The New Year brought with it some big changes for Ontario executors or estate trustees. At my law office in the Kanata-Stittsville area of Ottawa, there has been plenty of discussion about the new Estate Information Return (EIR) and the potential for an executor to be faced with an audit. Executors have always been responsible for ensuring the right amount of probate tax, now referred to as estate administration tax or EAT, is paid. The primary purpose of filing the new EIR filing is to ensure that all assets have been properly reported, valued and the applicable EAT has been calculated and paid. With the new rules in place, executors need to be prepared for an audit if their EIR is selected for review. Here’s what you need to know.
What is an EIR?
As of January 1, 2015, within 90 days of the Certificate of Appointment of Estate Trustee (commonly called ‘probate’) being issued by the Court, the executor (or estate trustee) must file an Estate Information Return with the Ontario Ministry of Finance. The EIR reports information about:
- the deceased,
- the Certificate,
- the assets of the estate,
- how date-of-death asset values were determined, and,
- the amount of estate administration tax (EAT).
When can the EIR be audited?
The Ministry of Finance can conduct an audit of the information reported in an EIR at any time up to four years from the date that the Certificate of Appointment of Estate Trustee was issued by the court. However, the 4-year limitation does not apply if:
- the EIR was filed late;
- the executor made a misrepresentation through neglect, carelessness or wilful default; or,
- the executor committed fraud.
If any of the above apply, there is no time limit on when the Ministry may conduct an audit. When reviewing the EIR, if the Ministry believes that the assets of the estate have been undervalued, the Ministry can assess the estate. The executor must then be able to show how the value of the assets was determined and that the EIR values reported were, in fact, accurate. Proof of asset values can be shown by having bank statements, investment reports, property appraisals, jewellery appraisals, and similar documents on hand to show the value of assets as of the date of death.
An executor will not hear form the Ministry if there are no issues with the EIR. The Ministry only sends out a Notice of Assessment if they disagree with what was report on the EIR.
Are you acting as an executor? Do you have questions about the EIR and what is required of you as an executor or estate trustee? If so, send an email to firstname.lastname@example.org or call 613.836.9915 to make an appointment to meet with me at my Ottawa law office. We can assist in you preparing to file the EIR or review an EIR that you have already filed if you are concerned that the EIR may not be correct.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.