Principal Issues: Whether an estate has to obtain a business number
Position: Yes.
Reasons: s.6(1)(c) and s.248(1)
XXXXXXXXXX 2007-025050 Lindsay Frank May 27, 2008
Dear XXXXXXXXXX :
Re: XXXXXXXXXX
This is in reply to your letter concerning the above-referenced matter, in which you seek answers as to why it was necessary for the estate to have a business number. We apologise for the delay in replying.
As indicated in your correspondence, the executrix of the above-referenced estate was entitled to receive compensation for services rendered as an executrix. Subsection 248(1) of the Income Tax Act ("the Act") considers the activities of an executrix to be carried out in the course of, or in relation to, the position of an office. That being the case, it was necessary for the estate to obtain a business number.
Since the activities of an executrix are regarded in that light, paragraph 6(1)(c) of the Act will apply, to include the executrix's compensation from the estate in computing that person's income. Accordingly, the estate will be required to withhold tax, and prepare and issue a T4 slip relating to that withholding. Given that the executrix is over 70 years old, deductions on account of the Canada Pension Plan are not required.
Trusting you find this explanation satisfactory,
Yours truly,
Bob Skulski
Manager
Insolvency and Administrative Law Section
Business and Partnerships Division
Income Tax Rulings Directorate