What is "estate administration tax" in Ontario?

Estate administration tax in Ontario is specifically a tax paid on the total value of the estate's assets at the time of applying for probate. This tax is calculated based on the fair market value of the assets that form part of the estate, which are considered before any taxes, debts, or liabilities are deducted. The payment of this tax is a prerequisite for the issuance of a Certificate of Appointment of Estate Trustee, commonly known as a grant of probate, which legally recognizes the executor's authority to administer the estate.

Understanding this tax is vital because it directly affects the estate's cash flow and the responsibilities of the executor. The estate administration tax is not an income tax, nor is it imposed on the beneficiaries directly. Instead, it is assessed during the probate process, correlating only to the value of the assets owned by the deceased at the time of their death. Hence, when preparing to administer an estate, the executor must account for this tax along with other administrative costs that may arise.