24 September 1998 External T.I. 9808695 - REPORTING OF COMMISSION INCOME

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: are gross commissions reported in box 14 of T4?

Position: yes

Reasons: gross commissions must be reported, deduction of expenses by commission sales persons must be disclosed on T1 as employment expenses

		980869
XXXXXXXXXX 	N. Graham, CA
(613) 957-2136
September 24, 1998

Dear XXXXXXXXXX:

Re: Reporting of Commission Income

We are writing in reply to your letter of March 30, 1998. You asked for clarification of the amounts to be included in an employee's income under sections 5, 6 and 7 of the Income Tax Act (the "Act"). We apologize for the delay in replying.

You raised, in your letter, a question concerning what amounts are considered remuneration, benefits or allowances as described under sections 5, 6, and 7 of the Act. XXXXXXXXXX, you were advised of an industry practice concerning the deduction of employment expenses from gross commissions. The net amounts were then reported as employment income in Box 14 of a T4. You were advised that Revenue Canada was aware of and accepted this practice.

Our Comments

We are not aware of any arrangement with any firm allowing the reporting of only net commission earnings. The 'gross amount' of the commission are reportable in Box 14 of a T4 slip. In addition, the total commissions paid are reportable in Box 42. Commission earners can in turn claim expenses incurred to earn this income when filing their returns.

In reviewing the examples attached to your letter, we are not able to establish who, the company or the financial advisor, is in fact the employer of the assistants. This would impact the amount reportable in Box 14 of the T4 slip. The exact status needs to be established to ensure accurate reporting of gross income on the T4 slips by the employer.

If you require additional information, please contact our Trust Accounts Division, Mr. Paul Remillard at 957-1307 or Mr. Claude Bergevin at 954-1303. We trust these comments are of assistance.

Yours truly,

Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

bcc. P. Remillard