PREC payroll: lumpy commissions, licensed splits, and the staff you actually employ

Commission is lumpy; payroll is not

The core tension of PREC pay is that commissions arrive in clusters while payroll runs on a fixed calendar. A salary means source deductions due to CRA on a schedule that does not care whether you closed three deals in March or none in June. Dividends have no withholding cycle at all — the PREC declares them when cash is actually there, and a T5 reports them after year-end. That flexibility is why straight salary is rare among our agent clients.

Salary still earns its place. It is deductible to the PREC, it creates RRSP room, and it builds CPP — including the second CPP2 ceiling, where the corporation pays the employer share on your behalf. Because you hold every voting share of an Ontario PREC, your own pay is EI-exempt either way, so EI never decides the question. The pattern we model most often is a modest salary sized to predictable personal costs, topped up with dividends after strong quarters — revisited every year against your pipeline, not set once and forgotten.

The licence line decides who can be on your payroll

Under Ontario's real estate rules, remuneration for trading in real estate can only be paid by the brokerage to a registrant or that registrant's PREC. A licensed buyer's agent or showing partner on your team is therefore paid their split by the brokerage — directly, or to their own PREC — and must never appear on your corporation's payroll. Your PREC cannot lawfully pay another registrant for trading activity, no matter how the team markets itself.

Unlicensed assistants are the opposite: they generally are your employees, because you set their hours, supply the tools, and direct the work. That means a T4, withholding, vacation pay, and an ROE when they leave. It also means a compliance boundary — tasks that require registration, like showing property or negotiating terms, cannot be delegated to them. Keep the job description firmly on the admin side: scheduling, marketing, listing paperwork, database upkeep.

Your team on paper

Family, TOSI, and the PREC's odd shape

An Ontario PREC requires you to hold all of the voting equity, while family members may hold non-voting shares. That structure interacts with the tax on split income in a specific way: the excluded-shares escape from TOSI demands at least 10% of both votes and value, and family members in a PREC can never hold votes. So dividends to a spouse or adult child are generally taxed at the top rate unless they genuinely work in the business enough to meet the excluded-business test — roughly 20 hours a week.

Wages avoid that maze. A spouse who runs your transaction paperwork, bookkeeping, or marketing can be paid a documented, market-rate salary through payroll with a T4. The test is reasonableness, so keep the duties and hours on file the same way you would for a stranger. We coordinate this with the deduction and HST discipline in our realtor bookkeeping work, because family pay that is not booked cleanly tends to unravel on review.

The practical rails

Once anyone earns a wage — you included — the PREC needs an RP payroll account under its business number, a cloud platform such as Wagepoint or QuickBooks Online Payroll, remittances by the 15th of the month after payday, and T4s filed by the last day of February. Ontario's Employer Health Tax only enters once payroll passes the $1 million exemption, which few agent teams reach. If your practice touches the US side — referral fees from American brokers, or a dual licence — none of it changes Canadian payroll, but the income itself needs handling we cover in our cross-border guide for realtors.