When a loved one passes away in Ontario, the government doesn’t technically charge an “inheritance tax” on the people receiving the money. However, they do charge the estate a “hidden” fee known officially as the Estate Administration Tax (EAT)—more commonly called Probate Tax.
As of 2026, this tax remains one of the highest in Canada, making it a top priority for people looking to preserve their family’s wealth. Here is everything you need to know about how it’s calculated and how to legally minimize it.
1. The Math: How Much Does It Cost?
In Ontario, the tax is calculated based on the total value of the assets that must go through the court (the “probate estate”). The current 2026 rates are:
- First $50,000 of estate value: $0 (Exempt)
- Amount over $50,000: $15 for every $1,000 (or 1.5%)
Example Calculation:
If you leave an estate valued at $800,000:
- Subtract the $50,000 exemption = $750,000.
- Multiply by 0.015 (1.5%) = $11,250.
This amount must be paid as a deposit to the Minister of Finance at the time the executor applies for a probate certificate.
2. What Assets are “Probate-able”?
The tax is only charged on assets that require a court-certified executor to move.
| Usually Subject to Probate | Often Bypasses Probate |
| Real estate owned solely by the deceased | Real estate held in Joint Tenancy |
| Bank accounts in only one name | Accounts with a Named Beneficiary |
| Vehicles and personal property (jewelry, art) | Life insurance paid to a person (not the estate) |
| Non-registered investment accounts | RRSPs, RRIFs, and TFSAs with beneficiaries |
| Business interests (without a second Will) | Assets held in a Living Trust |
3. The “Deemed Disposition” Trap
While the 1.5% probate tax is what people talk about, the real tax hit at death is often the Final Income Tax Return.
The CRA treats the deceased as if they sold everything they owned at fair market value the moment before they died. This can trigger massive Capital Gains Taxes on:
- Investment properties or the family cottage.
- The full value of RRSPs or RRIFs (unless rolled over to a spouse).
Pro Tip: Your principal residence is exempt from capital gains tax, but it is not exempt from the 1.5% probate tax unless it’s held jointly.
4. Strategies to Minimize the Tax
- Designate Beneficiaries: Ensure your RRSP, TFSA, and Life Insurance have specific people named as beneficiaries. This moves the money directly to them, bypassing the estate and the 1.5% tax entirely.
- Joint Ownership: Holding a home or bank account in “Joint Tenancy with Right of Survivorship” allows the asset to pass automatically to the survivor without probate. Warning: Be careful doing this with children, as it can trigger immediate tax or legal issues.
- The “Dual Will” Strategy: If you own a private corporation, lawyers often draft two Wills. One handles assets requiring probate (like your house), and a “Secondary Will” handles your business shares, which often don’t require court validation—saving 1.5% on the entire value of your company.
- Gifting While Alive: Giving money to your heirs while you are still here removes those funds from your estate, meaning they can’t be taxed at death.
Find Out More
Find out more about Guthrie Law’s estate management legal services.
The information provided on this blog is for general informational purposes only and does not constitute legal advice or a legal opinion. No solicitor-client relationship is created by your use of this site or by any communication sent to Guthrie Law through this website. While we endeavour to keep the information up to date and correct, laws in Ontario change frequently. You should not act or rely on any information on this website without seeking the advice of a qualified lawyer regarding your specific situation.
