Exempt is not the same as tax-free
No HST on commissions sounds like an advantage until you price your overhead. Because intermediation is exempt, the 13% HST on rent, BMS licences, IT, marketing and outsourced services is a final cost, not a recoverable one, so every quote you accept is really 13% heavier than the sticker. There is usually nothing to register for and nothing to file on the commission side, and a brokerage that registered anyway would still recover nothing against exempt revenue.
Ontario adds its own wrinkle: many P&C premiums carry 8% provincial retail sales tax. In a routine placement the insurer collects and remits it, but a brokerage that places business with an unlicensed insurer can find the collection and remittance obligation landing on the firm. We flag those placements before the filing deadline does.
The RST does not fall evenly across the book either. Automobile insurance premiums are exempt, individual life and health policies are exempt, and a commercial property policy or a group benefits plan carries the full 8%, so a client comparing coverage across lines is comparing different tax treatments whether anyone points it out or not. Brokers who can explain that line by line quote more credibly, and their invoices stand up when the Ministry of Finance asks.
Which revenue is exempt, and which is not
The exemption follows the activity, not the company. Every stream needs its own answer:
| Revenue stream | HST treatment |
|---|---|
| Commission for placing or renewing a policy | Exempt, no HST charged |
| Contingent profit commission declared by an insurer | Exempt |
| Broker fee charged to the client for arranging coverage | Exempt when tied to arranging the insurance |
| Standalone risk consulting with no placement attached | Generally taxable |
| Rent from subletting space in your office | Taxable |
The $30,000 small-supplier threshold is measured against taxable revenue only, so exempt commissions never push you over it. But a brokerage that builds a real consulting or subletting stream can cross the line quietly, and at that point registration, partial input tax credit allocations and HST returns all arrive at once. We track the taxable stream separately so the answer is a calculation, not a guess.
The T2 underneath the commissions
An Ontario brokerage corporation pays roughly 12.2% on its first $500,000 of active income, and the return is only as good as the cut-off work behind it. Direct-bill commissions earned but not yet on an insurer statement belong in income at year-end. Contingent profit commissions are income for tax when the amount is determinable, which in practice means when the insurer declares it, not when you privately expect a good loss ratio to pay off.
Deadlines run on the corporate clock: the balance is due two or three months after year-end depending on your small-business status, the T2 itself six months after, and instalments follow last year's result. Our Corporate Tax Filing engagement plans that calendar with you instead of letting the final commission statements of the year set it by accident.
T4, T4A, and the line between your people
Slips are where brokerages get sloppy, because the same office holds employees and independents. CSRs and salaried producers belong on T4s with source deductions through the year. Self-employed producers paid on splits belong on T4A slips, box 20, with no deductions withheld and their own instalment obligations. The CRA decides which is which on the facts: who controls the work, whose book it is, whose tools and E&O cover the file. A producer treated as a contractor while working exclusively on house accounts at your desks is a reassessment waiting for a payroll audit.
Growth adds an Ontario filing of its own. The Employer Health Tax starts once your Ontario payroll clears the $1 million exemption available to most private employers, at rates that top out at 1.95%, and the remuneration of salaried producers, CSRs and managers all counts toward that line. The slips themselves, T4 and T4A alike, are due by the last day of February, with late-filing penalties charged per slip, so December producer splits have to be final weeks before anyone opens the T2.
Solo advisors file differently
A life and health advisor operating personally reports T4A commissions as self-employed income on a T2125, deducting FSRA licence fees, E&O premiums, continuing education and the home office against them. We prepare those through Personal Tax Filing, and for a solo advisor with year-round questions between filings, CPA Quick Support at $99 a month covers the ruling-by-ruling stuff: a CRA letter, a car purchase, a first hire.
Source: CRA — GST/HST for businesses.
