Do Executors Charge HST on Their Fees in Ontario?

An estate trustee, usually called an executor, is often paid for the work of winding up an estate. Whether a bill shows HST depends on the executor's own situation, so it is worth confirming with an accountant. Beneficiaries naturally ask whether differences between bills are right.

This article explains how executor fees fit into the estate, how CRA treats them for the person who receives them, and what to ask before you accept or pay a bill. It does not set out a complete HST test, because the answer turns on the executor's own situation.

What an executor does and who pays

An executor winds up the deceased's affairs: paying taxes, bills and debts, collecting assets and distributing the rest. A named executor is not required to act. Costs for estate professionals, such as tax filing, legal work and property maintenance, are paid from the estate as expenses.

How HST applies to any particular bill depends on the situation, so it is worth confirming with an accountant or lawyer. Beneficiaries therefore have a real interest in whether a charge is proper.

Why a professional bill and a family bill can look different

Whether HST applies depends on the executor's own circumstances. How it applies can differ from one executor to another, so it is worth confirming with an accountant. For that reason two bills can look different.

The exact rules on when HST must be charged, who must register and what exceptions apply are technical. They depend on the person's circumstances, so ask the executor to explain the basis for any HST charged and confirm it with an accountant or a lawyer.

How CRA treats the fee for the executor

For an individual executor who is not in the business of acting as an executor, CRA treats executor fees not earned in the regular course of business as office income. CPP and income tax are deducted, EI is not, and a T4A is issued.

If GST/HST is involved, it must not be included in the T4A box 48 amount. This is one more reason to keep the fee and any tax charged clearly separate in the estate's records.

Fees, HST and the probate tax are separate

Executor pay should not be confused with the Estate Administration Tax paid to the province. Executor compensation is not deducted from the estate value used to calculate that tax. Funeral expenses, lawyer's fees, loans, credit card debt and real estate commissions are not deducted either.

Reporting also continues after fees are paid. A trustee who distributes estate assets before getting a CRA clearance certificate can be personally liable for unpaid tax up to the value of assets distributed. A clearance certificate application should only be made after returns are filed, assessed and paid.

What to do next

• Ask for a written, itemized bill that shows the fee and any HST separately.
• Ask the executor to explain why HST is or is not being charged, and whether they are registered.
• Check that the fee has been approved by the beneficiaries or is otherwise supported before it is paid from the estate.
• If you are the executor and receive a fee, speak with an accountant about T4A reporting, CPP and your own tax.
• Keep every invoice and receipt for the estate's accounts.
• Talk to an estate lawyer if beneficiaries disagree about the amount.

The amount an executor may charge is a separate question from HST. If there is disagreement about either, a lawyer can explain the options before anything is paid.

Frequently asked questions