The broker as a self-employed worker: duties and resources to avoid financial hassles

From a fiscal point of view, a real estate broker is considered a self-employed worker, and as such he has certain obligations. The OACIQ has observed that some of the risks associated with this tax status are often not well known to real estate brokers, so here are a few concepts you should know about and apply.

The broker’s fiduciary role toward tax authorities

Like any taxpayer, you have an obligation to pay taxes based on your income. You must therefore plan for these taxes, especially when your income is irregular.

It is also important to remember that the broker plays a fiduciary role when it comes to the taxes he collects in the course of his real estate transactions. The sums collected for this purpose are meant for the tax authorities and do not belong to you. They were paid by the client, and it is your fiduciary duty to remit them to the government so they can be used for the public good.¹

Professional risks and consequences

One of the risks that you face as a self-employed worker is bankruptcy (or an assignment of your property). This can have an impact on your licence and the practice of your activities. Sections 37 and 38 of the Real Estate Brokerage Act state that the Organization may refuse to issue or may suspend, revoke or impose restrictions or conditions on a licence if you or the business corporation within which you carry on your activities declare or have in the past declared bankruptcy.

We also remind you that I accordance with section 10 of the Regulation respecting the issue of broker’s and agency licences, you must inform the OACIQ without delay of any change in information or in a document, including if you or the business corporation within which you operate declares bankruptcy. (Read article In case of bankruptcy or conviction, informing the OACIQ is essential.)

While a haphazard management of your affairs can make a situation worse, a well-planned one can fortunately prevent many difficulties. Your prosperity depends not only on conducting your business with professionalism and rigour, but also on sound management of your finances.

To avoid finding yourself in a difficult financial situation:

• Comply with your tax obligations;
• Set aside money for taxes (for instance by making instalments and remitting taxes on a more regular basis);
• Have good business planning;
• Provide for a safety cushion (especially if you are a new broker);
• Plan for your retirement;
• Surround yourself with competent people, such as an accountant who is a member of the Ordre des comptables professionnels agréés du Québec;
• Be aware that, even if you delegate a task (such as your tax administration), you remain responsible for it.

Good to know: The OACIQ training activity The broker as a self-employed worker can help you improve your skills and ensure you have good business planning.

In ending, we remind you that all brokers and agency executive officers must meet the requirements of the Mandatory Continuing Education Program (MCEP).

¹ Certain disciplinary decisions have dealt with this issue, including OACIQ v. Perreault, 2014, CanLII 36343 (QC OACIQ).