Does Canada have an estate tax?
Canada does not have a federal estate tax or inheritance tax. Instead, the Income Tax Act deems the deceased to have disposed of all capital property at fair market value immediately before death, triggering capital gains tax on accrued gains. Provincial probate fees (called 'Estate Administration Tax' in Ontario) are the only direct death-related fee, ranging from flat fees in Quebec and Alberta to percentage-based fees in Ontario and BC.
How are Ontario probate fees calculated?
Ontario's Estate Administration Tax (EAT) is calculated at 0.5% of the first $50,000 of the estate's gross value, and 1.5% on everything above $50,000. For a $500,000 estate: $250 (first $50k) + $6,750 (remaining $450k) = $7,000. The tax applies to the total fair market value of all assets in Ontario at the date of death, including real estate, bank accounts, investments, and personal property.
Can I avoid probate in Canada?
Yes. Common probate-avoidance strategies include: joint ownership with right of survivorship (assets pass directly to the survivor), designated beneficiaries on RRSPs, RRIFs, TFSAs, and life insurance (paid directly, not through the estate), inter vivos (living) trusts, and multiple wills in Ontario and BC (a private will for shares in private corporations).