Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Tax treatment of Mutual Funds Commissions.
Position: Included in income by individual or corporation that earned the commissions.
Reasons: Question of fact.
July 14, 1999
Verification and Enforcement HEADQUARTERS Victoria Tax Services Office Wm. P. Guglich (613) 957-2102 Attention: Brian Norman 991602
Tax Treatment of Mutual Funds Commissions
This is in response to your request of June 3, 1999, for our views regarding the tax treatment of mutual funds commissions paid to a corporation. You indicate that the taxpayer is a financial advisor/agent and operates his business through a corporation. All the commissions and fees are paid to his corporation. The taxpayer points out that a magazine article indicates that commissions received from the sale of mutual funds is taxed in the hands of the individual regardless of whether the commission has been paid directly to the corporation.
Our Views
It is our view that the commissions from the sale of mutual funds should be included in the individual’s income, if the individual earned the commissions rather than the corporation. In each specific case, it is a question of fact as to whether the individual or the corporation earned the commission. The fact that an arrangement has been made to pay the commissions directly to the corporation is not determinant. Where, for example a corporation cannot act as salesperson or broker under the relevant provincial legislation, then the individual agent must report the income.
In addition, the arrangement between the company paying the commissions and the corporation and the individual should be examined. These views were reflected in our document E9824175.
For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Department's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at 819 994-2898. The severed copy will be sent to you for delivery to the client.
We trust our comments will be of assistance.
John Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
- 2 -