Newly changed tax has local Funeral Directors seeing red

Licensed Funeral Directors Tim Baragar and Jeff Neuman are sounding the alarm bells over a new tax program that they say will make life difficult for estate representatives in Ontario.

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.

Tim Baragar has been in the funeral business for a long time. He received his Funeral Director’s license in 1982 and since 1996 he has operated Baragar Funeral Home in downtown Bancroft.

Baragar makes it clear that his service does not end at the cemetery. He and Funeral Director Jeff Neuman do their best to help families obtain pertinent documents and ensure that a loved one’s affairs are in order.

And that’s why Baragar and Neuman are sounding the alarm bells over a newly changed tax that took effect on Jan. 1. The Estate Administration Tax (EAT), its timelines and its penalties, are something these Funeral Directors think everyone needs to be aware of.

“It is frightening to see how this government has simply slipped this in without any discussion that I know of. It will have a major impact on all of us at some point,” Baragar says. “We need to be making lots of noise to hopefully get this revoked.”

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. The calculation goes like this – $5 for each $1,000 of the first $50,000 and then $15 for each $1,000 of the value of the estate over $50,000.

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.”

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.”

Ministry of Finance representative Scott Blodgett says estate representatives should have been compiling all or most of the information that must now be reported on the return.

Baragar is unhappy with this response and thinks the short timeline will make people more hesitant to accept the important role of acting as an executor. He sees time and time again how challenging it can be to sort through an estate and he fears that the stress and potential penalties will make a difficult time even worse.

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’s 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.

While the tax program rolls out and more and more people in Ontario are introduced to the reality of the EAT program, Baragar suggests learning what you can when you can. Speak to professionals, your funeral director, your financial advisor, your lawyer and make the best possible plans so that your loved ones don’t end up with any additional burdens.

“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.”

 

Editorial note – please follow this link for EAT details.

This link might also be helpful.

23 thoughts on “Newly changed tax has local Funeral Directors seeing red

  1. FayvHenry

    Tim…..thank you for alerting us to this new tax. Your comments are “right on” as executors of an estate are usually family members and they are going through a grieving period. It would be so rough to have to rush into doing all that is required under this new regulation. Mistakes could easily be made!

    1. dorothy cox rothwell

      I agree with the person who said we need to get in touch with our MP, an online petition would be a good place to start, not sure how to do that one …
      it is unfair as I have done this role several times and it takes more time, and the government has most of this information through taxation already..and how did they pass it without our hearing about it

  2. Arden Pritchard

    I can’t believe the thieving Liberals you can’t even pass away and they are charging us for that.How sick are these idiots.

  3. david graf

    this is not hard to believe as the wasteful and unaccountable practices of our goverment has led

  4. Laurie wood

    Yes Thanks for sharing this information. Most people wold not even be aware of this. All I can say is Our Government should be ashamed of themselves!!!

  5. Shirley McPhie

    well I guess there isn’t much more they can do to us . I worked hard all my life and all I have is my house which is supposed to be my 7 kids inhearitance . I guess there won’t be much left for them . They also worked hard all thier lives , so what”s left for any one ??

  6. Mavis Bowers

    Two things are sure…Death and Taxes. They have just ensured another one. As it is the stress at these times can be over whelming. To add these obligations is cruel and unjust.
    Thanks Tim. Your help to me and my family over the years has been very much appreciated and I thank you again. Mavis

  7. Sandra

    not everyone dies to a schedule…accidents, heart attacks, etc.
    So why would an executor be compiling all this information before hand? I wrote my will a couple of years ago and have an executor who has not been given any of that information.
    When my husband passed away last year, it took more than 3 months for some of the information to come in to me ( his executor) from government sources and it took over 6 months to straighten out an insurance company because one of THEIR operators had put a wrong # in a sequence of numbers.
    Government is looking for any excuse to come up with a tax so they can spend, spend, spend.

  8. Melody Chard

    Siggghhhh! Yet another reason to see politicians for the dirty rotten scoundrels they have become. “EAT” indeed…..as in eat us alive when we are living, and eat us again for dying, and eat anyone who has the awful task of putting together our final affairs. When will this greed ever stop?

  9. Josephine brown

    This is a disgusting tax that they Ontario government should get rid of. Myself and my husband pay tax on everything we buy already things as small as a screw driver to as a large purchase as a vehicle and now they want to tax me or my husband or family member on the estate. The Ontario government should be ashamed of themselves on double taxing. At first we didn’t have a death tax for the longest time then the HST took care of that which has brought back the death tax now they want more….shame shame shame on you the government of Ontario. I guess what the government is telling us you truly do not own anything you buy with out paying taxes twice. And that just keeps multiplying as the next person in your family passes away and say the inherit your house and they pass away they will get taxed again and so on and so on can’t say it enough disgusting

  10. June

    I’m truly dismayed by this. I’m going to assume they cannot interfere with federal accounts such as rrsp/tfsa? What about life insurance via my employer? As for savings, I’m buying gold bars and putting them in a non financial institution so at least I know when I die, something will be left for my loved ones that the government can’t touch.

  11. David Gillick

    As an appraiser with the Appraisal Institute of Canada I have appraised a couple of properties for this new EAT program.
    Just last Friday I appraised a mobile home on leased land not owned for estate purposes.
    It appears nothing is exempt from this new tax ?

  12. Donna Bryant

    I have to wonder how many MPPs, who voted in favour of this bill, have ever been an executor for an estate. I have been an executor three times in the last twelve years and not one estate was finalized within a 3 month period. Thanks for bringing this to our attention and we need to get this rescinded.

  13. Pat Stephenson

    Thank you Tim and Jeff for bringing this to our attention. At least there is a possibility of being prepared for death events having this knowledge ahead of time. I can certainly see concerns over having all paper work ready to file within three months particularly when an executor has to be dependent on other institutions for some of the filing material. Can a person afford to die? Also, if a person does not have an executor is this then the moment when the government jumps for glee and just takes over most if not all of your assets?

  14. lynn

    This is not new. This is what was known as probate fees. All they’ve done is name probate fees for what they are. A tax. Been around for a while these probate fees. And with a proper estate set up, can be worked around. No news here.

  15. Edward

    I wholeheartedly agree with Vera’s response above where she suggests ” Why don’t you start a petition and have taxpayers sign and submit their protest on-line?”

    An on-line petition is an excellent idea, very easy for all of us to respond to, and would quickly garner hundreds of thousands of names opposing this highly insensitive tax grab.

    Edward

  16. Tom Kirkby

    Tim
    Thanks for this info and it shows why the liberal government should not have got in.

  17. Vera

    Something else to place an additional burden on the families left grieving. Not sure that my parents are aware of this…so it’s left to myself and my brother to come up with the funds…crazy!! I now under the term, “being taxed to death”!

  18. Rob Howard

    This tax was actually brought in by the Harris government in 1998 as an alternative and replacement to traditional estate resolution probate fees. To put it into perspective, the administrative fee amounts to 250 on a 50,000 estate and around 7,000 of a 500,000 estate. Having said that, I certainly understand the concern that some of the terms and conditions of the revised EAT are onerous. I think these funeral directors are well positioned to understand this and that their feedback should be factored into future versions of this legislation.

  19. Jim White

    Thank your sharing this information. I have never heard of this tax. It seems the Ontario government must have slipped this in quietly. We need to pay attention to this as it will have serious implications for many as the time comes to settle an estate, whether upon our own death or the death of someone for whom we have been appointed executor.