IMBA, MBABC & AMBA Fight HST Interpretation

HST-mortgage-broker-commissions The Independent Mortgage Brokers Association of Ontario (IMBA) calls the potential 13% HST on broker commissions “the most pressing issue facing mortgage agents and brokers right now.”

It emailed an eye-catching information bulletin to brokers today, saying: “Your income may be about to be slashed by 13%.” IMBA states that “any financial service fees found not to be exempt would be subject to GST as of Dec 14, 2009.”

Prior to this year, financial services agents (like mortgage brokers, insurance agents, financial advisors, etc.) were GST exempt.  If you assume the average mortgage planner makes $50,000 a year, this tax could wipe out roughly $6,500 a year of those earnings, minus deductions.

IMBA has partnered with other provincial mortgage associations (MBABC & AMBA) to fight and re-establish the mortgage services tax exemption. They will advise once a ruling has been handed down.

For a general discussion of the financial services exemption see this KPMG Advisory Bulletin.


Sidebar:  If your livelihood is affected by this proposal, ensure your MP knows about it.

Here is a link whereby you can find your MP's email address:

MP by Postal Code

  1. Jim:
    Mortgage planners already pay full income tax on their earnings like every other Canadian.
    The tax discussed here is an extra tax (GST/HST) that will be deducted from income before the broker even receives it.

  2. Yes they do-but so do us like every other Canadian pay tax on tax, look at when you put gas in your car- read the sticker that is on the pump !!! If you start with one group, where does it end and where is it fair.The more tax you people pay the less tax the a family will pay.
    My point of view.jim

  3. 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

  4. Quoting Jim: “The more tax you people pay the less tax the a family will pay.”
    Families don’t win here Jim. Even if you pay a tiny bit less tax you will pay more when getting a mortgage. You are no further ahead.
    In fact you are behind. If the exemption were removed the cost to the industry would need to be recovered somehow. That would fall on the backs of homeowners. That means less chance at getting that additional 0.10% off your mortgage. If you ran an amortization schedule you would understand what this means to a family’s budget.

  5. The amount of tax I already pay on my income is disturbing, now the government wants another 12-13%? What’s wrong with the 40% they are ALREADY taking? If and only if we were charging a client, then perhaps I could see GST or soon HST being charged. However, this cost should be absorbed by the consumer and never the party providing the service or product. When I walk into Safeway to buy eggs, does Safeway pay my GST? Of course not. When I hire a power washer to clean my driveway, do they pay my GST? Of course not.
    Excuse my french but the concept of this is complete bull**** and just another deceptive trick by the government stealing more of my hard earned money.
    They want to charge 52% income tax now, that should be illegal.
    I am done ranting now. Thanks for listening.
    P.S. I just emailed my local MP

  6. Face the fact, the Canada government is looking at the best interests of the 6 big charter banks, so long,you are the 2nd best lender,life sucks. The bank are non tax and have the power in the politics system. GOOD LUCK.JIM !!!!

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