# Realtor Commission Kickback



## 30goodies (Jan 10, 2018)

Last year, I referred a friend to my trusted realtor. Upon completion of the sales, the realtor gave me a kickback. 

I am reporting this as income for 2017. I have been told to report it under the T2151. 

Is this correct?

Must I enter a business name? Obviously, I don't have a business name for this as this is once in a blue moon thing. 

Thank you for reading.


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## condor (Jun 15, 2014)

Are you serious ??...or is this your attempt at dry humour? Cash flows across table...agent does not report it(no reason to) and you wonder what form....really?


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## gardner (Feb 13, 2014)

condor said:


> Are you serious ??


I missed the part where anyone said the agent wasn't reporting something. My assumption is that the agent is reporting his/her commission totally normally, and reporting a business expense for paying a "finders fee" or something. OP is only wondering how to report the other income. I don't see anything to be incensed about -- except the implication that RE commissions are far too large.

Anyhow, I have no special insight how to report it. My approach would be to just report it as other income.


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## Mukhang pera (Feb 26, 2016)

I think I'd report it under "Bribes, Graft and Corruption Income". Or perhaps under "Other Ill Gotten Gains". :smile:


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## stardancer (Apr 26, 2009)

Since it's a one time thing, you can report it under other income. If you are referring clients to him on a regular basis then it would be a business. On the realtor's side, I have no idea if it's illegal or not. It's up to him to report it as an expense or not.


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## nobleea (Oct 11, 2013)

In essence, this is the same thing as a cash back credit card. The agent (CC) is giving you a kickback of their commission (merchant fees), which the seller has to pay. Very few seem to question the ethics or legality of that.

Unless the realtor has asked you to sign anything or needs a receipt, they would be paying this from after tax income, so no need for you to claim. Technically a gift.

If they need a receipt, then it's a business expense and it'd better show up as income on your tax papers.

Regardless of what happens, I'd take my friend out for dinner or something nice since he's the only one who brought money to the table.


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## Eclectic12 (Oct 20, 2010)

condor said:


> Are you serious ??...or is this your attempt at dry humour?
> Cash flows across table ... *agent does not report it(no reason to)* and you wonder what form....really?


Is this your attempt at humour? :wink:

Putting myself in the agent's shoes - why would I sign a contract that spells out my fees then skip claiming an expense that reduces my taxable income?
I suppose the realtor may be working under the table for this particular transaction ... but I doubt it.


Cheers


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## gardner (Feb 13, 2014)

nobleea said:


> this is the same thing as a cash back credit card


I don't agree. In the credit card case, the card holder who receives the refund is a party to the goods/payment transaction. In the case at hand, the person getting the "kickback" is not a party to the RE deal at all, being neither the buyer nor seller nor agent.


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## nobleea (Oct 11, 2013)

People and companies offer referral bonuses all the time. Tangerine sign up bonuses, Aeroplan CC bonuses when you get a friend to sign up, same thing with places like greatcanadianrebates, Alarm companies, window replacements, dealerships, etc


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## OhGreatGuru (May 24, 2009)

nobleea said:


> People and companies offer referral bonuses all the time. ...


My thoughts exactly. OP's reference to it as a "Kickback" is inappropriate. Assuming OP wishes to be honest, Line 130 "Other Income" is the catchall.


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## 30goodies (Jan 10, 2018)

OhGreatGuru said:


> My thoughts exactly. OP's reference to it as a "Kickback" is inappropriate. Assuming OP wishes to be honest, Line 130 "Other Income" is the catchall.


Yes, I want to be honest by reporting it as income. True, "kickback" might be a little misleading. it is a referral fee. Thank you all for your input! I will report it under other income.


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## mrbizi (Dec 19, 2009)

You might want to reconsider this. Unless you're a licensed agent, or are party to the trade (buyer or seller), it's illegal to receive a referral fee/finders fee. You and the agent can get fined or go to jail.

Per RECO website:

REGISTRANTS PROVIDING REFERRAL COMPENSATION FOR LEADS TO AN UNREGISTERED THIRD-PARTY

Not permitted

Compensation may not be provided to an individual or entity that is not registered under REBBA 2002 if the compensation would be considered to be in furtherance of a trade. This would be contrary to the provisions of REBBA 2002 for the registrant that is offering the compensation (section 30 of the Act) and for the person receiving the compensation (section 4(2)(b) of the Act). The form of compensation does not matter. It could be a cash payment, a bottle of wine or a gift card. No form of compensation is permitted to an unregistered third party.

Remember, according to REBBA 2002, “trade” means a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for purchase and sale, exchange, option, lease, rental or otherwise and any offer or attempt to list real estate for the purpose of such a disposition, acquisition or transaction, and any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt, and the verb “trade” has a corresponding meaning.


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## nobleea (Oct 11, 2013)

mrbizi said:


> You might want to reconsider this. Unless you're a licensed agent, or are party to the trade (buyer or seller), it's illegal to receive a referral fee/finders fee. You and the agent can get fined or go to jail.


Can the agent be fined? Maybe, by their governing body.
Can an individual? Maybe, but impossible for the realtor board to collect on it.
But go to jail? You'll have to quote the part of the criminal code that stipulates this. I would bet there is nothing.


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## Synergy (Mar 18, 2013)

^ From my knowledge of other professions failure to comply often lead to some form of disciplinary action by the college or regulating body. Often a fine, license suspension, educational requirements, etc. Never heard of action taken against the general public on something like this. How is the average joe suppose to know the rules! They can rightfully plead ignorance here, at least IMO.

Some professions are strict on referral fees, others not so much...


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## Eclectic12 (Oct 20, 2010)

mrbizi said:


> You might want to reconsider this. Unless you're a licensed agent, or are party to the trade (buyer or seller), it's illegal to receive a referral fee/finders fee. You and the agent can get fined or go to jail ...


Maybe in Ontario ... BC on the other hand says that it is fine, with a couple of restrictions.
https://www.recbc.ca/psm/paying-and-receiving-referral-fees/

Alberta says it is fine as long as the activities don't require a license, according to the Real Estate Act.

So like a lot of other things ... YMMV according to the justification.


Cheers


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## Retiredguy (Jul 24, 2013)

30goodies said:


> Yes, I want to be honest by reporting it as income. True, "kickback" might be a little misleading. it is a referral fee. Thank you all for your input! I will report it under other income.




My answer would be contingent on exactly how much money we are talking about. Do tell us! I see a big difference in 250 or 2500.


Also many RE selling agents give a house warming gift to those who have purchased from them. Lets say $200 gift cards or in kind. The agent deducts it from taxable income. Does anyone think the recipient house purchaser needs to claim it on their tax? Does anyone think CRA cares?
Any agent reporting 150k in income who has 3k deducted as gifts IMHO would never get questioned. Its all about reasonableness.


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## twa2w (Mar 5, 2016)

A gift for a referral would not likely be considered furtherance of a trade. I believe there have been rulings on this.
If the RE agent gives you a gift, if you list with him, then it is against the rules.


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## Eclectic12 (Oct 20, 2010)

Retiredguy said:


> ... Also many RE selling agents give a house warming gift to those who have purchased from them. Lets say $200 gift cards or in kind. The agent deducts it from taxable income.


I am going to have to call my RE agents then. The most I have received when buying/selling is a calendar and a card once in a while - nothing like $200 worth of anything. :frown:




Retiredguy said:


> ... Does anyone think the recipient house purchaser needs to claim it on their tax? Does anyone think CRA cares?


Common sense says no.

CRA's past history where they tried to get employees collecting travel points from business trips to pay taxes on the points or the more recent attempt to have retail employees discounts for purchases treated as a taxable benefit says YMMV.


Cheers


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