It would appear that iPRO had an arrangement whereby it would withhold funds on account of taxes for remission to the CRA.
So, for example, an agent earns a commission of $20,000.00 and assuming they authorize this arrangement then the Brokerage might holdback $5,000.00 to be sent to the CRA on account of taxes owing by the agent.
However, nothing happened. The Brokerage just took the money and did not remit anything to the CRA.
When the agent files their income tax return, naturally they will be expecting that the $5,000.00 amount will be a credit to their account. But, the CRA received nothing and will still charge the agent.
It would be helpful for the agents to retain a law firm to handle a class action.
The retained HST funds and tax funds are “trust moneys”, and these agents need a Court Order providing priority over others, setting aside this money before any other distributions and equalizations by RECO.
I should make it clear that the funds are being held “in trust on behalf of the agents” notwithstanding that they are not placed in an identifiable trust account and one step further that there’s no insurance back up for that account. When eventually dividing up the proceeds:
1) money will go first to the agents (money held for remission to CRA that was stolen) and then,
2) to those who were lenders and facilitated the business.
The HST trust funds should have a super-priority by the CRA. This will be helpful where the agent has also authorized the CRA to withhold and remit the HST on their behalf.
Brian Madigan LL.B., Broker