Realtor accountant in Oshawa

Commission income is lumpy, and tax is not

A realtor can close three deals in May and none in January, but the tax on those deals is calculated on the year as a whole. Nothing is withheld from commission cheques, so the tax sits in your account until April 30 unless you set it aside. Once your net tax owing exceeds $3,000 in the current year and either of the two previous years, the CRA expects instalments on March 15, June 15, September 15 and December 15, and charges interest when they are missed.

The simple habit that fixes most of this is moving a share of each commission into a separate account the day it arrives, for income tax and HST, before any of it is spent. The instalment calculator gives a starting estimate.

Many Durham agents also own property of their own, a rental unit, a condo bought pre-construction, a house they renovated and sold. Those are reported separately from commission income, and a property bought and sold quickly can be treated as business income rather than a capital gain. It is worth talking through before the sale closes, not after. See accounting for real estate investors and rental income returns.

The Ontario personal real estate corporation

Ontario has permitted personal real estate corporations since 2020. A PREC lets a registered salesperson or broker have the brokerage pay commissions to a corporation instead of to them personally. The corporation pays tax at the small business rate on active business income, and you pay personal tax only on what you take out as salary or dividends. For a realtor earning more than they spend, that can defer a meaningful amount of tax. For one who spends everything they earn, the saving is much smaller, and the extra cost is real: a T2 each year, year-end statements, and the annual return through the Ontario Business Registry within six months of year-end.

A PREC also comes with conditions on who can hold shares and what the company can do, set by the regulator and the Ontario legislation. We look at your income, spending and family situation before recommending one, and handle the corporate filings if you go ahead. Corporate tax in Oshawa covers the T2 side.

HST on commissions, and what the brokerage does not do

Real estate commissions are taxable supplies, so a registered realtor charges 13% HST on them. Registration becomes mandatory once commissions pass $30,000 over four consecutive calendar quarters, which most working realtors reach quickly. The brokerage generally pays the HST along with the commission, but filing and remitting it is your job, or your PREC’s if you have one. The registration has to be in the name of whoever earns the commission.

The upside is input tax credits. HST on your car costs, marketing, phone, desk fees and brokerage fees is recoverable, so a realtor’s HST return is usually the difference between what was collected and what was paid. Those credits need the supplier invoices. Most realtors are assigned annual filing, but many choose quarterly so the balance never builds up. See HST registration.

Car and home-office claims

For a Durham realtor the car is the office: showings in Whitby, a listing in Courtice, an open house in Ajax. The business share of car costs is deductible, but the CRA expects a logbook to support the percentage, and a realtor’s claim is one of the first things it asks about. A full-year log is the standard; a representative period can support the claim in later years if the pattern holds. The mileage and vehicle log shows what to record.

A home office is claimable by a self-employed realtor when it is the principal place of business or used regularly to meet clients. Through a PREC it works differently: the corporation can reimburse the business share of home costs or pay rent under a clear arrangement. Home office through a corporation explains the options, and vehicle deductions covers the car side.

Marketing, fees and what qualifies

Realtors spend on things other businesses rarely do: listing photography, staging, signs, social advertising, client gifts, board dues, errors and omissions insurance and brokerage fees taken off each commission. Most of it is deductible, but not all of it in the same way. Brokerage fees and desk fees are often deducted before the commission reaches you, and need to be grossed back up so both the income and the expense are reported. Meals and entertainment are only partly deductible. Staging furniture you own is equipment, claimed through capital cost allowance rather than expensed. Getting these categories right at the time is what keeps the return defensible. See advertising deductions.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• Personal T1 with business schedules, or the PREC’s T2 and statements
• HST returns on commissions, with input tax credits claimed
• Commission statements reconciled to deposits
• Car and home-office claims supported by records
• Instalment planning around irregular income
• Salary and dividend planning for PREC owners
• Ontario Business Registry annual return

Fixed fees, fully online

EverStone is an Abbotsford CPA firm, and Oshawa runs ahead of us on Eastern time, so a question sent between showings is often answered the same day. Everything runs by video, phone and secure upload, and commission statements can be sent from a phone. A self-employed return with schedules is commonly $250 to $450 depending on the schedules, and a PREC is quoted after a free consultation. See what it costs.

Remote accounting for realtors from Abbotsford

Realtor accounting for Oshawa clients is delivered remotely from Abbotsford, British Columbia. There is no Oshawa office and no local team. Meetings are virtual, documents are signed electronically, and you deal with the CPA directly. Commissions, HST and car costs are tracked as they happen rather than reconstructed at year end.