Posted September 3, 2015
Here’s a new, not so nice tax called the Estate Administration Tax (EAT) that the Wynne Liberals slipped through effective Jan. 1, 2015 and no one is talking about it!
Basically, your survivors and executors have to report the value of all your stuff, valuables, cars and trucks, second homes, boats, RV’s, right down to the exercise bicycle in the basement.
It is yet another roadblock to discourage real growth in Ontario joining the other job killers and evaporating prosperity. Here are some examples of how the Ontario Liberals have mismanaged the Ontario economy: We have the most expensive electricity rates in North America; a new job- killing Ontario pension plan; the most expensive alcoholic beverages in North America; sky high gasoline taxes; supply management agriculture boards that have driven basic food prices to excessive levels; an integrated sales tax of 13 per cent on all goods and services with minor exceptions.
Yes the province even charges the HST on the cost of your funeral.
The province charges the HST on the electricity you use.
The HST is charged on a number of consumables including vehicles, non-prescription drugs, clothing, and items that most people would describe a food or a derivative.
When does the premier stop her relentless quest to bail out a province she and her predecessor created that is now carrying an $8 billion deficit? Her finance minister claims the Ontario budget will be balanced by 2017.
That runs counter to what her federal Liberal leader is saying. He wants to remove the Harper government’s balanced budget legislation and go to deficit financing to fix the country’s infrastructure.
These two leaders who are currently working together to elect federal Liberals in Ontario, but don’t seem to be playing from the same page.
For all the details of this new tax grab, go to the link below where the government explains it or you can read the comments from funeral directors printed out below in layman’s terms, or both. But be forewarned, it’s scary stuff.
Our Wynne Liberal Government presumably has to find a way to repay the billion dollars they gave the construction companies not to build the gas-fired hydro plants and subsidizing wind/solar power projects, the Orange air ambulance fiasco, the E-health record keeping program that cost millions, and other boondoggles they created. The aptly named EAT even has local Funeral Directors seeing red.
Here’s the skinny of Kathleen Wynne’s latest play to extract more money from taxpayers, even after they’re dead.
The current EAT tax rates
- $5 for each $1,000, or part thereof, of the first $50,000 of the value of the estate, and
- $15 for each $1,000, or part thereof, of the value of the estate exceeding $50,000.
Note: There is no estate administration tax payable if the value of the estate is $1,000 or less.
The estate administration tax is calculated on the total value of the estate. For example, for an estate valued at $240,000 the tax would be calculated as follows:
- $5 per thousand for the first $50,000 of the estate
- $50,000 ÷ $1,000 = $50
- $50 X $5 = $250
- $15 per thousand for the remaining $190,000 of the estate
- $240,000 – $50,000 = $190,000
- $190,000 ÷ $1,000 = $190
- $190 X $15 = $2,850
- For a total of $3,100 ($250 + $2,850) payable to the Minister of Finance. The EAT act demands that the executors or appointed representatives must complete the EAT return within 90 days.
- $15 per thousand for the remaining $190,000 of the estate
In order to comply with this new death tax, the estate appointed representatives are forced to consult with the following professionals: Financial advisor, registered appraiser, lawyer, funeral director, insurance broker, the Municipal Property Assessment Corporation, the estate banker. Most of who charge a fee for service in preparing the Estate Administration Tax returns. Those fees along, depending on the size of the estate, could run into the thousands.
Yes, and the return, when filed, must be accompanied with payment in full.
Licensed Funeral Directors Tim Baragar and Jeff Neuman are sounding the alarm bells over a tax program that they say will make life difficult for estate representatives in Ontario. Baragar makes it clear that his service does not end at the cemetery.
He and Jeff Neuman do their best to help families obtain pertinent documents and ensure that a loved one’s affairs are in order.
Sounding the Alarm
And that’s why Baragar and Neuman are sounding the alarm bells over the newly changed tax that took effect on Jan. 1. Its timelines and penalties are something these Funeral Directors think everyone needs to be aware of.
The newly changed tax program that Baragar finds frightening requires an executor to assess, appraise and value any and all property owned at the time of death on a tight timeline. This EAT appraisal includes anything that is not passed directly to a spouse or passed through joint ownership. Assets that are being gifted to charities also need to be included in the valuation. The tax is then calculated and needs to be paid immediately to the Province of Ontario as a deposit.
Baragar explains it this way – when a loved one dies and you are named as the executor of the estate, you apply for a Certificate of Appointment of Estate Trustee and then you have only 90 days to file your Estate Information Return. As soon as you file you have to pay the tax as a deposit. And if you don’t file, there are serious consequences.
According to the Ministry of Finance, “estate representatives who fail to file an Estate Information return as required, or who make false or misleading statements on the return, may be found guilty of an offense and, on conviction, are liable to a fine of at least $1,000 and up to twice the tax payable by the estate or, imprisonment of not more than two years or both.”
Has Ontario become a police state?
This is concerning to Baragar. “It is completely unreasonable for the Ministry of Finance to expect this reporting within 90 days of the trustee beginning their role,” Baragar says. “Just getting print outs and information from banks and investment companies takes a lot of time. My biggest concern is that quite typically the trustees are often family members or close friends of the person who has died. So this simply isn’t a matter of completing a task that the Ministry of Finance merely views as a new source of income, it is a very emotionally demanding and time-consuming job. Couple that with the added stress of dealing with the loss as a family member or close friend, and it can make this role very upsetting and emotionally draining.”
And to be clear – the valuation can’t be a guess. The Province requires that you be able to back-up what you’re filing so if you’re not sure what the current market value is of a home, for example, it’s up to the executor to hire someone to do an appraisal. There is even a link on the Ministry’s website to the Appraisal Institute of Canada.
And once you appraise, value and file you still have to be sure that nothing changes. If you made a mistake or if you missed something you have to immediately contact the Ministry (within 30 calendar days) and make all the necessary corrections.
“For our Government to threaten these individuals with charges and penalties is absurd,” Baragar says. “We pay tax when we earn our living. We pay tax when it generates income within an investment. We pay tax when we pull it from that investment, so this same money certainly shouldn’t be taxed again within the boundaries of someone’s estate.”
Enough is enough.