Calculate GST/HST payable on commissions

Updated Wednesday, June 9, 2010 :: Views (99931)

Calculate GST/HST payable on commissions using information based in OREA release

It’s been difficult to confirm how the HST should apply to real estate commissions for transactions that straddle the July 1st 2010, transition date. OREA Government Relations recently sent out a message to Realtors confirming their interpretation on how the HST will apply to services started before July 1 and concluding after the same date.

To help agents and brokers adapt their bills to allow for GST and HST through this transitional period, the following is an example of how to calculate commissions using the formula outlined in the OREA information bulletin, as I understand it.

Please note: This information is not based on a CRA tax bulletin, but it does appear to be the best information available based on the advice of CREA and its tax advisors and dialogue they have had with CRA.

Example: A property is listed (or a buyer-agency agreement is signed) on June 1, 2010 and sells on July 10, 2010.

Number of days before HST starts: 30

Number of days after HST starts: 10

Total number of days from listing to sale: 40

Commission: $10,000

Commission subject to GST: $10,000 x 30/40 = $7,500 x .05% = $375

Commission subject to HST: $10,000 x 10/40 = $2,500 x .13% = $325

In the end, each real estate office will have to make its own determination of how to apply the tax to their accounts during the transitional period based on the information that is available.

As always, Riopelle Griener is pleased to help our real estate and mortgage colleagues whenever possible. If you have a question or an idea for a future RG Real Estate Bulletin, don’t hesitate let us know.

Regards,

Robert Riopelle

Information Provided by:

Riopelle Griener Professional Corporation

2888 St. Joseph Blvd.

Ottawa, ON

K1C 1G7

T: 613.834.4800

F: 613.834.4828

TF: 877.834.4855

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