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Home » Taxation
Deductibility of Executor Expenses
Category :- Taxation

Author :- Steven Frye 
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Posted on June 17, 2014, 6:04 pm
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Generally speaking, an executor who earns fees in the course of carrying on a business may deduct the expenses net of any estate reimbursement against the fees in computing net income for tax purposes. An executor who is not performing their duties in the course of carrying on a business is considered to have received the fee for acting as executor as income from an office.

The Income Tax Act (ITA) limits the deductible expenses from income from an office or employment. Generally, The ITA allows a taxpayer to deduct travel (including meals) and motor vehicle expenses, if the following conditions are met:

1. The taxpayer was ordinarily required to carry on the duties of the office or employment away from the employer’s place of business or in different places;
2. The taxpayer was required under the contract of employment to pay the travel and motor vehicle expenses incurred in performing the duties of the office or employment; and
3. The taxpayer did not receive a reasonable allowance for the travel and motor vehicle expenses.

In a recent technical interpretation, the Canada Revenue Agency(CRA) took the view that the executor’s appointment to administer an estate does not typically require the executor to bear the cost of estate administration as an estate is generally obliged to reimburse an executor’s properly incurred out-of-pocket expenses. Accordingly, in the CRA’s opinion, the second condition above cannot generally be met therefore an executor who receives their fee as income from an office or employment cannot deduct non-reimbursed expenses.

 

Source: http://www.allaboutestates.ca/estate-planning/deductibility-executor-expenses/

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