GST and QST on a Real Estate Commission in Quebec: What the Seller Actually Pays

When sellers think about their broker's commission, they think about a rate or an amount. They often forget the line underneath it: sales tax. The commission pays for a service, that service is taxable, and both GST and QST are added to it. This article is only about those taxes: what they are calculated on, how much they add, and how to read an amount without getting it wrong. For what the commission itself is calculated on and how it is split, see our article on the commission base and split in Quebec.

A commission pays for a service, and that service is taxable

A brokerage commission is not a deduction from the price and not a tax in itself: it is the price of a service provided to the seller. Because that service is taxable, the agency bills GST and QST on top of the commission amount.

The consequence is simple and often missed in back-of-the-envelope math: the amount that actually comes out of the sale proceeds is not the commission, it is the commission plus tax. A seller who budgets a sale on the commission alone underestimates the cost, and always in the same direction.

Two taxes stacked: 14.975% of the commission

At the current rates published by Revenu Québec, GST is 5% and QST is 9.975%. Both are calculated on the same amount, the commission, and added together. Combined, they come to 14.975% of the commission.

The two taxes are applied side by side, each one to the commission; QST is not calculated on top of GST. That is why the combined rate is simply the sum of the two, 5% plus 9.975%, and why the same 14.975% factor works for any commission amount.

An easy way to remember it: just under 15 cents of tax for every dollar of commission. For every $1,000 of commission, that is $149.75 of tax. The ratio does not change with the price of the property or the negotiated rate: it applies to any commission amount.

A worked example: a $20,000 commission becomes $22,995

Take a constructed example to illustrate the mechanism, not a rate card: a hypothetical commission of $20,000, whatever sale price it comes from.

GST at 5% is $1,000. QST at 9.975% is $1,995. Total tax is therefore $2,995, which is 14.975% of $20,000. The amount deducted at the notary for the commission is not $20,000 but $22,995.

The gap of almost $3,000 is neither a surprise nor a hidden fee: it follows directly from the two rates. It only becomes a surprise when it is left out of the sale budget.

Reading the example backward is just as useful. If a document shows $22,995 for the commission and you want the commission alone, the pre-tax amount is $20,000 and the tax share is $2,995, roughly 13% of the tax-included total. Tax is 14.975% of the commission, but only about 13% of the commission plus tax: two percentages describing the same dollars from two different bases.

Tax applies to the commission, never to the sale price

The opposite mistake also happens: applying 14.975% to the sale price of the home. The result bears no relation to the actual bill, because the tax base is the service provided, meaning the commission.

The sale price only comes in indirectly: it is used to set the commission, and the tax is then calculated on that commission. There are two distinct steps, and they should not be merged. First the commission, as your brokerage contract provides; then the tax, at 14.975% of that commission.

Plus tax or tax included: comparing two amounts correctly

A commission amount can be presented in two ways: plus tax, meaning before GST and QST are added, or tax included. Comparing an amount presented one way with an amount presented the other way skews the comparison by about 15%.

To bring a tax-included amount back to its pre-tax value, divide it by 1.14975. In the worked example, $22,995 divided by 1.14975 gives back $20,000. To go the other way, multiply the pre-tax amount by 1.14975.

The useful habit, in front of any commission figure, is to ask whether it is before or after tax. The answer moves the amount by about 15%.

The negotiated commission sets the tax, not the other way round

No commission rate is imposed: it is agreed between the seller and the broker. The taxes, however, are not negotiable. They follow the agreed commission amount mechanically, in the same proportion.

That matters when you compare scenarios: any change in the commission brings a change in tax equal to 14.975% of that difference. Comparing two scenarios on the commission alone therefore understates the real gap between them by that much. For the same reason, always compare tax-included amounts, or always pre-tax amounts, never a mix of the two.

If the property being sold is part of a business activity, the tax treatment of the sales tax paid on the commission is a separate question for your accountant.

Run the numbers with your own price

The $20,000 example is there to explain the mechanism, not to predict your bill. To apply it to your situation, use the CourtiConnect commission calculator: you enter your sale price and your rate, and it shows the commission, the combined GST and QST, and the total cost.

Keep in mind what the tool does and does not do: it calculates the commission from the price and rate you enter, then applies GST and QST to it. The rate itself remains the one you agree with your broker.