All About Estates

Power of Attorney Fees Paid

The Canada Revenue Agency (CRA) was asked whether compensation received by an individual acting under a power of attorney (POA) is required to be included in the individual’s income for income tax purposes.

A POA is a legal document between two persons whereby one person (A) appoints another person and confers authority to the other person to perform specific acts on A’s behalf. Generally, compensation received by an individual for acting under a POA will be treated either as income from a business or as income from an office. Where the individual is in the business of providing POA services, the compensation will be included in the business income of the individual. In addition, the person who paid the compensation is required to report the amount on a T4A information slip, even if no amounts (i.e., tax, Canada Pension Plan and Employment Insurance) have been withheld at source. Where the individual does not provide POA services in the course of carrying on a business, the compensation is considered to be income from an office and is included in the individual’s. In this situation, the payor must withhold income tax on behalf of the individual and to report the amount on a T4 information slip. Thanks for reading – take note of the obligations when paying POA fees.

About Derek de Gannes
Derek A. de Gannes: Director, Domestic & International Tax of RSM Canada. RSM Canada is committed to the highest level of integrity, quality and professionalism and provides clients with solutions in the area of Audit, Tax and Transaction Services. Email: derek.degannes@rsmcanada.com

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