Imposition of GST/HST on trailer commissions effective July 1, 2026
As a result of … industry developments, the application of tax to trailing commissions has changed. Most services provided by mutual fund dealers in exchange for mutual fund trailing commissions no longer meet the definition of financial service and are now considered to be taxable supplies that are subject to the GST/HST. The CRA will enforce the application of the GST/HST to supplies made by dealers on or after July 1, 2026, in exchange for trailing commissions. …
Brokering of MFT units now considered a separate supply
Regulatory and operational changes in the industry indicate that trailing commissions are generally not earned for brokering the issuance of mutual funds. Dealers typically earn a separate one-time trading fee for brokering mutual fund issuances, and for GST/HST purposes such brokering is now considered to be a separate supply from the ongoing services supplied in exchange for trailing commissions. In rarer cases where a dealer earns only trailing commissions in exchange for both brokering the unit issuance and for providing ongoing services to the investor, the combined supply is viewed to be predominantly advice and/or asset management. …
Other types of trailing commissions will be reviewed
The tax treatment discussed in this notice applies to the payment of mutual fund trailing commissions only. … The tax status of services supplied in exchange for other types of trailing commissions will be considered on a case-by-case basis and is not the subject of this notice.
