Principal Issues: Whether $20,000 received annually as an executor fee is either a non-taxable gift or, alternatively, taxable income.
Position: The executor fees are likely taxable as other fees.
Reasons: The remuneration is ascertainable and is likely received in consideration for services rendered in the office of executor.
XXXXXXXXXX 2005-012222
Kathryn McCarthy, CA
May 5, 2005
Dear XXXXXXXXXX:
Executor Fee Received
This is in reply to your e-mail dated March 21, 2005, concerning the above noted subject matter.
You described a situation where your niece stipulated in her will that $20,000 be given to you for work as executor each year until the wind-up of the estate. You enquired as to whether this is either a non-taxable gift or, alternatively, taxable income under the Income Tax Act (the Act).
Our Comments
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to offer the following general comments.
Generally, the fees earned for the administration of an estate by an executor will be treated either as income from a business or income from an office. Where the taxpayer does not act in the course of carrying on a business, the executor fees are included in income under paragraph 6(1)(c) of the Act. In our opinion, the fees you received are likely consideration for services rendered in your office as executor. For more information, see Interpretation Bulletin IT-377R, Director's, executor's and juror's fees (Archived), which is available on our website at http://www.cra-arc.gc.ca/formspubs/prioryear/it377r/README.html.
We trust these comments are helpful.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch