CRA reverses its longstanding position that MFT trailer fees are GST/HST exempt

In a GST/HST interpretation dated December 22, 2025, CRA stated:

Based on our review of the industry's current regulations and practices, our position has changed. Effective July 1, 2026, mutual fund trailing commissions paid by managers to both original dealers and new dealers will generally be subject to GST/HST.

CRA indicated that the current practices of dealers and agents suggest that they provide ongoing taxable services to their clients in exchange for the trailing commissions, as opposed to the exempt service of assisting with the issuance of the mutual fund units. This reverses its longstanding position (see, e.g., 13 January 2022 GST/HST Interpretation 187184) that “where under the distribution agreement between the dealer and manager, the dealer is also entitled to receive ongoing amounts as a trailing commission, this amount would ordinarily be viewed as additional consideration for the supply of the financial service of arranging for the sale of shares or units.”

Neal Armstrong. Summary of EY Tax Alert, 2026 No. 1, 12 January 2026 “Reversal of longstanding position with respect to the GST/HST status of trailing commissions” under ETA s. 123(1) – financial service – (l).