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Ruling
Subject: Assessability of executor's fee
Question and answer:
Will the amount you receive by way of an Executor's fee for administering a deceased estate be included in your assessable income?
Yes.
This ruling applies for the following period:
1 July 2011 to 30 June 2012.
The scheme commenced on:
1 July 2011.
Relevant facts and circumstances:
You are the Executor of a deceased estate (the estate).
You will charge a fee for your services as executor of the estate.
The amount you will charge will be an amount that is allowed under the relevant state law.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
Generally, amounts of ordinary income are included in the assessable income of a resident taxpayer in the year they receive the amount.
In determining if an amount is income according to ordinary concepts, consideration must be given as to whether the amount is the product of any income producing activity. Such an activity could include employment, carrying on a business or rendering services (Brown v. FC of T [2001] FCA 596; (2001) 47 ATR 178; 2001 ATC 4294).
You will charge a fee for the services you render as executor of the estate. As such, the fee you charge will be ordinary income and will be included in your assessable income in the year you receive it.