Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
Place de Ville, Tower A, 5th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 245161
Dear [Client]:
Subject: GST/HST INTERPRETATION
Requirement to register for real estate agents
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to services provided by a real estate agent.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
Based on the your correspondence and our telephone conversation on [mm/dd/yyyy], we understand the following:
1. You are a real estate agent located in British Columbia (BC) and you have entered into a contract with […][the realtor] , a real estate company located in BC, to provide real estate services. A copy of your contract with […] (the realtor) was not provided.
2. It appears that you are a self-employed contractor and not an employee of the realtor.
3. You are not registered for GST/HST purposes.
4. Pursuant to discussions with representatives of the realtor you were informed that you are required to register for the GST/HST and that you must charge and collect tax on the commissions earned from the service provided as a real estate agent.
INTERPRETATION REQUESTED
You would like to know whether the services provided by a real estate agent are subject to GST/HST. You also want to know whether you are required to register for the GST/HST and required to collect and remit the GST/HST on the commissions made as a real estate agent
INTERPRETATION GIVEN
Pursuant to subsection 240(1), every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for the purposes of the GST/HST except where:
(a) the person is a small supplier (i.e., annual worldwide taxable sales, including those of the person’s associates, do not exceed $30,000);
(b) the only commercial activity of the person is the making of supplies of real property by way of sale otherwise than in the course of a business; or
(c) the person is a non-resident person who does not carry on any business in Canada.
Pursuant to subsection 123(1), a supply means, […] the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition.
A taxable supply is defined in subsection 123(1) to mean a supply that is made in the course of a commercial activity.
Subsection 123(1) defines commercial activity of a person as a business1 carried on by the person (other than a business carried on without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the business involves the making of exempt supplies by the person.
Generally, the service provided by a real estate agent of facilitating the sale, lease, purchase or rental of real property is a taxable supply made in the course of a commercial activity. Unless the real estate agent is a small supplier, the agent is required to register for purposes of the GST/HST and is required to charge and collect tax on the consideration (i.e., commission) payable for the provision of the taxable supply of the real estate service.
Note, a person that is engaged in a commercial activity in in Canada may voluntarily register for the GST/HST even if revenues from taxable supplies do not exceed the $30,000 small supplier threshold.
If the person elects to register for the GST/HST they will be required to collect and remit tax on taxable supplies made in Canada.
As a GST/HST registrant, you may recover the GST/HST paid or payable on your purchases and expenses related to your commercial activity by claiming input tax credits (ITCs). The ITC is limited to the extent that your purchases and expenses are for consumption, use, or supply in your commercial activity.
For more information on registration, ITCs and other entitlements and obligations as a GST/HST registrant you may consult the GST/HST Guide: General Information for GST/HST Registrants, available online at the Canada.ca website.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 819-271-8708. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Joseph Zeidan
Senior Rulings Officer
General Operations Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
1 The definition of “business” in subsection 123(1) of the Act included “a profession, calling, trade, manufacture or undertaking of any kind whatever, whether the activity or undertaking is engaged in for profit, and any activity engaged in on a regular or continuous basis that involves the supply of property by way of lease, licence or similar arrangement”.
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