HST/GST: CRA finds mortgage broker services to be exempt notwithstanding associated credit assessment and processing services - but warns that trailer fees may not be exempt

CRA has indicated that the fees earned by a mortgage broker from mortgage lenders (and, in some instances, from the borrowers) were exempt financial services for HST and GST purposes.  The services of the mortgage broker included credit monitoring and administrative/processing services, which were sufficient to cause the similar services provided by a web-based loan broker described in the post below to be taxable supplies (see also 19 July 2011 HQ Letter Case 125864).  However CRA noted that the mortgage broker had a high degree of responsibility and involvement in making the loans occur.

Although it was not asked to comment on trailer commissions, it went out of its way to warn that "a renewal commission payable in future years may not be [exempt]."

Neal Armstrong.  Summary of 27 May 2011 HQ Letter 129882 and 14 July 2011 HQ Letter 132388 under s. 123(1) - financial service.