How do I handle a referral fee where the tax portion is remitted by the brokerage instead of the agent?

How do I handle a referral fee where the tax portion is remitted by the brokerage instead of the agent?

Q: How do I handle a referral fee where the tax portion is remitted by the brokerage instead of the agent?

A: Scenario

A Canadian brokerage pays a $4,000 referral fee to a non-tax-collecting recipient. The associated GST/HST amount (for example, $200) could be remitted by the brokerage rather than by the agent.

Solution

Create an additional Standard Deduction on the deal's deduction page (for example, "Company Tax for 3rd Party Referrals").

Configure this deduction to map to your brokerage's GST/HST Payable (or tax collected) GL account in your accounting system. This allows the tax amount to be retained by the brokerage while the referral recipient receives only the referral amount.

Example

  • Referral Fee: $4,000

  • GST/HST Portion: $200

  • Additional Standard Deduction: $200

  • GL Mapping: GST/HST Payable (Tax Collected) Account

Once the deal is paid, the $200 tax deduction will be posted to the designated GST/HST payable (tax collected) GL account. This ensures the tax portion is retained by the brokerage and tracked separately from the referral payment, making it available for remittance as part of the brokerage's regular GST/HST filing process.

For detail Manual Monthly Journal Entry Adjustment - Quickbooks Online - https://support.loft47.com/portal/en/kb/articles/quick#Step_1_Pull_Report

Accounting Consideration

The deduction records the tax liability in Loft. Your brokerage will still need to complete the appropriate accounting entries and include the amount in its regular GST/HST filing process (monthly, quarterly, or annually, depending on your filing schedule).

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