CRA considers that a share of the revenues of a mortgage broker paid to a franchisor generally will be subject to GST/HST

Although the activities of a mortgage broker generally qualify as an GST/HST exempt “arranging for” financial service, CRA considers that where the mortgage broker is a franchisee, the payment of a portion of those exempt revenues to the franchisor generally will be subject to GST/HST. CRA apparently considers that such payments (viewed by it as “franchise fees”) likely are consideration for the supply by the franchisor of “intangible personal property,” namely, “the right to operate a franchise which includes the right to use the name of the franchisor as an advertising tool and any systems made available by the franchisor to facilitate the operation of the franchise.”

CRA also considers that fees charged by car dealers or travel agents to an insurer for helping their customers sign up for insurance (e.g., customer disability insurance) are taxable.

Neal Armstrong. Summaries of Excise and GST/HST News, No. 100, November 2016 under ETA, s. 123(1) – financial service – para. (l), para. (t).