Remuneration paid by the agency to a broker’s business corporation: did you check properly before making the payment?

In compliance with the conditions set out in the regulations, a broker acting on behalf of an agency may get from the OACIQ the authorization to carry out his activities within a business corporation. Where appropriate, the remuneration formerly payable to the broker by the agency will now be paid to his corporation. However, the Inspection Department noted that some agencies make remuneration payments to corporations without first ensuring that the brokers who are shareholders in these corporations comply with the Act and regulations that apply to the practice within a business corporation.

We remind you that if a broker is not authorized by the OACIQ to operate within a business corporation, the payment of remuneration must be made in the broker’s personal name. The same applies if the conditions of an authorization already obtained by a broker are no longer met. The agency must ensure that the remuneration cheque or the account in which the electronic transfer is made is open in the name of the corporation within which the broker is authorized to practice.

In short, an agency can pay to the business corporation of a broker the remuneration relating to the latter’s brokerage activities, but can do so only in compliance with well-established conditions. The agency executive officer is responsible for ensuring that the usual checks are made beforehand.

Warning: the agency executive officer who does not make the usual checks is violating the ethical rules and the broker in default is exposed to tax consequences.

For detailed information, please read the article entitled: Remuneration to be paid to the broker's business corporation by the broker's agency.