36 | fall 2016 cmba-achc.ca CMB MAGAZINE
THE QUESTION
Do mortgage broker commissions attract
GST
1
? e Tax Court of Canada has said
they do not – at least in the fairly typical
circumstances of Rojas v. Her Majesty the
Queen, 2016 TCC 177.
Basis for collecting and
remitting GST
e Excise Tax Act (ETA) is the legislation
that provides for collecting and remitting
GST. It requires that GST be collected and
remitted when there has been a taxable supply.
ere is a supply when property or a service
is provided in any way, including by sale,
transfer, barter, exchange, licence, rental, lease,
gi, or disposition. However, some supplies
are exempt from attracting GST and others
are zero-rated, which means they do attract
GST, but at the rate of zero per cent. If GST
is applicable to a broker's commissions, the
broker would be required to collect and remit
the GST. If a person fails to collect required
GST, the person is nevertheless, in most cases,
required to remit the amount that should
have been collected.
What happened in the Rojas case?
e relationships and occurrences in the Rojas
case are fairly typical. e licensed broker
was registered by the regulator and, as an
independent contractor, to a specific brokerage.
e broker identified a potential borrower and
determined whether the borrower qualified for
a mortgage. e broker also identified lenders
who were willing to provide a mortgage loan to
the borrower and the terms under which they
would make the loan.
Once the borrower chose a lender and
a specific mortgage, the broker took steps
to obtain a lending commitment from the
lender. e broker obtained the applicable
documentation from the borrower and
provided it, via the brokerage, to the lender. e
lender responded by issuing a commitment
letter. e lender then paid the due commission
to the brokerage. e brokerage paid the broker
her share of the commission.
Were there one or two supplies?
e Canada Revenue Agency (CRA)
reassessed the broker's tax return requiring
her to remit GST it claimed should have been
collected. It said the supply made by the broker
attracted GST because the broker had not
provided the financial services, but rather had
provided a separate supply of administrative
services (consisting of collecting information)
to the brokerage. Although a supply of
financial services would be exempt from
taxation, a separate supply of administrative
Does GST apply to a mortgage broker's commissions?
To Tax or Not to Tax?
BY RAY BASI, LL.B. STAFF, EDUCATION
AND POLICY REVIEW
