Tax Tip 110: Tax Issues with Paying Executors of Estates

Tax Issues with Paying Executors of Estates

Many people want to leave something extra to the executor of their estate upon death. The position of executor involves a lot of work and involves a lot of risks so it is only natural that some want to give a bit more to the persons that take this role.


But there could be tax consequences depending on how it is done.


A payment for services performed as executor will be income for tax purposes under s15-1 ITAA 1997. This is because it is payment directly related to the services provided by the executor, ATO ID 2014/44.


However gifts are not income if they are given with nothing expected in return.


Therefore carefully consider how you word your will so you can maximise gifts.


s15-1 ITAA 1997
INCOME TAX ASSESSMENT ACT 1997 - SECT 15.1 What this Division is about

ATO ID 2014/44
Income: Commission paid to executor of deceased estate

ATO ID 2014/44 - Income: Commission paid to executor of deceased estate

 

See also
ATO ID 2004/513 (Withdrawn) Income Tax Income: Commission paid to executor of deceased estate
ATO ID 2004/513 (Withdrawn) - Income: Commission paid to executor of deceased estate