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Taking the Confusion Out of Taxes for Canadian Real Estate Agents

If you are a real estate agent probably one of the most complex deals you have to face is dealing with your Canadian tax return at the end of the year.   While the CRA has made some attempts to steer you in the right direction you most likely still find yourself becoming quite frustrated over your filing.  You can put an end to this aggravation by putting your tax matters into the hands of a Toronto tax accountant.

 
The first question you are going to be faced with is are you an employee or are you self-employed?   The answer to that is going to depend on your relationship with the Brokerage company you are working with. Now figuring that out is not going to be as easy as you think. First for generalities about employee and self-employed determinations you can refer to the CRA Guide RC4110.

It won’t stop there though because your regulated activities will be a factor as well, although these are not going to give you a definite answer either because the regulated activities are applicable to both the employees and employers.

 

So you may be thinking that because you have entered into a commission based contract with your Broker so that makes you self-employed, but think again because this may not be the case either.
Some more substantial guidelines to bump you into the self-employed category would be…

 

You may be required to pay administrative fees that cover a variety of services that you are privy to.
You are able to control your commission rate
You are responsible for providing some of your own working tools
You have to pay specific types of expenses in order to carry out your real estate services
You can hire help if you want to
You have to pay for marketing your services

 

Now on the other hand if the following are applicable you could find yourself classified as an employee…
You appear as part of the brokers business, and are the direction and control of the broker.
You don’t incur administrative costs but instead the broker keeps a percentage of your sales to cover this
The broker may set the commission rate but exceptions to this apply
You have to meet a specific sales quota
You have additional tasks to perform outside of your actual sales
You have to be accountable to the broker regarding your working activities
You do not have the authority to hire help
You don’t pay for your own marketing/advertising

 

Nothing that has been mentioned here is hard and fast rules in determining your status as a self- employed real estate agent or an employee of a Realty Company. This particular industry is quite complex when it comes to Canada taxation. Do yourself a favor and retain the services of a Toronto tax accountant now, rather than at the end of the tax year. There may be several steps that you need to take depending on your category which can be done effectively with a good Toronto accountant.

 
 

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Sam Seidman, CPA, CA, LPA
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Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant

Email: sam@torontoaccountant.ca

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