Any fees you receive for acting as an executor of a will or as a director of a company must be included in your income for income tax purposes.

Executor Remuneration

Usually the will of a deceased individual includes the appointment of an executor to administer the estate as well as provision for payment for these services. Sometimes a misconception exists, especially if the administrator happens to be a family member, that the executor's fees are part of the distribution of the estate and therefore not subject to tax in the hands of the executor.

According to the Income Tax Act, the fee earned for the administration of the estate by the executor is treated as income from an office or employment, even if the individual does not normally work as an executor and even if the executor is completing the task as a family member. It is Canada Customs and Revenue Agency's position that if a professional (e.g. lawyer or Chartered Accountant) has been appointed as an executor but the practice does not normally include the administration of estates, the income would also be considered income from an office or employment. However, if the executor is a professional whose practice normally earns executory income, the fees are considered to be income of the business, not income from an office or employment. In this case, expenses incurred for the purposes of carrying out executor duties, to the extent that they are not recoverable from the estate, may be deducted as a normal business expense.

Director's Fees

The Income Tax Act provides that a director of a corporation holds an "office" and therefore any fees received for services in this capacity are considered to be from an office or employment.

If an individual is acting on behalf of a corporation or partnership as a director, and the director's remuneration is turned over to the corporation or partnership, then the remuneration is considered to be income of the corporation or partnership.

Expenses

Whether acting as an executor or a director of a company, determining whether the remuneration is considered income from an office or employment or business income affects the allowable expense deductions. We would suggest that you talk to us to determine the appropriate allocation of expenses for your particular situation.

The above provides general information only. It should not be regarded or relied upon as accounting or taxation advice or opinions. Logan Katz LLP Chartered Accountants would be pleased to provide more information or specific advice on matters of interest to you.

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