Personal Real Estate Corporation: Books, GST/HST and First T2

What does a personal real estate corporation need for its books and first T2?

A personal real estate corporation (PREC) is a corporation that provides one agent's services to a brokerage and is paid for them. In Ontario and British Columbia the agent owns all its voting shares and is its only director and officer (RECO checklist; BC Real Estate Services Regulation, Part 10). The corporation, not the agent, then generally earns the commission, once the brokerage's contract and payments are in its name. It should have its own bank account, and it needs its own books and its own T2, filed within 6 months after each tax year ends (CRA).

The case is not simple if any of these is true:

• Commissions went to your personal account after the corporation started.
• The brokerage agreement, the Ontario notice to the regulator or the BC licence is not in place.
• The corporation has no GST/HST account and its sales, with yours, are near $30,000.
• Money leaves the corporation with no plan for salary, dividends or a loan.
• The year has ended or is ending and the books are not ready for the first T2.
• You are in Alberta, Quebec or another province, where the corporation rules or the tax return differ.

Gather before you start:

• The brokerage agreement and any consent.
• The articles, share register and director and officer records.
• The regulator notice or BC licence.
• Every commission statement since the corporation began.
• Corporate and personal bank statements from that date.
• Receipts for costs.

Are personal real estate corporations the same in Ontario, British Columbia and Alberta?

No. The provincial real estate regulator decides whether a brokerage can pay a corporation, and the rules differ in each province.

Sources: Ontario, RECO; British Columbia, Part 10 of the regulation; Alberta, rule 50 of the Real Estate Act Rules. Brokerages in Ontario are not obliged to agree to a PREC (RECO). Who may incorporate and share ownership is in professional corporations.

Alberta's Real Estate Act and Rules do not use the term personal real estate corporation. Whether anything else applies to a corporation paid under rule 50 is a question for RECA and your brokerage. For other provinces, ask the provincial regulator before commission is paid to a corporation.

The tax return also depends on the province. The CRA administers provincial corporation tax everywhere except Quebec and Alberta (CRA). An Alberta corporation files a return with Alberta within six months of year-end, as well as its federal T2. The Alberta Corporate Tax Act excuses a small Canadian-controlled private corporation only when every test in subsection 36(1.1) is met, including no taxable income and gross revenue of no more than $500,000.

British Columbia's PST Notice 2026-001 announced PST on non-residential real estate services, including trading services, from October 1, 2026. The notice, last updated September 21, 2026, says that expansion is paused and tells anyone who registered for a PST account to cancel it (BC). It lists non-residential real estate services only. See BC PST on services.

How does the commission reach the corporation, and what goes in writing?

Once the paperwork is in place, the brokerage pays commission earned from that date to the corporation, and the corporation pays you. What must be written depends on the province.

• Ontario: a written agreement among the corporation, the agent and the brokerage. In it the corporation agrees not to hinder the brokerage, its broker of record or the agent in their duties and to give the help they reasonably need to comply. The brokerage must satisfy itself that the corporation qualifies before it pays. The agent tells RECO the corporation's legal name and service address before the first payment and reports a change affecting eligibility within five days (RECO checklist).
• British Columbia: the corporation is licensed for the same brokerage as the agent, and the application includes the brokerage's written consent. The agent's licence names the corporation. The corporation engages the agent as an employee or an independent contractor and pays the agent for the services. If the corporation stops meeting the share, director or officer rules, its licence becomes inoperative, and the agent's licence with it (Part 10).
• Alberta: the Act and Rules set no form for this. Get the brokerage's written terms and RECA's answer before commission is redirected.

Ask the brokerage to put the corporation's exact legal name on every commission statement and payment. Statements or payments in your own name after the switch are how corporate income ends up in a personal account; see corporate income in a personal account.

What should a realtor's corporation open and keep?

Open a business bank account and a card in the corporation's exact legal name, and run only corporate money through them. Then keep:

• One commission statement per deal, tied to the deposit it produced.
• The brokerage's statements of splits and fees.
• Receipts for every cost the corporation pays.
• A shareholder loan account for any personal money in or out (shareholder loan account).
• The articles, share register and resolutions.

The setup steps are in books for a new CCPC, and how long to keep records is in business record retention. To choose between doing the books yourself and hiring a bookkeeper, monthly or year-end only, see doing your own books or hiring a bookkeeper and year-end only or monthly bookkeeping.

How does a personal real estate corporation book commission, the brokerage split and fees?

Book what the brokerage credits to the corporation as revenue, and every amount the brokerage deducts as its own line, so each deposit ties to a statement.

Account names should follow the return's financial statement lines; see chart of accounts for GIFI. Which part of the gross fee is yours and which is the brokerage's is set by your agreement, not by the books.

Does a realtor's corporation register for GST/HST, and when does it charge?

The corporation must register for GST/HST when its taxable sales pass $30,000 in a single calendar quarter or over four consecutive calendar quarters, and it may register voluntarily before then (CRA). A corporation under the limit is a small supplier and does not have to register. After a single quarter over the limit, registration takes effect no later than the day of the supply that made you exceed the limit. If only the four-quarter total passes the limit, small supplier status ends at the end of the month following the quarter in which you exceed the limit. Apply within 29 days of the effective date.

The totals include revenues of associates, if they were associated at the start of the quarter. You are associated with a corporation you control (Excise Tax Act, section 127), as a sole voting shareholder in Ontario or British Columbia does. So for each calendar quarter that begins while you control the corporation, its test also counts your own taxable sales in the four quarters before it, such as commission you earned personally before the switch (section 148). If those passed $30,000, the corporation is not a small supplier.

The CRA's real property memorandum lists real estate services on buying, leasing or renting real property among services in respect of real property, which are taxable unless another provision exempts them (GST/HST Memorandum 19.1). That memorandum dates from 1997 (revised 2002) and does not mention a PREC, so confirm with the CRA or an adviser how your own commission is treated. Once registered, the corporation charges and remits tax on taxable commission. Registration timing, late registration and what to charge are in when to register for GST/HST.

A GST/HST account you held as a sole proprietor does not carry over to the corporation's business number automatically (CRA); see books after incorporating a sole proprietorship. Ask the brokerage whether it pays GST/HST on top of the commission and what registration number it needs on statements. The rate depends on the province: GST/HST, PST and QST by province.

How do I pay myself from the corporation, and what do the books show?

The corporation can pay you by salary, by dividend, or by a loan, and each leaves a different mark in the books and on your slips.

A loan from the corporation to a shareholder is included in the shareholder's income unless an exception applies. The usual one is repayment within one year after the end of the corporation's tax year in which the loan was made, and the repayment cannot be part of a series of loans and repayments (Income Tax Act, subsection 15(2.6)). See shareholder loans.

In Ontario, RECO says the corporation cannot pay the agent remuneration greater than the remuneration it received from the brokerage (RECO checklist). RECO's page does not say whether a dividend counts as remuneration, so ask RECO before paying out more than the brokerage has paid in. The mix of salary and dividends is in salary or dividends and the amount in how much to pay yourself. Salary affects RRSP room and CPP (salary for RRSP room and CPP); dividends usually have no tax withheld, so the bill arrives at filing (owing tax after dividends).

Dividends on a family member's non-voting shares may be taxed at the top rate under the tax on split income, and a corporation that earns almost all its income from services cannot use the excluded-shares exception (Income Tax Act, section 120.4); see paying family members.

As the sole director in Ontario or British Columbia, you can be personally liable with the corporation for payroll deductions it fails to withhold or remit and GST/HST net tax it fails to remit, plus interest and penalties, unless you acted with the care, diligence and skill of a reasonably prudent person. The CRA's time to recover or assess ends two years after you last cease to be a director (Income Tax Act, section 227.1; Excise Tax Act, section 323).

Which costs can the corporation deduct, and which do I pay and get repaid for?

The corporation deducts the costs of earning its commission when they are for the business and documented, and pays them from its own account. A cost you pay personally can still be the corporation's if the corporation repays you against a receipt.

A cost that benefits you personally and was paid by the corporation can be taxed as a shareholder benefit (Income Tax Act, subsection 15(1)); see corporation-paid personal expenses. More on deductible costs: business expenses the CRA accepts.

When is the first T2 due, and do I file if little happened?

The first T2 is due 6 months after the corporation's first tax year ends, and the corporation files every year even if no tax is payable. The CRA lists inactive corporations among those that must file; the only exceptions are tax-exempt Crown corporations, Hutterite colonies and registered charities (CRA).

Tax owing is due earlier than the return:

The conditions come from the CRA balance-due day page. A first tax year has no preceding year, and neither that page nor the statute's definition says in terms how the prior-year condition applies then, so confirm which date applies before the first payment. If you cannot confirm it, pay within 2 months of year-end. A late return carries a penalty of 5% of the unpaid tax plus 1% for each complete month late, up to 12 months, and the repeat-offender rate is higher.

The first tax year starts on incorporation, and the year-end is a choice; see choosing a year-end. A tax year shorter than 51 weeks prorates the business limit (CRA T2 guide). Instalments may also apply; see recording corporate tax instalments.

The return uses the year-end financial statement figures, so close the books first: year-end close checklist. Filing it yourself and its cost are in filing your corporate return and what a corporate return costs.

Could the personal services business rule apply, and does the corporation get the small business deduction?

A corporation that is a personal services business gets no small business deduction and no general rate reduction on that income, and it can deduct only limited costs. Otherwise the small business deduction applies: a CCPC's active business income up to the federal business limit of $500,000 is taxed federally at 9%. Provincial rates differ, and the limit is shared by associated corporations (CRA T2 guide).

The Income Tax Act treats a corporation as a personal services business when the person doing the work, or someone related, is a specified shareholder, who owns directly or indirectly at least 10% of the issued shares of any class (section 248), and would reasonably be regarded as an officer or employee of the one receiving the services but for the corporation (section 125). Exceptions exist; the full test is in personal services business.

Personal services business income is also left out of the general rate reduction (section 123.4). Its federal rate is 33% before provincial tax, which includes an additional tax of 5% (section 123.5). Paragraph 18(1)(p) allows it to deduct only the owner's salary and benefits, certain selling expenses and legal fees to collect fees.

The "employed" or "engaged" wording in the real estate rules is about licensing. The tax test is separate and depends on the facts of your relationship with the brokerage, which makes this a point to settle before the first return.

What if commissions were earned before the corporation existed, or paid to me by mistake?

Commission earned before the corporation was in place is generally your own income, and commission earned after it is generally the corporation's if the contract and statements are in its name. The switch date is generally when the regulator paperwork and brokerage terms were complete, not only the date of incorporation. A deal that was listed before the switch and closed after it depends on your agreement and the facts.

• Earned before the switch: it stays on your personal return, with the costs that go with it. The corporation's books start at the switch. A car or equipment you move in is treated as sold to the corporation at market value unless you jointly file a section 85 election (Form T2057) by the earliest income tax return filing deadline of either party for the transfer year; see moving a business into a corporation.
• Earned after the switch but paid to you: if the corporation was the party paid, book it as corporate revenue and record the money you hold as owing from you to the corporation. Move the money into the corporate account, and clear it within one year after the end of the corporation's tax year in which the loan was made; an interest benefit can apply while it is owed (shareholder loan interest). The contract and statements decide whose income it is; the steps are in corporate income in a personal account.

Ask the brokerage for corrected statements, so the books and the CRA's records show the same payee and dates.

Example

These examples are illustrative; all amounts are Canadian dollars and exclude GST/HST.

Ontario agent, one full year

An agent earns $180,000 of commission through the PREC and the corporation pays $40,000 of costs. It books $180,000 of revenue and $40,000 of expense, leaving $140,000 before owner pay and tax. If it pays $60,000 of salary, expenses rise to $100,000 and profit before tax falls to $80,000; a dividend would not change that profit, because it is paid out of profit after tax. Employer payroll contributions are left out. In Ontario, remuneration the corporation pays the agent cannot exceed the $180,000 the brokerage paid in. At this size the corporation is well past the $30,000 small supplier limit.

British Columbia agent whose corporation is licensed in March

The agent's corporation is incorporated in January and licensed, with the brokerage's written consent, on March 1. She earns $20,000 of commission in January and February, paid to her personally. That stays on her personal return. Commission from March 1 is corporate revenue. If an $8,000 March commission is deposited to her personal account while the brokerage's statement names the corporation, the corporation generally books $8,000 of revenue and $8,000 owing from her, and she moves the money across.

Alberta agent asks to use a PREC

The agent confirms with RECA first, because the Act and Rules do not use the term PREC. They do allow a brokerage to pay one corporation in which the agent holds at least 50% of its shares. With the brokerage's written terms in place, the corporation books commission as in the Ontario and British Columbia cases and files its federal T2 and, unless the small-corporation exception above applies, its Alberta corporate return.

Different for you?

• Commissions are in your personal account, there is no GST/HST account, you have no pay plan or a first T2 is due: fix the books and filings together; see corporate income in a personal account, and get bookkeeping help and corporate tax help.
• The books are months behind, returns were missed or GST/HST registration was late: see when to register for GST/HST, catching up on overdue books and catching up on unfiled corporate returns, with bookkeeping help.
• You are unsure whether the personal services business rule applies: read personal services business and get corporate tax help.
• You are a different licensed professional, or want to share ownership: see professional corporations.
• You moved from sole proprietor to corporation this year: see books after incorporating a sole proprietorship.
• Your corporation is in Alberta, Quebec or another province: the real estate and tax-return rules differ from Ontario and British Columbia; confirm with your provincial regulator and get corporate tax help.