EAT, more commonly referred to as probate fees, have been revised for Ontario. While a new regime will take effect January 1, 2013 to date the Ontario Government has not published any regulations or details to assist estate practitioners and administrators with preparations for the changes.

What we do know is there will be substantive changes that will come into use including:

• New prescribed information returns that will be required indicating full disclosure of all assets of the estate including those not currently subject to EAT.
• A new four-year reassessment window available to the Ministry that also appears to mean that there will not be a clearance certificate able to be issued before that expiry of the window meaning that, even the simplest estate, will need to remain open for at least 4 years.
• The above limitation period does not expire if the estate fails to report all prescribed information.
• Penalties beginning at $1,000 up to twice the amount of tax payable and/or 2 years jail.
• All estate will be required to maintain detailed accounting records similar to that needed for passing of accounts.
• It will be necessary to file for a certificate of probate even if there are no assets to be taxed.
• Valuations will be required for all items listed which can significantly increase the cost of administration.

Some items that will not change are the exemptions currently available for the following assets:

• Insurance proceeds and pensions with a named beneficiary.
• Jointly-held property with the right of survivorship.
• Real property held outside Ontario.

Additional issues that have yet to be determined or announced may include the sharing of information between CRA and Ontario to ensure there is consistency between the filings of terminal returns and EAT. There is also a question as to whether multiple wills, often used to separate assets subject to probate from those that would not (i.e. shares in private corporations), will still be available for use. The assets will have to be reported but the question of taxing them has not been answered.

There are also concerns about who will be liable for the reporting and any penalties and taxes. It may be the administrators or the beneficiaries or both and the location of these parties will also be of potential concern.

Those using institutional trustees will have to be aware that, because of the waiting period and the new potential liabilities, costs may be substantially higher.

One consideration is that estate administrators should require a joint and several indemnification from all beneficiaries upon assuming their responsibilities.

The effective date of January 1, 2013 refers to the date of filing the estate with Court and not the date of death so that estates currently under administration should take care to try to wind-up before that date.

Among the suggested solutions to ease the burden of EAT is undertake an estate freeze or liquidate as much into cash as possible.


Two recent cases outline the importance of documentation in supporting a claim for tuition fees paid for a child with disabilities. While the medical expense tax credit (METC) will be available for tuition fees it is very important that certain steps are completed first.

The 1998 the Court established four rules in order to qualify for the METC. They are:

1. “The taxpayer must pay an amount for the care and training of the patient at a school, institution or other place.” This means that if the school also teaches to children that do not have disabilities then there must be a payment over and above what the other children pay. If the school is strictly for children with disabilities then this distinction would not apply.
2. “The patient must suffer from a mental handicap.”
3. “The school, institution or other place must specifically provide to the patient suffering from the handicap, equipment, facilities or personnel for the care or the care and training of other persons suffering from the same handicap.” This again returns to the idea that if the school or institution is not solely for the disabled then the claim may be questionable.
4. An appropriately qualified person must certify that the mental or physical handicap is the reason the patient requires that the school specially provide the equipment, facilities or personnel for the care or the care and training of individuals suffering from the same handicap.” This stresses the importance that a qualified person, generally a medical professional, provide a written opinion including the nature of the handicap and the necessity of the special training. It would be even better if the opinion included a listing of the various institutions that would provide the necessary support and training.

In the more recent cases the families used schools that were not specifically set up or equipped to provide training and educating for disabled children but were private schools and the fees charged were no different than those charged to other students.


The case of Canadian Winesecrets Inc v The Queen details the importance of a proper business valuation before undertaking a tax-free rollover to a corporation. In this recent case the individual had transferred all the assets and liabilities of the business to the taxpayer corporation. The liabilities were greater than the assets so the difference was treated by the taxpayer as goodwill. The question was what, if any, value was the goodwill. The taxpayer had not retained an expert valuator to determine the value but CRA did and their expert determined that there was no goodwill as the business had been in a loss position and did not have an established customer base facilities or contracts of an enduring nature. The CRA position was that any goodwill was personal as opposed to commercial and that personal goodwill was not an asset that can be transferred.

The Court agreed with CRA and the result was a personal income to the individual for the amount reported as goodwill. The lesson is, obtain a valuation based on supportable facts and you are better equipped to avoid the hardship of a challenge from CRA.