Transaction Levy (Ontario and Newfoundland)



Members of the Law Society of Upper Canada and Newfoundland are required to pay a professional liability insurance levy for all real estate, civil litigation and personal property matters opened on or after April 1, 1995.


Transaction Levy Amounts:


Newfoundland:

  1. The Transaction Levy payable on real estate transactions is $30.00, effective 1 January 2016

  2. The Transaction Levy payable on civil litigation transactions is  $75.00, effective 1 January 2016

  3. Definition of personal property transaction - “personal property transaction” means a transaction which results in the transfer or charging of title to personal property in Newfoundland and Labrador, including but not limited to the placement of any security interest on personal property under the Personal Property Security Act (PPSA).  The Levy payable to the Society is $35 in respect of each personal property transaction in which the member acted for one or more parties.

Taxes:  HST is applied to these amounts in Newfoundland.  Firms must submit HST directly to CRA, not to the Law Society.

Source: http://www.lawsociety.nf.ca/lawyers/lawyer-regulation/law-society-rules/part-x/


Ontario:

  1. Real Estate transactions: Lawyer is required to pay a professional liability insurance premium levy to The Law Society of Upper Canada $65 inclusive of taxes. There are examples of exclusions where a lawyer is exempt from a transaction Levy such as the transfer of land to a spouse.  

  2. Civil Litigation transactions: Lawyer is required to pay a professional liability insurance premium levy to The Law Society of Upper Canada $50 inclusive of taxes  (Increasing from $50 to $100 for files opened on or after January 1, 2018). In respect of each civil litigation transaction in which the Lawyer acted for a party. Exclusions are possible so the Lawyer needs to be able to exempt some types of transactions from this levy.


How to Enter Transaction Levy Entries


In CosmoLex user needs to manually record this charge with correct amount/taxes to applicable matters. This article provides specific steps:

One Time Initial Setup

  • If you intend to pay transaction levy as a normal firm expenses and not charge to clients, in Accounting, create a separate chart of account of type Expense and title it “Transaction Levy Expense”.

  • In Contact -> Payee, create a payee “<Law Society Name> - Levy” for easier identification


Transaction Levy Entries

  • For each applicable matter, Under Accounts Payable, enter a bill payable to the newly created payee “<Law Society Name> - Levy”. You may want to capture Matter’s File # in the bill’s Ref # block for easier identification.

  • If Levy is paid as normal firm expense, under Account, select the newly created chart of account for Levy Expenses.

  • If Levy is charged to the client, select “Post as Matter Expense” and select the appropriate Matter. This will create a disbursement entry for the matter and will be included in the next invoice to the client.

  • At the end of the Quarter or when levy funds are to be remitted to Law Society, select all of these unpaid Bills payable to “<Law Society Name> - Levy” and pay using a single check. 

  • At any time, to see detailed listing of recorded levy charges:

    • Go to : Reports -> Accounting -> Account Payable Payee Ledger

    • In the Date Range section, specify dates

    • In Payee Name section, remove “All Payees” and instead choose “<Law Society Name> - Levy”

    • Generate the report

    • You should run this report periodically to audit that you did not charge a client-matter twice or you did not miss entering bill for an applicable matter.

  • Amount & HST Entry:

    • For Newfoundland:

      • Real Estate transactions

        • Amount = $30

        • HST = $0

        • Total = $30

      •  Civil Litigation Transactions

        • Amount = $75

        • HST = $0

        • Total = $75

      • Personal Property Transactions

        • Amount = $35

        • HST = $0

        • Total = $35

      • If levy is charged to client, program will automatically charge the levy amount + HST to the client as a taxable disbursement item on next bill. Collected HST will be reimbursed to CRA as part of the Input Tax Credit Calculations.

    • For Ontario:

      • Real Estate transactions

        • Amount = $65

        • HST = $0

        • Total = $65

      •  Civil Litigation transactions [for files opened before 1/1/2018]

        • Amount = $50

        • HST = $0

        • Total = $50

      • Civil Litigation transactions [for files opened before 1/1/2018]

        • Amount = $100

        • HST = $0

        • Total = $100

      • If levy is charged to client, program will automatically charge the levy amount + HST to the client as a taxable disbursement item on next bill. Collected HST will be part of the Input Tax Credit Calculations. You can learn more about taxability of transaction levy at http://lawpro.ca/insurance/faqs/faqs_pp13.asp