CRA now publishes its position that mutual fund trailer commissions (whether paid to the originating or a subsequent dealer) are subject to GST/HST

CRA has now published its response to a submission that GST/HST did not apply to dealer trailing commissions earned by a dealer (the “New Dealer”) who is not the dealer (the “Original Dealer”) who arranged the sale and issuance of the subject mutual fund trust units or shares (the “Units”).

In summarizing its previous position, it stated:

As noted in Excise and GST/HST News #111 issued in June 2022, CRA’s previous position had been that where a Dealer was not the same person that facilitated the initial sale of shares or units in the fund (i.e., a New Dealer) but received a trailing commission in respect of those shares or units, the trailing commission was consideration for a separate supply from the supply of arranging for the initial sale of shares or units. Unless the service provided by the New Dealer in these circumstances fell within the financial services definition, the trailing commissions would attract GST/HST. Where the Dealer received the trailing commission for the servicing of an investor's account, this was not a supply of a financial service as defined in the ETA.

It stated that it had now revised its position:

Effective July 1, 2026, mutual fund trailing commissions paid by [mutual fund] Managers to both Original Dealers and New Dealers will generally be subject to GST/HST.

It stated that this revised position arose from its review, which suggested that “Dealers do generally provide ongoing services to their clients in exchange for the trailing commissions they receive”, so that the “collective provision of investment account support, servicing and advice in this context generally constitutes an asset management service for GST/HST purposes”.

CRA further stated that its new position “simplifies tax administration”:

Managers will no longer be required to track the transfer of units to New Dealers (i.e. distinguish between payments to Original Dealers versus New Dealers) in order to apply GST/HST correctly to the trailing commissions paid. Note that arranging for the initial issuance of units remains an exempt supply, so any up-front trading fees earned by Dealers are not subject to GST/HST.

Neal Armstrong. Summary of 22 December 2025 GST/HST Interpretation 246664 under ETA s. 123(1) – asset management service.