GST/HST on Trailing Commissions: Deferred to Jan 2028

Quick Answer

Why this deadline moved and what it means for the person paying advisor fees

If you have been reading headlines about the CRA charging tax on your investment advisor’s fees, you can exhale. Nothing on your account statement is changing today, and nothing changes in the immediate future either.

In May 2026, the Canada Revenue Agency pushed back a significant change in how it treats the trailing commissions that mutual fund managers pay to dealers and advisors. The original plan was to apply GST/HST to those payments starting July 1, 2026. After extensive industry pushback, the CRA moved the enforcement date to January 1, 2028.

For investors, that means the tax question you may have been worried about does not affect your next quarterly statement. For advisors and dealers, it means roughly eighteen months of runway to update systems, agreements, and workflows before the new treatment takes effect. This article walks through what changed, who is affected, and what to do next.

Pick your path: are you an investor, an advisor, or a dealer?

The trailing commission tax question hits four groups of readers very differently. Find yourself below.

What actually changed, and how each fee type is now taxed

The CRA’s reasoning traces to changes in how mutual fund dealers are regulated. Since 2020, securities rules have required dealers to provide ongoing advice to investors in order to earn a trailing commission. The CRA now views that ongoing advice, not the original sale, as the core service being paid for. Because ongoing advice is not an exempt financial service, the payment becomes taxable. For a fuller walkthrough of Canada’s GST/HST framework, see our practical guide to the new GST/HST rules.

Two things in that matrix are worth pausing on. First, upfront trading fees remain exempt from GST/HST across all three periods. If your firm processes upfront sales charges or deferred sales charges, the tax treatment of those payments has not changed.

Second, the transition period contains a hidden trap. A dealer that has claimed input tax credits, often referred to as ITCs, on business inputs linked to trailing commission revenue must collect and remit GST/HST on those supplies from the date the credits were first claimed. Input tax credits are the mechanism through which GST/HST registrants recover tax paid on business expenses. Claiming an ITC on an expense attributable to trailing commissions is treated by the CRA as evidence the dealer accepted the taxable characterisation, and the deferral no longer protects those supplies.

Your roadmap to January 1, 2028

Whether you are a two-person independent practice or a national dealer, the runway is finite. The steps below walk through the compliance work most firms will need to complete, in the order they typically make sense.

1. 1
   Confirm registration statusCheck whether trailing commission revenue crosses the small supplier threshold of $30,000 in taxable supplies over four consecutive calendar quarters. Once you cross that line, you have thirty days to register for a GST/HST account with the CRA.
2. 2
   Decide whether to apply the tax earlyApplying GST/HST to trailing commissions before January 1, 2028 unlocks eligibility to claim input tax credits during the transition period. That can be attractive for firms with high input costs, but it locks the dealer into taxable treatment from the day of the first ITC claim. This decision needs to be modelled, not made on intuition.
3. 3
   Map your revenue streamsDistinguish trailing commissions, upfront trading fees, deferred sales charges, referral fees, and any advisory fees billed directly to clients. Only the first is caught by Notice 344, but comingled coding can create audit exposure. See our upcoming deadlines for investment plan investors when you sit down with clients.
4. 4
   Update client agreements and fee disclosuresFund facts, account opening documentation, and management fee disclosures should reflect that GST/HST may apply to trailing commissions on and after January 1, 2028.
5. 5
   Coordinate with fund managersFund managers pay the trailing commission and may need to gross up remittances or negotiate net-of-tax arrangements. Do not wait for them to reach out.
6. 6
   Prepare for QST alignmentRevenu Québec has signalled its intent to align the Quebec Sales Tax treatment. If you serve Quebec clients, monitor provincial announcements.

Common mistakes to avoid during the transition

Most of the risk during the transition period comes from small operational decisions that quietly change your GST/HST status.

• →Assuming the deferral protects every dealer regardless of input tax credit history. A dealer that has claimed ITCs on business inputs tied to trailing commission revenue is treated by the CRA as having accepted taxable treatment, and remittance obligations apply from the first day of that claim.
• →Coding shared overheads without apportioning them. Software licences, technology costs, and office expenses often support both trailing commission activity and other advisory work. Claiming a full ITC without apportioning may inadvertently pull your firm out of the 2028 deferral.
• →Waiting for CRA correspondence before registering. The small supplier threshold applies whether or not the CRA writes to you. Once trailing commission revenue crosses $30,000 over four consecutive calendar quarters, registration becomes mandatory within thirty days.
• →Treating upfront trading fees the same as trailing commissions. Upfront trading fees remain an exempt financial service. Do not apply GST/HST to them by default when you update your systems.
• →Assuming Quebec Sales Tax rules automatically mirror the federal position. Revenu Québec has signalled alignment but has not yet formalised an enforcement date. Watch for a separate provincial notice.
• →Overlooking client-facing disclosure updates. Fund facts, management fee schedules, and account opening kits often reference the tax treatment of fees. Our case study on resolving HST payment discrepancies shows how quickly small coding gaps can become audit findings.

Frequently asked questions

Sources & References

1. CRA GST/HST Notice 344 — Application of the GST/HST to Mutual Fund Trailing Commissions — https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/notice344/application-gst-hst-to-mutual-fund-trailing-commissions.html
2. CRA — When to register for and start charging the GST/HST — https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/when-register-charge.html
3. Excise Tax Act (Canada) — https://laws-lois.justice.gc.ca/eng/acts/e-15/
4. PwC Canada — Tax Insights: Mutual fund trailing commissions effective date changed to January 1, 2028 — https://www.pwc.com/ca/en/services/tax/publications/tax-insights/mutual-fund-trailing-commissions-2026.html
5. KPMG Canada — Dealers: CRA pushes trailing commission GST/HST to 2028 — https://kpmg.com/ca/en/insights/2026/06/cra-pushes-trailing-commission-gst-hst-to-2028.html
6. BLG — CRA delays GST/HST changes on trailing commissions to 2028 — https://www.blg.com/en/insights/2026/06/cra-delays-gst-hst-changes-on-trailing-commissions-to-2028
7. Investment Executive — CRA to enforce GST/HST on mutual fund trailing commissions in 2028 — https://www.investmentexecutive.com/news/cra-to-enforce-gst-hst-on-mutual-fund-trailing-commissions-in-2028/