Many real estate agents work as self-employed commission earners. This guide covers the records, tax accounts, and cash-flow habits that commonly apply. Confirm your employment status from the actual relationship with your brokerage rather than the job title alone.
Understanding your self-employed status
If you are self-employed, the brokerage generally does not withhold income tax from commission payments. An agent treated as an employee follows different rules.
Here’s what that actually means:
- Income tax isn’t deducted at source. When a deal closes and you get your commission, you get the full amount. It’s on you to set aside money and report it as income later.
- You pay both portions of CPP. The contribution rate, maximum pensionable earnings, and annual maximum change each year.
- You may need to pay tax by instalments. CRA instalment thresholds and notices depend on net tax owing, not simply how much commission you earn.
- Your filing deadline is June 15 - but payment is still due April 30. Don’t wait until June to figure out what you owe.
The GST/HST question
Real estate commissions are subject to GST/HST. Here’s how it works:
- At or below the small-supplier threshold: Registration is generally optional while worldwide taxable supplies remain at or below $30,000 under both the single-quarter and four-consecutive-quarter tests.
- Why register early anyway: If you register voluntarily, you can claim Input Tax Credits (ITCs) to recover the GST/HST you pay on business expenses. A $1,130 laptop includes $130 in HST - registered agents can claim that back.
- Once you exceed $30,000: The effective date and registration deadline depend on whether you crossed the threshold in one calendar quarter or over four consecutive calendar quarters. Check the CRA’s registration timing rules.
- Charging and remitting: If you’re registered, the HST on your commissions goes to you to remit to the CRA - not to keep. Open a separate account for it so you’re never tempted to spend it.
- Filing: Most new agents file annually. You report HST collected minus HST paid on expenses, and pay the difference (or get a refund if your credits exceed what you collected).
If you are unsure about the effective date, ask an accountant or the CRA before invoicing the next commission.
Bookkeeping basics
Good habits here will save you money and stress. Here’s what to actually do:
- Separate bank account. Not a CRA requirement, but essential. Deposit commissions into a dedicated business account and pay business expenses from it. Mixing personal and business is how you lose hours at tax time.
- Keep every receipt. The $5 parking at a showing matters. Use an app to snap photos as you go - or just create a folder by month. CRA expects documentation for every expense you claim.
- Use a consistent bookkeeping system. A spreadsheet can work. Accountly can extract receipt details and organize transactions for review, but you should confirm the categories and amounts.
- Log your mileage. Keep business and total kilometres plus the purpose of each business trip. A mileage tracker reduces manual entry, but review the trips before using the report.
- Be honest about personal vs. business use. If your phone is 80% business, claim 80% of the bill. CRA can and does ask for justification on mixed-use expenses.
- Do it monthly, not annually. Set aside time each month to update your records. The shoebox full of receipts approach works great - until it doesn’t.
Things to register for
A checklist for getting set up properly:
- GST/HST account - generally required after you cease to be a small supplier; voluntary registration is also available
- Payroll account - only needed if you hire help (an assistant, a spouse, etc.)
- Provincial accounts - Quebec has its own requirements; check what applies in your province
- Municipal business license - some cities require one for home-based businesses; worth a quick check
- Trade name registration - if you’re operating under a name other than your own, some provinces require this
Best practices for staying financially healthy
- Build a tax reserve from every commission. Estimate it from projected net income, province, CPP, deductions, instalments, and other income. A fixed percentage is only a planning starting point.
- Budget for dry spells. A $20k month followed by nothing is normal in real estate. Save during the good months to cover the slow ones.
- Separate business credit. A dedicated credit card for business expenses simplifies tracking and usually earns better rewards on the categories you spend most on.
- Get advice when the facts are unclear. An accountant can review GST/HST timing, mixed-use expenses, and employment status. Accountly can organize the records you provide.
Update the records monthly and reconcile them to brokerage statements before filing.
Official CRA references
Check the CRA’s Form T2125 and business expense guidance against your tax year and circumstances.
The information in this guide is for general informational purposes only and is not intended as accounting, tax, business, or legal advice. Accountly does not provide professional services or act as your accountant, tax advisor, or lawyer. No client relationship is created by your use of this material. Always seek advice from qualified professionals who understand your particular circumstances before acting on any information contained herein.