As of January 1, 2015, a Regulation under the Estate Administration Tax Act, 1998, O Reg 310/14 requires estate trustees to give an Estate Information Return to the Ministry of Finance within 90 calendars days of a certificate of appointment of estate trustee (“Estate Certificate”) being issued. The Estate Information Return requires disclosure of a comprehensive list of information about the deceased person, including “a complete list of the assets of the deceased person used to determine the value of the estate”. An inventory of assets of the estate setting out the fair market value of each asset at the date of death is required as well as specific details of each type of asset.
If, within four years of the issuance of an Estate Certificate, an estate trustee becomes aware that any information given on an Estate Information Return is incorrect or incomplete, a revised Estate Information Return must be given within 30 calendar days of the estate trustee becoming aware that the information initially given is incorrect or incomplete. This requirement ceases after four years of the issuance of an Estate Certificate has passed. Since assets are valued at the date of death, any subsequent change in the value of an asset will not affect the value of the estate and will not require a revised Estate Information Return.
If incorrect information was given about any of the following, a revised Estate Information Return need not be given, but rather the estate trustee is simply required to notify the Ministry of Finance in writing of the updated information no later than 30 days after becoming aware of the incorrect information:
- type of application that was made by the estate trustee;
- date on which the Estate Certificate was issued to the estate trustee;
- court file number that is assigned by the court;
- address of the court;
- date on which the estate trustee gave an undertaking when an estimated value of the estate was used to calculate the deposit of tax and a copy of the undertaking;
- the court order authorizing the issuance of an Estate Certificate prior to the payment of a deposit of tax;
- name of the deceased;
- address – last place of residence;
- date of birth;
- date of death; and
- name and contact information of the estate trustee.
If, after receiving an Estate Certificate, an estate trustee discovers additional property owned by the deceased person, a statement disclosing the subsequently discovered property must be filed with the court within six months of the date of discovery (subsection 32(2) of the Estates Act, RSO 1990, CHAPTER E.21). If property is subsequently discovered, a revised Estate Information Return setting out the subsequently discovered property and its fair market value must be received by the Ministry of Finance within 30 calendar days after the statement is delivered to the court.
If an undertaking regarding the estimated value of the assets of an estate was filed with the court when applying for an Estate Certificate, the estate trustee must provide the Ministry of Finance with at least two Estate Information Returns:
- the initial Estate Information Return, which must be received by the Ministry of Finance within 90 calendar days of the issuance of the Estate Certificate. This Estate Information Return should include estimated values for any assets for which a final value is not yet available, together with a copy of the undertaking; and
- a revised Estate Information Return, showing the final value of the estate, details of the fulfillment of the undertaking and any additional tax paid, which must be received by the Ministry of Finance within 30 calendar days of fulfilling the undertaking.
This may prove to be a compliance nuisance for very large estates where many undertakings are given due to the unknown values of certain assets at the time of filing the initial Estate Information Return. It would be prudent for estate trustees to maintain detailed records of a list of all undertakings that have been given, the dates they are fulfilled and the deadlines for filing revised Estate Information Returns, because every time an undertaking is fulfilled, a revised Estate Information Return must be given.
Failing to give an Estate Information Return may result in a fine ranging from $1,000 to an amount that does not exceed twice the amount of tax payable by the estate if that amount is greater than $1,000, and/or imprisonment for a maximum of two years. Further, the Ministry of Finance has four years to assess or reassess tax payable on an estate and has broad powers to authorize audits and inspections. Where an estate trustee is found to have made a misrepresentation that is attributable to neglect, carelessness or wilful default, has committed fraud in supplying any of the information or in omitting to disclose any information regarding the estate, or has failed to comply with the filing requirements, the four-year limitation period does not apply and the Minister may, at any time he or she considers reasonable, assess or reassess an estate’s tax payable.
These increased reporting requirements have made the estate administration process and obtaining probate more onerous for estate trustees than ever before. We are still in the early days of this new regime, but the question remains whether the government will collect enough additional estate administration tax to justify the costs and burden associated with the new reporting requirements.