How Tax Season Affects Self-Employed and Commission-Based Individuals

Posted on 07 March, 2019

A few weeks ago, Canada’s Minister of National Revenue announced that tax season for Canadians is officially open. During tax time, we get many questions from our clients about what documents they will need to secure mortgage financing. The answer to that question depends on your employment type and income information.

Self-Employed and Commission-Based Employment

If you are self-employed or paid by way of commission and your income level increased over the past year, chances are you will want to use your most recent income information in order to qualify for a mortgage. This information will be a better reflection of your current financial situation and may enable you to qualify for a higher amount of funding should you so choose. For example:

Current Year: 2019

Most Recent Income: This will come from your taxes for 2018 and 2017.

As we explained in last week’s blog on required documentation to get a mortgage, your lender will likely request copies of your most recent two years’ worth of Notice of Assessments (NOAs) and T1 Generals. Consider the following questions:

  • Do you want to use your most current income information?
  • Do you anticipate having to pay in when you get your taxes done this year?
What you will Need

If the answer to either of the above is yes, you will need to complete your taxes before moving forward with a mortgage. Your most current income information can only be used if you have your most recent NOA, which takes about 2 weeks to become available after your taxes are filed. If you have to pay in this year, this will need to be done before your lender will fully approve your mortgage application.

If the answer to both of the above is no, you would not be required to complete your taxes for mortgage-related purposes. In the example above, you would use NOAs and T1 Generals from 2017 and 2016 instead of 2018 and 2017.

What if I’m Paid an Hourly Wage?

If you are paid on an hourly basis, the above does not apply to you as you will be able to prove your most recent income amounts through the T4s provided to you by your employer.

If you have any questions about making sure you have the appropriate documentation for your upcoming mortgage, our team of Brokerage Assistants are here to assist you.

*Please note that this is a general overview and required documentation can change based on your personal financing requirements.


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