Customs broker tax services: fee income, disbursements, and AMPS

Only the fee is income — the T2 starts there

Revenue for tax purposes is the brokerage fee, and any handling fee charged on top of a disbursement, not the gross duty and GST paid to CBSA and recovered from the client. Some brokerages carry a small administrative charge on the disbursement itself — that charge is taxable income, but the underlying duty and GST passed through from client to CBSA is not, because it was never the brokerage's money to begin with.

Getting the split wrong overstates both revenue and an offsetting "duty paid" expense. Since the two mostly cancel on the bottom line, some assume it doesn't matter for tax — but it distorts GST/HST return figures, industry benchmarking, and any loan covenant or provincial reporting that keys off gross revenue rather than net fee income. It also makes it harder to see the number that actually matters for pricing and staffing decisions: fee revenue per entry, once the disbursement noise is stripped out.

GST/HST: your fee is taxable, the border GST is someone else's

Brokerage services are a standard taxable supply — GST/HST applies to the fee like any commercial service, with no financial-service exemption the way some insurance or lending activities carry. The 5% GST clients pay at importation flows through the brokerage's disbursement account and becomes the importer's own input tax credit on their GST34, never the broker's. We see brokerages accidentally claim input tax credits on GST they only fronted and never truly incurred as their own cost — a claim that belongs to the client, not the firm that held the money for a few days.

AMPS penalties: when CBSA fines the brokerage, is it deductible?

CBSA's Administrative Monetary Penalty System can fine a broker directly for errors like misclassification or late accounting, separate from any penalty the importer faces on the same file. Penalties and fines imposed under a federal statute are generally not deductible for income tax purposes, so we treat AMPS penalties as non-deductible unless the specific circumstances say otherwise, and flag them clearly on the return rather than quietly folding them into deductible compliance costs.

Professional liability insurance premiums that respond to the underlying error, by contrast, are a straightforward deductible operating expense — and a brokerage that tracks AMPS incidents by cause over time usually finds its own coaching and file-review process pays for itself in avoided penalties long before the insurance ever has to respond.

Bonding and security: a financing cost, not a one-time fee

Every licensed broker posts security with CBSA — a bond or equivalent — sized to the volume of duty and tax the brokerage might need to cover on behalf of clients, and as CARM shifts more clients toward posting their own Release Prior to Payment security, the brokerage's own bonding needs may change too; as at the time of writing, this is still settling across the industry. Where that security is financed through a letter of credit or a line against the bond, the interest is deductible the same as any other financing cost, and we track it separately from operating expenses so it doesn't get lost inside "bank charges" on the trial balance.

The corporate rate, and where a brokerage actually sits

Because fee margins run thin against real payroll and disbursement financing, most incorporated brokerages sit comfortably under the $500,000 small business deduction threshold on active business income, keeping the corporate rate near 12.2% in Ontario — the disbursement float sitting on the balance sheet doesn't touch that active-income test at all. For US partner referral fees, W-8BEN-E documentation, and USD-denominated brokerage work, see our cross-border tax page for customs brokers. The T2 and GST34 filings described here run through our tax services page, fixed fee after a discovery call.