Can a Canadian CPA accept a referral fee? Provincial rules on commissions

The short answer: your provincial code decides

Canadian CPAs are regulated province by province. CPA Canada is the national organization, but the rules of professional conduct that bind you are adopted and enforced by your provincial or regional body, such as CPA Ontario, CPABC, CPA Alberta or the Ordre des CPA du Québec. Wording on referral fees and commissions can differ between them, so a colleague's answer in another province may not be yours.

Three facts usually decide the outcome for a SourceX introduction:

• whether the US company is a client, and whether your firm does assurance work anywhere in its group;
• whether your provincial code permits third-party referral fees with disclosure, restricts them, or requires the client's consent;
• your firm's own policy, and any other licenses you hold.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

What to read in your provincial code

Rather than paraphrase several codes, here is what the text you are bound by should answer. Read the current version on your body's website.

1. Fees and commissions: may a member accept a payment from a third party for recommending a product, service or business to a client, and on what conditions?
2. Conflicts of interest: does a reward linked to a client's decision create a conflict that must be disclosed, consented to or avoided?
3. Independence: does the answer change when the firm performs an audit, review or other assurance engagement for the company or a related entity?
4. Confidentiality: what authority do you need before naming a client, or sharing anything about it, with a third party?
5. Members outside public practice: which provisions apply to members working in industry, government or not-for-profit roles?

If the text leaves any of these open, ask your body's practice advisory or ethics service, where it offers one, and keep a note of the answer.

If you also hold a US state license

US rules then apply alongside your provincial code, and states handle referral fees in different ways. Kansas requires its CPAs to comply with the AICPA Code's commissions and referral fees provisions by reference. Florida regulates CPA commissions and referral fees in its own statute; the linked text is the 2017 version, so check the current law. A New Jersey society resource shows that state rules can be stricter than the AICPA Code. Where two regimes apply, meet the stricter one.

How it applies in common Canadian situations

Disclosure and consent good practice

Even where your code only requires disclosure, a written record protects you and the client.

• Disclose before the introduction, in writing: SourceX is the payer, what the reward is based on and when it becomes payable
• Confirm that the reward comes from SourceX's fee and does not reduce what the company receives
• Obtain the client's consent to share its name, a contact and basic fit information
• Check whether your engagement letter already deals with third-party fees, and update it if needed
• Record your conflict assessment in the client file and revisit it if assurance work starts
• Never send financial statements, ledgers or system exports; the company deals with SourceX directly

Questions to ask your provincial body or practice advisor

• Does a referral reward from a non-client business count as a commission under our code?
• Is written disclosure enough, or do I need the client's documented consent?
• Does it matter whether the reward is paid to me or to my firm?
• Which rules change if my firm reviews or audits any entity in the client's group?
• If I am a member in industry, which provisions apply to an introduction of my employer's affiliate?

For comparison with the international model many other countries build on, see the IESBA Code overview on referral fees; members who are also UK-qualified can compare the ICAEW and ACCA position.

Rewards and paperwork for Canadian partners

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. Rewards become payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. The referral earnings calculator shows how the formula works, and the program terms set the details.

As a non-US partner you will be asked for a US tax form before any payout: an individual form if you register personally, an entity form if your firm does. The W-8BEN-E guide for advisory firms covers the firm version. How the reward is taxed in Canada is a question for your own tax adviser.

Next step

Once your provincial body or firm has confirmed the position, register as a partner. The page for accountants explains which clients tend to fit.