A deceased died owning private companies. Life insurance policies on the deceased’s life were payable to the private companies. Are the insurance proceeds included in the value of the companies and the deceased’s estate for the purposes of calculating Estate Administration Tax?
A good question. In Crichton v. HMTQ, 2021 ONSC 8012 (CanLII), the estate trustees of the estate of Mark Greaves applied to the Court for the opinion, advice and direction of the Court on this very question. However, the Minister of Finance objected. It argued that the legislation did not allow the Court to consider the question (at this point, anyway).
The Minister relied on provisions of the Estate Administration Tax Act (“EATA”) and the Retail Sales Tax Act (“RSTA”). Essentially, the EATA provides that the Minister assess taxes. An estate trustee can object or appeal an assessment. The EATA provides that the procedure for objecting or appealing is set out in the RSTA. Under the RSTA, an application to the court (not by way of an appeal) is permitted but only in very limited circumstances, as specified in the RTSA. One of the preconditions to a court application was the consent of the Minister.
In dismissing the estate trustee’s application, the Court stated: “The purpose of the mechanism set out by the EATA and RSTA is to minimize the court’s involvement in estate administration tax matters, placing those decisions into the hands of the Ministry who is best positioned to make policy decisions with respect to tax law.”
The Court went on to say that access to the Court was still possible. However, the Court would only be involved at the appeal stage, after the procedure set out in the RSTA was followed.
Thus, the initial question remains. I have my views on an answer, but for now, like the Court hearing the application, “I offer no opinion upon the issues to be decided and nothing I have said should be construed otherwise.”
Thank you for reading.