GST/QST Rules for Real Estate Agents and Brokers in Quebec: Commissions, Rebates, Expenses, and Reporting Requirements

Introduction

Real estate brokers and agents in Quebec face specific GST/QST obligations because commissions, referral fees, marketing costs, and reimbursement structures are treated differently for tax purposes.
Revenu Québec audits real estate professionals frequently due to high commission income, complex fee-sharing agreements, and inconsistent expense documentation.
This guide explains how GST/QST applies to commissions, team structures, broker–agency relationships, advertising costs, and client rebates.

Legal and Regulatory Framework

Under the Excise Tax Act (GST) and the Quebec Taxation Act (QSTA):

• Real estate brokerage services are fully taxable at 5% GST and 9.975% QST.

• Brokerage services include:

  • Listing services

  • Buyer representation

  • Referral fees

  • Commission splits

  • Property marketing

  • Transaction management

• Brokers must register and remit GST/QST once revenues exceed $30,000.

• Commissions paid by agencies to brokers must include GST/QST.

• Brokers may claim ITCs/ITRs on business expenses with proper documentation.

Authorities enforce:

• ETA s.165/QSTA s.16 — tax on taxable services

• ETA s.221/QSTA s.22 — obligation to collect tax

• ETA s.169(4)/QSTA s.39 — documentation for ITCs/ITRs

• ETA s.286/QSTA s.24 — record-keeping obligations

Key Court Decisions

Courts have ruled that:

• Real estate commissions are taxable even when paid by notaries or lawyers as part of closing adjustments.

• Referral fees between brokers must also include GST/QST unless an exemption applies.

• Agents working under an agency are still responsible for their own GST/QST filings unless operating as employees.

• Rebates or cash-back incentives to clients cannot reduce the taxable base unless structured correctly.

• Mixed-use activities (e.g., mortgage referrals, property management) require separate tax classification.

These decisions highlight the strict classification of taxable brokerage services.

Why CRA and Revenu Québec Target These Issues

Real estate professionals are frequently audited because:

• Commission structures are complex and often undocumented.

• Brokers may incorrectly treat commission splits as non-taxable reimbursements.

• Referral fees are often paid without GST/QST.

• Advertising and marketing expenses are frequently miscoded.

• Agents hold large deductible expenses (vehicles, home offices, photography, staging).

• Large ITC/ITR claims and inconsistent earnings create audit triggers.

• Real estate income often involves multiple payors: agencies, teams, notaries, and referral sources.

Industries targeted: residential real estate agents, commercial brokers, leasing brokers, property managers, and real estate teams.

Mackisen Strategy

We help real estate agents remain fully compliant with GST/QST while maximizing credits.

1. Commission & Referral Fee Analysis

We determine:

• GST/QST treatment of commissions

• Taxability of referral fees

• Correct invoicing from agent to agency

• Tax implications of rebates to clients

2. Expense Review & ITC/ITR Optimization

We review:

• Vehicle and mileage

• Home office

• Photography, staging, designers

• Online advertising

• Agency desk fees

• Transaction management platforms

• Coaching and training

• Client gifts and marketing materials

3. Team & Split Structures

We set up:

• GST/QST-compliant commission splits

• Proper invoicing between brokers

• Documentation for partnerships, teams, and lead-generating arrangements

4. Bookkeeping & Compliance

We implement:

• Sales tracking systems

• Monthly GST/QST reconciliation

• Receipt and invoice organization

• Allocation between taxable vs exempt activities (e.g., property management)

5. Audit Defence

If Revenu Québec initiates a review, we prepare:

• Commission logs

• Agency reports

• Brokerage fee breakdowns

• Documentation packages

• Legal arguments referencing ETA/QSTA

Real Client Experience

A Montreal real estate broker received a GST/QST audit after claiming large vehicle and marketing ITCs. The auditor discovered referral fees paid without GST/QST.
Mackisen reissued compliant invoices, corrected GST/QST filings, and negotiated reduced penalties by demonstrating unintentional error and full documentation going forward.
This case shows how complex brokerage income can trigger tax issues.

Common Questions

1. Are real estate commissions taxable?
Yes — commissions are fully taxable.

2. Do referral fees require GST/QST?
Yes — unless a specific exemption applies.

3. Can rebates to clients reduce GST/QST?
Only if structured properly; many “cash-back” strategies are misapplied.

4. Can brokers claim ITCs/ITRs on marketing costs?
Yes — with proper invoices and documentation.

5. Are agency desk fees taxable?
Yes — they are taxable services.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps real estate professionals stay compliant while recovering the taxes they're entitled to. Whether you’re earning commissions, paying referral fees, or managing complex expenses, our expert team ensures precision, transparency, and protection from audit risk.

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GST/QST rules for real estate brokers in Quebec — learn how commissions, referral fees, expenses, and rebates are taxed, and how to stay compliant with Revenu Québec.