An executor generally acts without payment unless the will contains a charging clause, all beneficiaries consent, or a court allows commission. Because executor commission is assessable income while an inheritance is not taxed, leaving the executor a specific legacy in the will is usually a more effective way to compensate them than commission.
Eighteen months in, the executor has closed the bank accounts, sold the house, chased two share registries, lodged the tax returns, fielded the phone calls, and had at least one difficult conversation with a sibling. Somewhere around here, somebody asks the obvious question: is this person getting paid?
It is a fair question and it has a real answer, but not the one most people expect — and the financial answer is more interesting than the legal one.
This is general information, not personal financial advice. It is not legal advice and it is not tax advice: how an executor can be paid is governed by state and territory law and differs between jurisdictions, and the tax consequences depend on the individual. Both halves of this need proper advice before anyone acts.
The default is unpaid
Start here, because it is the part that surprises people: an executor generally acts gratuitously. No fee, no hourly rate, no automatic entitlement — regardless of how many months the work takes.
That is the starting position, not the end of it. There are broadly three routes to an executor being paid, and it is worth understanding all three even if only one will apply to you.
The first is a charging clause in the will, where the will-maker expressly authorises payment. This is the cleanest route by a distance, and it is the only one available before anyone dies — which makes it the actionable one for anybody still writing their will.
The second is consent of the beneficiaries — all of them, and they generally need to be adults with capacity. This route fails more often than people expect, and it fails in a specific way: if there is a minor beneficiary, or an unborn contingent beneficiary, they cannot consent. Which quietly closes the option in exactly the estates where the executor's work is heaviest — the ones with young grandchildren or a testamentary trust in the mix.
The third is an application to the court. Each state and territory allows an executor to apply to the Supreme Court for commission for their "pains and trouble." The process, the jurisdiction and the amount a court will allow all differ, so this belongs with a solicitor in the relevant state. It also costs money and takes time, which is worth weighing before starting.
One thing to set aside: professional executors are different. A solicitor or a trustee company appointed as executor charges under its own fee scale, agreed up front. That is a commercial arrangement, not commission, and none of the above applies to it in the same way.
The part that changes the answer
Here is where the financial question diverges from the legal one, and it is the reason this article exists.
Executor's commission is assessable income. The ATO's position is that a commission paid for acting as executor of a deceased estate is included in the recipient's assessable income as a payment within the meaning of section 15-2 of the Income Tax Assessment Act 1997 (ATO Interpretative Decision 2014/44, https://www.ato.gov.au/law/view/document?docid=%22AID/AID201444/00001%22, as at August 2026).
The mechanism is worth seeing, because it explains why there is no way around it. Section 15-2(1) brings into assessable income "the value to the taxpayer of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to the taxpayer in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by the taxpayer." As the ATO notes, the courts have consistently indicated that the predecessor provision "is not limited to employment situations and that it can apply to payments for services rendered in the absence of an employer/employee relationship." So the absence of a job, a contract or an invoice changes nothing — and neither does the executor's state of mind. It is caught whether or not they asked for it or expected it.
An inheritance is not taxed on receipt. The ATO states it plainly: "There are no inheritance or estate taxes in Australia." Be precise about the limits of that, though, because it is not a blanket exemption from ever paying tax on inherited wealth — the same page adds that "capital gains tax may apply if you dispose of an asset inherited from a deceased estate, and income tax applies as usual to any dividends or rental income from shares or property you inherited" (https://www.ato.gov.au/individuals-and-families/deceased-estates/if-you-are-a-beneficiary-of-a-deceased-estate, as at August 2026). What matters for the comparison below is the receipt itself: the amount arriving as your share of the estate is not assessable income in the way a commission payment is.
Now put those two facts side by side, because in most families the executor is also a beneficiary — usually one of the children.
Say the family agrees the executor should receive $30,000 for the work — an illustration, not a benchmark, since there is no standard rate and a court assesses commission on the facts of the estate. Taken as commission, that $30,000 is assessable income, taxed at the executor's marginal rate. Received instead as a larger share of the estate, that same $30,000 is not assessable income at all. Identical amount leaving the estate; materially different amount arriving in the hand.
And where the executor is the sole or main beneficiary, commission gets close to self-defeating: they are converting part of their own inheritance into taxable income, and paying it to themselves out of the pool they were going to receive anyway.
None of that makes commission wrong. There are situations where it is the right instrument — particularly where the executor is not a beneficiary, and there is no other way to compensate them. But it does mean the question "should we pay the executor?" and the question "how should we pay the executor?" have quite different answers, and the second one is worth asking a registered tax agent about rather than assuming.
What this means if you are writing your will
This is the actionable part, and it belongs to the only person who can settle it cleanly — the will-maker.
If you want the person doing the work to be compensated, a specific legacy in the will is usually the better instrument than a charging clause. A fixed amount left to your executor is certain, it does not depend on anyone's consent after you are gone, it is visible to the whole family in advance rather than appearing as a deduction at distribution, and it is not assessable income the way commission is.
It also removes the conversation that causes the trouble. Nobody has to ask, nobody has to agree, and no sibling gets to feel that their inheritance was reduced by a claim they never sanctioned.
If you have not decided who is doing the job yet, our article on choosing an executor for your will covers that decision — and this is worth deciding at the same time rather than later.
Reimbursement is a different thing entirely
This gets confused with commission constantly, and the distinction is worth money.
An executor is generally entitled to be reimbursed out of the estate for proper expenses properly incurred in administering it — court filing fees, valuations, travel, postage, certified copies, the cost of securing and clearing a property. That is not payment for their time. It is recovering money they have laid out on the estate's behalf.
Critically: reimbursement does not require anyone's consent, and it is not a payment for services in the way commission is. It is simply the estate paying its own costs.
A striking number of executors never claim any of it. They pay for the death certificates, drive across town eleven times, cover the storage unit for four months, and quietly absorb the lot because it feels grasping to ask. It is not grasping — those are estate expenses. Keep receipts from day one, because reconstructing them at the end is miserable and usually incomplete.
Our article on what being an executor actually involves covers the scope of the work these expenses attach to.
Worked examples
Two executors, same workload, opposite answers. Illustrative only, and neither tax nor legal advice; the right instrument depends on marginal rates, family structure and state law.
Consider Susan, 58, one of three children and the executor of her mother's estate, which divides equally between the siblings. Her brothers agree she should be compensated for eighteen months of work, and the family lands on a figure of $30,000 (an illustration only — there is no standard rate). Paid as commission, that amount is assessable income to Susan under s 15-2 (ATO ID 2014/44), taxed at her marginal rate, and it reduces the residue her brothers share. Paid instead by adjusting her share of the estate upward, the same money is not assessable income on receipt (ATO). The amount leaving the estate is identical either way. On these facts, putting the question to a registered tax agent before choosing the mechanism is generally rational — the legal route and the efficient route are not the same route, and the difference is real money.
Now consider David, 64, a family friend appointed executor of an estate that passes entirely to the deceased's grandchildren, two of whom are minors. He inherits nothing. The consent route is closed to him, because minor beneficiaries cannot consent, so his only avenue is an application to the Supreme Court in the relevant state for commission — which costs money and takes time. On these facts the tax comparison above simply does not apply to him: there is no inheritance to enlarge, so commission is not a conversion of untaxed money into taxable money but the only compensation available. It is also exactly the situation the will-maker could have solved for nothing by leaving David a specific legacy.
The conversation, and when to have it
The financial mechanics are the easy half. The hard half is that the executor is usually one of the children, the work is real and largely invisible to everyone else, and it is done while grieving.
Resentment about unpaid executor work is common and it is legitimate. So is the discomfort of the siblings who feel a claim is being made on their inheritance. Both of those are reasonable positions, and the difference between them is very often just timing.
A conversation about compensating the executor held before the work starts reads as a term of the job. The same conversation held at distribution, after eighteen months of work nobody watched, reads as a claim. Nothing about the amount changes — only when it was raised.
So: if you are the executor and you think compensation is warranted, raise it at the beginning. If you are a beneficiary and you can see how much work is landing on one person, raise it yourself, early — it is a great deal easier to be generous before anyone feels owed. Our article on distributing personal possessions covers the same dynamic playing out over the things that are not money.
And if the family cannot agree, that is what the court application exists for. It is slow and it costs, which is precisely why the will-maker settling it in advance is worth so much.
The one-line version
An executor is generally unpaid unless the will says otherwise, all beneficiaries agree, or a court allows commission — and because commission is assessable income while an inheritance is not taxed on receipt, a specific legacy in the will is usually the better way to compensate the person doing the work. Whatever you decide, expenses are reimbursable and should be claimed.
Sources
- ATO Interpretative Decision 2014/44 — executor's commission and section 15-2 ITAA 1997
- ATO — If you are a beneficiary of a deceased estate
- ATO — Deceased estates
- ATO — Who pays tax on deceased estate income
Key takeaways
- The default is unpaid — an executor generally acts gratuitously no matter how long the work takes.
- Executor commission is assessable income under section 15-2 of the ITAA 1997, whether or not the executor sought it, while an inheritance is not taxed at all.
- Where the executor is also a beneficiary, a larger share is generally more efficient than commission — same amount out of the estate, more of it in the hand.
- The beneficiary consent route fails where there is a minor or unborn contingent beneficiary, which is often exactly where the workload is heaviest.
- Reimbursement of proper expenses is not commission — it needs nobody’s consent, it is not income, and a striking number of executors never claim it.
Frequently asked questions
Can an executor be paid in Australia?
Generally only in one of three ways: the will contains a charging clause authorising payment, all beneficiaries consent, or the executor applies to the Supreme Court in the relevant state or territory for commission. The default position is that an executor acts gratuitously. Professional executors such as trustee companies are different and charge under their own fee scales.
Is executor commission taxable?
Yes. The ATO treats a commission paid for acting as executor of a deceased estate as assessable income, being a payment within the meaning of section 15-2 of the ITAA 1997, and it is assessable whether or not the executor sought or expected it. An inheritance, by contrast, is not taxed — there are no inheritance or estate taxes in Australia.
Is it better to leave the executor a gift in the will instead of paying commission?
Often, yes, though it depends on the circumstances. A specific legacy is certain, does not depend on anyone consenting after you are gone, is visible to the family in advance rather than appearing as a deduction at distribution, and is not taxed as income the way commission is. It is worth discussing with your solicitor and a tax adviser when the will is drafted.
Can an executor claim their out-of-pocket costs?
Generally yes, and this is separate from commission. An executor is usually entitled to be reimbursed out of the estate for proper expenses incurred in administering it — filing fees, valuations, travel, postage, certified copies. It requires nobody’s consent and it is not income. Keep receipts from the beginning, because reconstructing them later is rarely complete.
When should the family talk about paying the executor?
At the beginning. The same conversation held before the work starts reads as a term of the job; held at distribution after eighteen months of work nobody watched, it reads as a claim on other people’s inheritance. Nothing about the amount changes — only when it was raised. Best of all is for the will-maker to settle it in advance.