All About Estates

TAX REPORTING OBLIGATIONS FOR TRUSTEE AND EXECUTOR FEES – FOLLOW UP

Awhile ago , I wrote that payments made to trustees and executors usually trigger some form of tax reporting and often, an obligation on the payer to withhold and remit amounts on account of tax. Thanks to some welcomed and practical feedback from a concerned blogger, I would like to add a few comments.

I wrote that trustee, executor, or liquidator fees paid to an individual who does not normally act in the capacity of an executor in the course of a business (e.g. you are a fulltime teacher but you happen to be the executor of your father’s estate for the past year) is income from an office or employment which must be reported on a T4 slip issued by the trust or estate by the end of February.

I am discovering that many of us in the estate planning world and yes even the staff at CRA are not fully aware of this requirement and its implications.

To file a T4 slip, the trust or estate will have to open accounts with the Canada Revenue Agency to facilitate the tax withholding and reporting. Prior to issuing the T4 slip, the trust or estate must withhold taxes and CPP using the payroll tables issued by CRA for this purpose. Failure to make the necessary withholdings may result in penalties. Further, the T4 slip must be issued by the end of February or be subject to a maximum penalty of $25 a day to a maximum of 100 days.

I should again note that you should report these amounts as income from an office, even if you do not receive a T4 slip.

Thanks for reading

About Steven Frye
CW LLP is a firm of professional advisors providing a comprehensive suite of services to a diverse client base. Our experienced and skilled team can provide personal and corporate solutions to maximize growth potential, wealth and value. Email: sfrye@cwcagroup.com