Ontario Inheritance Tax Calculator

When someone dies in Ontario, their estate may be subject to inheritance tax. This calculator helps you estimate your potential inheritance tax liability based on the value of your estate and the Ontario inheritance tax rates.

How Ontario inheritance tax works

Inheritance tax in Ontario is a tax on the transfer of property from a deceased person to their heirs. The tax is calculated on the value of the estate above a certain threshold. The tax is paid by the estate, not the beneficiaries.

The Ontario government uses the fair market value of the estate to determine the taxable amount. This includes real estate, personal property, bank accounts, investments, and other assets. It excludes debts and liabilities.

There are two types of inheritance tax in Ontario: the federal estate tax and the provincial inheritance tax. The federal estate tax applies to estates valued over $1 million, while the provincial inheritance tax applies to estates valued over $1 million in Ontario.

Ontario inheritance tax rates

The Ontario inheritance tax rates are as follows:

Taxable amount	Tax rate
First $1 million	0%
Next $500,000	16%
Next $500,000	20%
Amount over $1.5 million	24%

Note: The Ontario inheritance tax rates are subject to change. The rates shown here are based on the current legislation as of the date of this publication.

How to calculate Ontario inheritance tax

To calculate Ontario inheritance tax, follow these steps:

Determine the fair market value of all assets in the estate.
Subtract any debts and liabilities from the total value to get the net estate value.
Subtract the Ontario inheritance tax exemption amount ($1 million) from the net estate value to get the taxable amount.
Apply the Ontario inheritance tax rates to the taxable amount to calculate the tax owed.

Formula: Ontario Inheritance Tax = (Net Estate Value - $1,000,000) × Tax Rate

Ontario inheritance tax examples

Here are some examples of how Ontario inheritance tax is calculated:

Net Estate Value	Taxable Amount	Tax Owed
$1,200,000	$200,000	$32,000 (16% of $200,000)
$1,800,000	$800,000	$144,000 (16% of $500,000 + 20% of $300,000)
$2,500,000	$1,500,000	$294,000 (16% of $500,000 + 20% of $500,000 + 24% of $500,000)

Frequently asked questions

What is the Ontario inheritance tax exemption amount?

The Ontario inheritance tax exemption amount is $1 million. This means that the first $1 million of an estate's value is not subject to inheritance tax.

Who pays the Ontario inheritance tax?

The Ontario inheritance tax is paid by the estate, not the beneficiaries. The tax is deducted from the estate's assets before the remaining assets are distributed to the beneficiaries.

Are there any exemptions from Ontario inheritance tax?

Yes, there are several exemptions from Ontario inheritance tax, including the spousal exemption, the minor child exemption, and the disabled child exemption. These exemptions can reduce the taxable amount of the estate.

How is the value of an estate determined for Ontario inheritance tax purposes?

The value of an estate for Ontario inheritance tax purposes is determined using the fair market value of all assets in the estate. This includes real estate, personal property, bank accounts, investments, and other assets. Debts and liabilities are subtracted from the total value to get the net estate value.

Can Ontario inheritance tax be avoided?

Ontario inheritance tax can be avoided or reduced by using exemptions, such as the spousal exemption, the minor child exemption, and the disabled child exemption. Additionally, gifting assets to beneficiaries before death can reduce the taxable amount of the estate.