Canada Revenue Agency has confirmed that independent financial advisors will now need to collect and remit GST/HST on trailing commissions from mutual fund dealers, effective July 1, 2026. The rule applies to advisors whose taxable revenue from trailing commissions exceeds $30,000, while dealer employees remain exempt. The CRA’s notice clarifies that trailing commissions are no longer considered financial services for GST purposes.
The rule becomes effective on July 1, 2026.
Independent advisors whose taxable revenue from trailing commissions exceeds $30,000 must register and remit GST/HST.
No, dealer employees are exempt; only independent advisors and dealers must collect the tax.
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Canada Revenue Agency has reversed its 35‑year position, treating mutual fund trailer commissions as subject to GST/HST. The change will take effect on July 1, 2026, requiring dealers to collect and remit the tax, while managers can recover it as input tax credits. Industry groups argue the implementation deadline is unrealistic and the change adds costs without revenue benefits.
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Advisor · 20 days ago
The Canada Revenue Agency has reversed its long‑standing position, declaring that trailing commissions paid by fund managers to dealers are taxable under GST/HST, effective July 1. Dealers and advisors may need to register for GST/HST if their taxable revenues exceed $30,000 over four consecutive quarters, and will have to adjust accounting systems to collect and remit the tax. The CRA will publish a formal technical interpretation in the coming weeks, clarifying the taxable status of trailing commissions and confirming that upfront commissions remain exempt.
