Track commission as one record per trade that links four things: what the agreement says is owed, what the trade record sheet says was earned, what the trust account actually holds, and what the brokerage paid out. Software can keep those four in agreement and raise a flag the moment they diverge. What it cannot do is authorise a payment, and in Ontario it cannot route one either — an agent may not be paid directly by anyone other than the brokerage that employs them.
Key takeaways
Commission tracking looks like a bookkeeping task and behaves like a compliance one. The money moves through a trust account governed by legislation, the entitlement comes from a document a regulator can read, and the payout has to be reconstructable years later. Treating it as an accounting export is how brokerages end up unable to explain a number.
The record for a trade should hold, and reconcile, four things.
The four sources
The entitlement. What the representation agreement and any remuneration clause say is owed, by whom, and when.
The trade record sheet. The brokerage’s own record of the trade. RECO’s bulletins treat it as a primary document — it is one of the items a brokerage must send when forwarding unclaimed trust money to RECO.
The trust account. What was received, when, and what remains.
The payout. What the brokerage disbursed, to whom, and against which trade.
Most commission disputes and most audit findings are a mismatch between two of those four. A reconciliation that runs continuously catches the mismatch while the file is still open; a quarterly export catches it after the money has gone.
RECO’s bulletin on financial benefits contains a sentence that decides the architecture: an agent is prohibited from receiving payment directly from any source other than the brokerage where they are employed. Every inbound dollar therefore lands at the brokerage and is disbursed from there, which means there is exactly one ledger that has to be right. Any workflow that lets a third party pay an agent directly — a referral partner, a service provider, a builder — is not a bookkeeping shortcut, it is a contravention. Our sister law firm’s answer on how and when commission is actually paid in Ontario describes the normal path: the seller’s lawyer deducts commission from the sale proceeds on closing and pays the listing brokerage, which then splits with the co-operating brokerage, and the agent is paid by their brokerage afterwards.
Two related questions come up constantly and both have plain answers on the same site: whether commission rates are regulated or set by law in Ontario, and whether a seller can be locked into paying commission on a deal that falls apart. The second is a listing-agreement drafting question, which is why the entitlement source in the record has to be the agreement text, not a stored percentage.
Where a buyer’s fees are being funded by the seller through a clause in the agreement of purchase and sale, RECO sets out the components: the parties, the purpose, the amount and whether applicable taxes are also to be paid, the timing of payment, and the payment mechanics — the payor, who disburses, and who receives. Those five map cleanly onto fields, and the two that go wrong are timing and recipient. The bulletin also flags what a buyer representation agreement should say if the seller offers more than the buyer owes, or less, which is the difference between a shortfall the brokerage absorbs and one the buyer owes. Get that into the record at the offer stage, not the closing stage; the extraction step is described in reviewing the agreement of purchase and sale.
On tax, keep the record honest by storing what the agreement says rather than a rate constant. Whether tax is payable on top of the stated amount is a term of the clause. Our sister firm covers HST on real estate commission in Ontario for the general position.
Trust money that nobody claims does not stay in the account. RECO’s bulletin sets the rule: all unclaimed money held in trust for more than two years must be paid to RECO, both where entitlement is unclear and where the person entitled cannot be located, and the payment includes accrued interest where the money was held in an interest-bearing trust account. There is a small carve-out — below $25.00 the brokerage is not required to forward it — and a documentation burden that is easier to satisfy prospectively: RECO wants the agreement of purchase and sale, the trade record sheet, the trust account transaction records, and proof of unsuccessful attempts to contact the entitled person over the two-year period. Proof of attempts is a log. A log is only complete if it was written at the time.
So the ageing report is not a year-end exercise. Every deposit gets a status and a review date from the day it arrives, and the two-year clock is visible from month one.
RECO has announced that effective 1 October 2026, all Ontario brokerages will be required to submit an annual financial filing demonstrating proper financial management and compliance with TRESA, complementing its audit and inspection work. Whatever the submission format turns out to be, the input is the same reconciled ledger described above, so a brokerage whose four sources already agree is doing preparation rather than remediation.
Commission records are also tax records. The Income Tax Act requires a person carrying on business to keep books and records, and to retain them until the expiration of six years from the end of the last taxation year to which they relate, with a further requirement that a person who keeps records electronically must retain them in an electronically readable format. That last clause matters more than it looks: a PDF image of a ledger is not the same as the ledger. Note that this six-year clock runs alongside, and separately from, the five-year FINTRAC clocks covered in FINTRAC record keeping for real estate.
The following is illustrative — a composite of how the workflow is usually assembled, not a measured result.
A deal firms up. The record for the trade is created with the entitlement fields populated from the listing agreement and, on the buy side, from the remuneration clause: amount, tax treatment, timing, payor, disburser, recipient. The deposit arrives and is logged against the record with a status and a first review date.
A reconciliation runs nightly across open trades and raises three kinds of exception: a trade with an entitlement but no trade record sheet; a trust balance that does not match the sum of logged deposits; and a payout with no matching entitlement. Each exception names a person and a trade, never a total.
Ninety days before any deposit hits two years, the record escalates to the broker of record with the four documents RECO will want already attached, and the contact log to date included. Nobody spends a week in February reconstructing envelopes.
No. RECO’s bulletin is unambiguous that an agent is prohibited from receiving payment directly from any source other than the brokerage where they are employed, and a referral fee is also a financial benefit with its own disclosure procedure — see tracking referrals.
Calculating is fine; paying is not. Compute the split from the agreement terms, show the working, and require a named person to approve the disbursement. The value of automation here is that the calculation is reproducible and its inputs are visible, not that it removes a signature.
Longer than the shortest applicable rule. The tax clock under section 230 runs six years from the end of the last taxation year to which the records relate, and FINTRAC’s guidance notes that where other retention obligations exist, yours can be longer than FINTRAC’s but not shorter. Set one retention rule per document type, computed from a stored start event.
A 30-minute call is enough to tell you whether AI pays for itself here.
