BUSINESS
CAREERS
HST leads to
disharmony
in real estate
By Christopher Guly
THE INTRODUCTION of the HST
in Ontario and British Columbia on July 1 hasn’t just had
clients paying more tax for
legal services. For real estate
practitioners in the former
province, it’s also created confusion over commissions,
according to Alan Silverstein,
certified as a specialist in real
estate law by the Law Society of
Upper Canada.
In a tip sheet for realtors, the
Ontario Real Estate Association (OREA) states that the
Canada Revenue Agency (CRA)
will consider various factors,
such as when agreements are
entered into and when a transaction closes in determining
when services are performed
and how the GST or HST will
apply to a commission.
In OREA’s view, it is
“assumed” that a realtor’s
commission becomes due or
is paid when the property is
sold or leased.
While the HST would
apply to services performed
on or after July 1, only the
GST would apply if 90 per
cent or more of the services
are performed before that
date, according to the HST
transitional rules. For
instance, if 90 per cent of a
realtor’s services were per-
formed before July 1, only the
five per cent GST would apply.
“The problem is who determines if the 90-per-cent
threshold is met?” asks Silverstein, who serves as director of
legal engagements and new
initiatives for Telus Inc.’s automated software mortgage program, Assyst Real Estate.
“What are the consequences
if there’s a mistake? What
leverage does the buyer have if
the deposit exceeds the com-
mission?”
OREA has some answers,
though Silverstein suggests
they only add to the confusion.
It acknowledges that a ser-
vice generally commences when
the agent and client sign a list-
ing or buyer-agency agreement,
and conclude when the deal has
closed (a property is leased or
sold). However, “it may or may
not conclude when an agree-
ment of purchase of sale or lease
has been signed because the
realtor could still provide some
services up to the time the real-
tor is paid when the deal closes.”
The tip sheet outlines three
different approaches realtors
may take depending on their
based on when the transaction
closes. “If the approach is
questioned by the client, the
realtor can decide whether or
not it is appropriate in the cir-
cumstances to adjust the
amount of tax (and take an off-
setting adjustment in the real-
tor’s return) or to advise that
the client may make a tax-
paid-in-error claim.”
DREAMSTIME.COM
Social media policies can reduce risk
DONALEE MOULTON
Employers can add a new
item to their worry list: social
media. As more and more
employees join Facebook, Twitter and other virtual networking
sites, more and more legal issues
arise. Fortunately, there are steps
that can reduce risk.
Social media is a significant
issue for employers — or should be,
said Peter Eastwood, a partner in
the Vancouver office of Borden
Ladner Gervais LLP. “It’s a very
complex legal issue. As a society,
we are still wrestling with social
networking and what it is.”
The learning curve is steep,
and uncharted. “It’s a social filter
that we haven’t learned yet. It’s
like a formal dinner party. We
don’t know what fork to use,” said
Giles Crouch, chief executive offi-
cer of MediaBadger, a social
media research and consulting
firm in Halifax.
