How to Pay Yourself as Power of Attorney in Ontario

Being named as someone’s power of attorney for property (POA) in Ontario is both an honour and a significant responsibility. Managing another person’s finances and legal matters can feel overwhelming, but many people don’t realize they are entitled to reasonable compensation for their time and effort. A common question I hear is: how do you pay yourself as a POA? Below I explain the basics in plain language so you can handle this role without needing a law degree.

What is an attorney for property?

In Ontario, a power of attorney for property authorizes an appointed person (the “attorney”) to manage the financial affairs and property of someone who is alive but may be unable to handle those affairs due to illness, incapacity or other circumstances. Typical duties include paying bills, managing investments, signing contracts, and selling property when required.

This is different from a power of attorney for personal care, which covers decisions about health care, medical treatment and living arrangements. It is also distinct from the role of an executor, who administers an estate only after the person has died. The main distinction is timing: a POA acts while the person is still alive; an executor steps in after death. The same person can fill both roles, but they can also be different people.

How much are powers of attorney compensated in Ontario?

Managing someone’s finances is a substantial task, and in Ontario POAs are typically entitled to fair compensation unless the POA document specifies otherwise. Here are the key points to understand:

1. Compensation is generally allowed: If the document that appoints you does not set a fee, the Substitute Decisions Act, 1992 provides guidance. Common practice is a fee equal to 3% of funds handled (paid periodically or as a lump sum at death), plus an annual “care and management” fee of about 0.6% of the total assets under management. These rates reflect the time, attention and fiduciary responsibility involved.
2. Family dynamics matter: Money can create tensions in families. Even though a POA is entitled to compensation, relatives may expect the role to be unpaid or may disagree about the fees. To avoid conflict, be transparent from the start about your duties and any compensation permitted by the POA document or applicable legislation.
3. Keep clear, detailed records: Accurate bookkeeping is essential. Document every transaction—payments, receipts, bill payments, investment moves and decisions you make on the person’s behalf. Detailed records support your entitlement to compensation, protect the person you represent, and shield you from future disputes or allegations of mismanagement.

How are POAs compensated in Ontario?

Once you understand the basics of compensation, the next step is to make the process smooth and defensible. Follow these practical steps to manage compensation responsibly:

1. Clarify compensation early: If the person you represent is capable of making decisions, discuss and document how they want compensation handled. If they cannot, carefully review the POA document to see if it sets out fees. When the document is unclear, seek legal advice to interpret any ambiguous language.
2. Automate and outsource when appropriate: Set up automatic payments for recurring obligations like utilities, insurance and rent to reduce manual work. Consider hiring a professional bookkeeper or paid caregiver for specific tasks; just ensure those expenses are reasonable and documented if you expect to include them in compensation calculations.
3. Schedule professional reviews: Periodically consult with a lawyer or financial advisor to review your records and confirm you’re following the compensation guidelines and your fiduciary duties. Regular professional oversight can prevent misunderstandings, catch errors early, and provide reassurance to family members and the court if questions arise.

Does a POA pay income tax in Ontario?

Yes. Compensation received as a power of attorney in Ontario is considered taxable income and must be reported on your personal income tax return. You are also required to treat the compensation similar to employment income for reporting purposes. That typically means preparing the appropriate information slip and reporting the amount as income.

When you pay yourself, you should withhold required deductions such as income tax and Canada Pension Plan (CPP) contributions where applicable, and remit those deductions to the Canada Revenue Agency. Proper withholding and remittance help you avoid penalties and ensure full compliance with tax rules. Because payroll and tax reporting can be complex, consult a tax professional or accountant to prepare the necessary paperwork and to confirm you are meeting all obligations.

Think of POA as a job—you deserve fair pay

Being a power of attorney for property in Ontario carries real duties and responsibilities. You are generally entitled to fair compensation for the time, effort and judgment involved. The keys to doing the job well are transparency with family, careful record-keeping, adherence to the POA document and relevant legislation, and periodic professional advice. When you follow these steps, you can perform your POA duties confidently, protect the person you serve, and preserve peace of mind for yourself and their loved ones.

More on estate planning:

• Is the family responsible for paying the mortgage of a deceased person?
• How does an executor pay estate expenses during the probate process?
• What is the CPP Survivor’s Pension and how can Canadians claim it?
• Can I leave a house to minor children?