Commercial real estate payroll: a small, specific list of people to get right

Most portfolios run on contracts, not a payroll department

A typical plaza, industrial, or office owner contracts out leasing to an outside brokerage, cleaning and landscaping to service companies, and often the whole building to a third-party property manager — all of which invoice with their own HST and never touch your payroll at all. The people who do land on your T4 are usually a much shorter list: a superintendent, maybe one administrative employee, and the owner if they take a salary. We set up straightforward payroll for exactly that list rather than a system built to handle staff you do not have, and we confirm the contracted relationships are structured well enough to hold up if CRA ever questions whether they are really employees in disguise.

Where a third-party property management company runs the building, its fee is usually a percentage of collected rent billed with its own HST, and none of its staff ever appear on your payroll at all — the management company remains the employer of record for its own people. Some owners still take an active hands-on role even with a manager in place, which raises the usual owner-manager question of salary versus dividends; we work that through alongside the wider structure rather than as an afterthought at year end.

The superintendent: employee or contractor, and what the on-site suite is worth

Building superintendents fail the employee-versus-contractor test in both directions often enough that it is worth checking deliberately: control over the work, who supplies the tools, and who bears the financial risk all point one way or the other, the same tests CRA applies to any trade. Where you employ a superintendent directly, WSIB coverage is generally required, and on older mixed-use or industrial buildings with an on-site caretaker suite, a reduced-rent or rent-free unit given as part of compensation is a taxable benefit valued at fair market rent — the same wrinkle we handle for self-storage on-site managers, and one that gets missed just as often here. Owners with a super covering several buildings across a small portfolio should also expect a per-kilometre travel allowance between sites, tracked and non-taxable the same way it is for any other employee who moves between locations for work.

Leasing commissions: T4A, payroll, or a capitalized deal cost

A commission paid to an outside brokerage for finding and closing a tenant is simply a vendor invoice with its own HST — it never touches your payroll. A commission paid to your own employee for the same work runs through payroll like ordinary wages, with CPP and EI withheld and vacation pay accruing on it, which is a different result for the same economic event depending on who is on the other end of the payment. Portfolios large enough to run an in-house leasing team should not assume the arrangement is automatically cheaper than an outside brokerage once payroll taxes, vacation pay, and benefits are added to the base commission — we model both before a portfolio commits to building an internal team. Either way, a lease that took real staff or brokerage time to negotiate raises a separate year-end question — whether that cost is capitalized as part of the deal and amortized over the lease term rather than expensed immediately — a distinction that shows up on the corporate return more than at payday.

Where payroll meets the bigger structural questions

How many people a portfolio employs directly, and through which entity, connects to more than payroll — it feeds into the active-business questions covered on our tax services page for commercial real estate investors, since a corporation with genuinely no employees of its own looks very different to CRA than one running its own leasing and maintenance staff — a distinction that matters for the small business deduction, not just for how the payroll register looks. The wider payroll toolkit — remittances, ROEs, T4 season — is on our payroll services page, and owners with US property or US tenants should see our cross-border guide for commercial real estate investors. We set the whole thing up once, correctly, rather than leaving it to be reconstructed at the next T4 or WSIB filing deadline.