Being appointed as someone’s power of attorney for property (POA) in Ontario is both an honor and a responsibility. While managing someone else’s finances and legal matters can seem daunting, it's important to recognize that as a POA, you are entitled to fair compensation for your time and effort. Many people are unsure about how to pay themselves properly, but this guide will break it down in simple terms so you don’t need a law degree just to get compensated.
In Ontario, a power of attorney for property allows someone (known as the “attorney”) to manage the finances and property of another person who may be unable to do so themselves due to illness or incapacity. This involves tasks like paying bills, overseeing investments, and potentially selling property on their behalf.
It’s important to distinguish between a power of attorney for property and a power of attorney for personal care. A POA for personal care is someone appointed to make personal decisions about health, medical care, and living arrangements when an individual is unable to make those choices independently.
This role is also distinct from that of an executor. Executors step in only after someone passes away to handle the estate, including settling debts and distributing assets according to the will. A POA, on the other hand, manages the individual’s affairs while they are still alive. The same person or different people can be appointed to fulfill these roles.
Handling someone else’s finances as a POA is a big responsibility, and in Ontario, POAs are generally entitled to fair compensation. However, as with most things in estate planning, there are some important details to understand before you start paying yourself for your services.
To make the process of paying yourself as a POA smoother and more efficient, consider the following steps:
Yes, compensation received as a power of attorney is considered taxable income in Ontario. This means you need to report any amount paid to you for your POA duties on your personal income tax return, just as you would with employment income.
Additionally, you are required to prepare a T4 slip for the compensation received—treating it as if you were an employee. This requires withholding income tax and Canada Pension Plan (CPP) contributions where applicable, and remitting those deductions to the Canada Revenue Agency (CRA). You must also issue yourself a T4 slip at the end of the year. Though this may feel like extra administrative work, it’s critical to comply with tax requirements to avoid penalties.
To simplify this process, consult a tax professional or accountant who can guide you through the paperwork and ensure you’re following all regulations correctly. A little investment in professional advice can save you headaches down the road.
Acting as a POA—Your Work Deserves Compensation
Acting as a power of attorney for property in Ontario carries a significant responsibility, but it also comes with the entitlement to fair compensation. By understanding the rules, communicating clearly with family members, and keeping organized records, you can ensure that the process runs smoothly for everyone involved. Compensation isn't just about getting paid—it's about recognizing the time, care, and effort required to manage someone else's affairs effectively. By following these guidelines and documenting every action, you can confidently fulfill your role while also being paid fairly for your work.
If you have further questions or need help navigating your responsibilities as a power of attorney, consider consulting a legal professional specializing in estate planning.
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