Flaherty Somewhat Clarifies GST/HST On Financial Services

Jim-Flaherty2 Mortgage planners can take a very slight sigh of relief. Finance Minister Jim Flaherty said the Finance Department has “no intention of changing tax policy” on financial services.

In response to whether GST/HST would be applied to services like mortgage brokering, Flaherty said:

  • “We are not imposing new taxes.”
  • “We will have the tools in the first Budget Implementation Act to make sure we get back to the status quo before the court cases, so people can rest assured that the tax treatment of defined financial services will not change.”

Jim Murphy, head of the Canadian Association of Accredited Mortgage Professionals (CAAMP), said: “It gives us some assurance.”

Nonetheless, it could be weeks before we know, for sure, how CRA’s financial services tax interpretation plays out. There are too many conflicting reports at the moment. For example, legal analysts from one of Canada’s top business law firms, Stikeman Elliot LLP, wrote on February 26:

“The CRA confirmed to [us] during a phone conversation that facilitatory services offered by an intermediary in the financial services industry, such as mortgage brokerage services, are likely to be taxable under the new regime.”


More from:  The Globe

Background:  13% HST on Broker Commissions

  1. Hooray for special interest groups avoiding paying a goods and SERVICES tax on the SERVICES they provide!

  2. Traciatim – If you are someone looking into getting a mortgage, you should be happy about that, because the broker or bank may pass the GST/HST onto YOU, the CONSUMER, just as retailers do now with their goods.
    I can assure all mortgage borrowers who need private funds for a purchase or refinance that this proposed tax is probably going to make the transaction 13% more expensive in terms of fees!

  3. I hate to be negative here but Mr. Flaherty is also quoted as saying (in Feb, when he announced the new mortgage rules):
    “We’re not aiming at investment properties. So, if a business, or individuals, want to buy an apartment building, or a duplex or something, and they are in the business of renting apartments, that’s fine. They can insure that business because that’s a good thing for Canadians. We need a supply of rental housing” (http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20100216/speculators_flaherty_100216/20100216?hub=Canada)
    “…the government is not trying to crack down on investment properties such as rental units. What we’re getting at is the speculation in multiple-condo markets, in particular” (http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20100216/flaherty_mortgages_100216/20100216?hub=)
    When referring to the new down payment requirements on rentals and we all know now that this is not the case….the new requirements will be applied to EVERYONE.
    All I’m trying to say is I wouldn’t take any comfort in anything this guy says or doesn’t say.

  4. Financial services have always been free of GST. I don’t see how facilitating the acquisition of a loan is much different than any of the other GST-free financial services.

  5. The government has excluded financial services from GST since the tax was created in 1991.
    Many services were deemed excluded for the greater good including long-term residential rents, educational services, insurance, commodity trading, health and dental care, financial services, music lessons, day-care services, and legal aid services.
    There is a reason this exemption was granted, and changing this policy benefits no one. Consumers will pay higher rates, have less choice, and receive less financial advice if this were to pass.
    There would also be inequity in its application. If you walk into TD to get a mortgage, for example, you wouldn’t pay GST on the “service” the mortgage specialist provides. If you walk down the street to mortgage broker, however, you would.
    Is it right for salespeople to pay GST on their commissions, and then pay income tax on those very same commissions? Be careful because that is a slippery slope.
    This is not a move to be celebrated. The overall cost to Canadians would most certainly offset any meager increase in federal revenue.
    Don Edwards

  6. Did you get a name at CRA, I think if the lenders pass the HST on to the customer, the feds will give low and middle income people a tax rebate and it is time for the rich to pay there fair share! This one way of doing this just like the rebate for first time home owners.Point of view. jim

  7. I made $43,000 brokering last year. If that is rich then your measure of wealth is way off. Now I am facing a $5,600 cut in pay??? I have a family too Jim. Your comments have made absolutely no sense at all.

  8. Then Josh you would get HST rebate and other Fed rebates because you do not make what the rich makes, your lower income like me with a family, does that make sense to you, if not I feel sorry for you,jim

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