario EAT on the Alberta condo, you will likely need to hire a lawyer in Alberta to reseal the probate and transfer the title, which usually costs $2,000 to $4,000.
- Appraisals: Hiring a professional appraiser for out-of-province personal property (like classic cars or art) typically costs $500 to $1,500.
How Long Does the Process Take?
Navigating an estate with assets spread across Canada adds administrative delays. Gathering the necessary financial statements from out-of-province banks usually takes 3 to 6 weeks. Once your application is submitted to the Superior Court of Justice, it takes an average of 2 to 6 months to receive your Certificate of Appointment, depending heavily on the specific municipality. Filing the EIR must strictly be done within 180 calendar days of receiving the certificate.
Frequently Asked Questions (FAQ)
Do I have to pay probate tax twice on the Alberta bank account?
Generally, no. Since the deceased was an Ontario resident, their primary probate process occurs in Ontario, and the EAT is paid there. Alberta banks will usually accept the Ontario Certificate of Appointment to release the funds without requiring an entirely separate Alberta probate application.
What if the out-of-province real estate is owned through a holding company?
If the Alberta real estate is owned by a corporation, the deceased technically owned shares in that company, not the real estate directly. Corporate shares are considered personal property, meaning the total value of those shares must be included in the Ontario EAT calculation.
Does this rule apply to real estate in another country?
Yes. The exemption for real property applies to all real estate located outside of Ontario, whether it is a condo in Alberta, a cottage in Quebec, or a winter home in Florida. It is strictly excluded from Ontario’s EAT calculation.
What happens if I forget to declare an out-of-province bank account?
If you fail to declare personal property and pay the required EAT, you can be audited by the Ministry of Finance. Executors face strict penalties, fines, and potential personal liability for filing an inaccurate Estate Information Return.
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