Sixteenth article in this silo. Travel retail is a business where the money arrives long before the service is delivered, which is the condition that produces trust legislation everywhere it occurs.
Key Takeaway
Section 27 of Ontario Regulation 26/05 requires a registrant to hold all money received from customers for travel services in trust and to deposit it within two banking days[1]. Separately, the regulator states that working capital is computed to CPA Canada standards except that related party and shareholder balances are excluded[2]. Our own arithmetic: $150,000 of positive working capital in the accounts becomes minus $50,000 on the regulatory measure if $200,000 of it is owed by a sister company.
The Verdict, Stated First
Five claims, in descending order of confidence.
One. The trust rules are strict, specific and mechanical, and we quote them.
Two. On our own arithmetic the regulatory working capital test can disagree with the statutory accounts by enough to reverse the answer.
Three. On our own arithmetic that exclusion cuts in both directions, which is a correction to what we first wrote.
Four. On our own arithmetic the trust balance can exceed a full year of commission, so most of the balance sheet is other people's money.
Five. And the reconciliation trigger in the guidance is an event rather than a date, which is weaker than the comparable rule for Ontario law firms.
The second is the one that costs a registration, ours. An agency can pass its own year end and fail the regulator's version of the same test.
Our Grades For These Claims
Applying the scheme this publication uses throughout.
Grade A for sections 26, 26.1 and 27 of the regulation, which we have in the regulator's words as reproduced in a legal database's indexed text[1].
Grade B for the working capital rule, which comes from the delegated regulator's own guidance rather than from the regulation[2].
Grade B for the trust operating detail, from the same regulator's guidance[3].
Grade A for our own arithmetic, which follows from the quoted rules.
Grade D for our reading of one ambiguous phrase, which we set out in its own section and expressly do not resolve.
A Note On Method
Everything here is verified to 29 August 2026.
We attempted to obtain Ontario Regulation 26/05 in full and could not. The legal database carrying it declines automated access, which is the second time in this silo that the same obstacle has stopped us. We therefore have sections 26, 26.1 and 27 in the regulation's own words as reproduced in that database's indexed text[1], and we do not have sections 22 to 25, 28 or 29, which the regulator identifies as containing the rest of the financial criteria[4].
That gap matters most at section 24, which is the working capital provision, and we say so where it bites.
The remaining sources are the guidance and forms of the Travel Industry Council of Ontario, which is not a commercial publisher but the administrative authority delegated to administer the Act. We treat its guidance as regulator guidance, which is stronger than a trade source and weaker than the instrument itself.
All arithmetic is ours. The agency, its bookings, its commission rate and every balance sheet figure are invented to demonstrate a structure.
This article discusses provincial regulation and is not accounting, legal or regulatory advice.
One Province, And Why That Matters
A scope limit we want stated early rather than buried. Ours.
Four observations.
Everything here is Ontario. The Act, the regulation, the compensation fund and the regulator are provincial.
Two other provinces operate comparable regimes and we have not researched either, so nothing here should be read across a border.
Most of Canada has no equivalent scheme at all, which means an agency in one province holds customer money under a trust obligation and an identical business elsewhere may not.
And that asymmetry is itself the practical point, ours. An agency selling into Ontario needs to know whether it is captured, and the answer does not follow from where its office is.
Four Financial Obligations
The shape of the regime, from the regulator.
The regulator states that one of the requirements of registration under the Travel Industry Act, 2002 is to meet certain financial criteria; that sections 22 to 29 of Ontario Regulation 26/05 detail the specifics; and that all registrants must file financial statements with TICO at least annually, maintain minimum working capital, trust accounts and make contributions to the Compensation Fund based on their sales[4].
Four observations, ours.
Four separate obligations, and they interact. The trust rule determines what is in the general account, which determines whether the working capital test is met, which is tested against filed statements.
The filing obligation is annual and mandatory, which is unusual for small private businesses and means a registrant's accountant is producing a regulatory return rather than only a tax one.
The compensation fund contribution is based on sales, which for this industry means gross bookings rather than commission, a distinction we return to below.
And the ordering is the useful way to read it, ours. Three of the four are about money that is not yet the registrant's, and only the working capital test looks at what is.
What Section 27 Requires
The core obligation, in the regulation's own words.
Section 27(1) provides that a registrant shall maintain a trust account for all money received from customers for travel services. Section 27(2): the trust account shall be designated as a Travel Industry Act trust account. Section 27(3): a registrant shall hold all money received from customers for travel services in trust and shall deposit all such money into the trust account within two banking days after receiving it. Section 27(4): no registrant shall maintain more than one trust account under subsection (1) without the registrar's written consent, obtained in advance[1].
Section 26(1) requires that a registrant shall maintain all accounts in Ontario in a bank listed in Schedule I or II to the Bank Act (Canada), a loan or trust corporation or a credit union; section 26(2) that each account shall be in a name under which the registrant is permitted to carry on business; and section 26(3) that the registrant shall promptly deposit all funds received as payment for travel services into such an account[1].
Four observations, ours.
The obligation attaches to the money, not to the booking. It is money received from customers for travel services, whatever stage the arrangement has reached.
The designation requirement in 27(2) is not cosmetic. A properly designated account is what separates trust money from the registrant's creditors if things go wrong.
Section 26 and section 27 overlap deliberately, with 26 governing all accounts and 27 the trust account specifically.
And the institution list in 26(1) is narrower than it looks, ours. Schedule I or II banks, loan or trust corporations, and credit unions, all maintained in Ontario, which excludes a good deal of what a modern business might otherwise use.
Two Banking Days
The clock, and what it does operationally. Ours.
Four observations.
Two banking days is short. It is not two calendar days and it is not a week, and a Friday receipt over a long weekend consumes most of it.
The rule bites hardest on the least sophisticated operator, because a business without automated settlement is depositing manually against a two-day clock.
It also constrains card processing arrangements, since money that settles into a merchant account and then moves is money the registrant has received, and the clock runs from receipt.
And it is the kind of obligation that fails quietly, ours. Nothing goes wrong on the day a deposit is late, and the failure only surfaces on inspection.
One Account, Unless Asked
A restriction that shapes how a multi-branch agency can operate.
Section 27(4) prohibits more than one trust account without the registrar's written consent, obtained in advance[1].
Four observations, ours.
The default is a single trust account for the registrant, whatever its size or number of locations.
Consent must be in advance and in writing, so opening a second account and asking afterwards is not a cure.
The evident purpose is traceability, since one account with one reconciliation is far easier to inspect than several.
And it creates a practical tension for larger operators, ours. A multi-branch business would naturally want an account per branch, and cannot have one without asking.
Nothing Comes Out For Rent
The withdrawal restriction, from the regulator's guidance.
The regulator states that all registrants must maintain trust accounting pursuant to section 27, meaning the registrant must maintain a Travel Industry Act trust bank account and have the bank specifically acknowledge that the trust account is properly designated; that all consumer funds must be deposited into this account and all payments to suppliers for which those consumer funds have been collected must be paid out of this account; and that no overhead expenses can be paid from this account, such as rent, payroll, phone[3].
Four observations, ours.
The trust account is a conduit with two permitted directions: customer money in, supplier payment out.
The named prohibitions are ordinary and revealing. Rent, payroll and phone are exactly what a business under cash pressure reaches for, which is presumably why they are named.
The bank acknowledgement requirement is the enforcement mechanism, because a bank that has acknowledged a trust designation treats the account differently.
And the commission is the interesting case, ours. The registrant's own earned commission sits inside a pool of customer money and has to be extracted deliberately rather than simply not deposited.
That is the opposite of the instinct, ours. A registrant cannot net its commission off before depositing, because section 27(3) captures all money received from customers for travel services, and the commission arrives inside it.
The Consent You Sign
A document worth reading before signing it.
The regulator's trust declaration form records that the registrant establishes the trust account and appoints itself as trustee; that the registrant accepts the trust and undertakes to deposit, hold, distribute and administer the account in accordance with the declaration, the Act, the regulation and the guidelines; and that at no time shall any part of the trust account be used for or diverted to purposes other than for the exclusive benefit of customers.
It further records that the registrant irrevocably consents to the registrar obtaining any financial information about the listed accounts from its bank and authorises the bank to disclose that information, and authorises the bank to apply any property freezing order issued by the registrar against the registrant's property held on deposit or under the bank's control[6].
Four observations, ours.
The registrant is the trustee of its own customers' money, which is a fiduciary position rather than a bookkeeping one.
The consent to information disclosure is irrevocable and given in advance, so the regulator does not need to ask the registrant to see the account.
The freezing order authorisation is the sharper provision. The bank is pre-authorised to act on an order from the registrar, which is a remedy that can operate faster than a court process.
And that combination is worth understanding before signing, ours. A registrant grants standing access and pre-authorised freezing as a condition of doing business, and most will have signed it without advice.
Whose Money Is On The Balance Sheet
Our own arithmetic on an invented agency, and the structural point about this industry.
Take an agency with $8,000,000 of gross bookings and a 12 percent commission. Commission earned is $960,000. Amounts remitted to suppliers are $7,040,000, or 88 percent of what passed through.
Four observations.
Eighty-eight cents of every dollar that touches the business belongs to somebody else from the moment it arrives.
Which makes conventional balance sheet analysis nearly useless without separating the trust, because total assets and total liabilities are both dominated by amounts that are not the agency's.
It also makes the business look far larger than it is, and far smaller than it is, depending on which line a reader stops at.
And it explains why the regulator built a bespoke test, ours. Ordinary solvency analysis cannot see this business, so a rule was written to look past the trust at what remains.
The Float Is Bigger Than The Revenue
Our own arithmetic on how much sits in trust at any moment.
On the same $8,000,000 of bookings, at an average hold between payment and travel of 30 days, roughly $657,534 sits in trust, being 68 percent of annual commission. At 60 days: $1,315,068, or 137 percent. At 90 days: $1,972,603, or 205 percent. At 120 days: $2,630,137, or 274 percent.
Four observations.
At a 90-day average hold the trust balance is more than twice a full year of commission, and none of it is the agency's money.
Our hold assumption drives everything and is invented. A business selling last-minute city breaks and one selling next-summer cruises have entirely different figures.
The seasonality compounds it, since bookings for a summer season concentrate in a few months and the peak balance is far above the average.
And the temptation is visible in the arithmetic, ours. A business with $960,000 of annual commission looking at $1,972,603 in a bank account it controls is the exact situation the trust rules exist to govern.
Gross Or Net, And It Is Not Close
Our own arithmetic on the presentation question.
On the invented agency, reporting gross gives revenue of $8,000,000. Reporting net gives $960,000. The gross figure is 8.3 times the net one, and profit is identical either way.
Four observations.
An eight-fold difference in reported revenue with no difference in profit is the largest presentation swing in this silo.
The determination turns on whether the agency acts as agent or principal, which is a question about control of the service before transfer, and which we have not researched for this industry and do not resolve here.
The trust structure is suggestive but not determinative. Holding money in trust for a customer looks like agency, and does not by itself settle the accounting question.
And it matters beyond presentation, ours. Compensation fund contributions are based on sales[4], and lending covenants, valuation multiples and industry rankings all consume a revenue figure that can differ by a factor of eight.
The Other Working Capital Test
The rule that this article exists to point at.
The regulator states that registrants are required, pursuant to section 24 subsection 2 of Regulation 26/05 and its amendments under regulation 101/20, to maintain current assets greater than current liabilities, being positive working capital; that working capital is calculated as current assets less current liabilities; and, critically, that working capital is calculated in accordance with CPA Canada Standards, with the exception that related party and shareholder balances are excluded from the working capital, as well as the value of the security that TICO holds in relation to the $10,000 or $20,000 security from all new registrants. It adds that effective 1 July 2016 a working capital exemption exists for lower risk businesses that promote tourism and are closely tied to the government[2].
Four observations, ours.
The threshold itself is modest: greater than zero. There is no ratio, no multiple of expenses and no minimum dollar amount in what we obtained.
But the measurement is not the one in the accounts, because two categories of balance are removed before the subtraction.
The exclusion is stated as an exception to CPA Canada standards, which is an explicit acknowledgement that the regulator is asking a different question from the one the financial statements answer.
And the security exclusion is a small trap on its own, ours. A new registrant's $10,000 or $20,000 deposit is an asset it cannot count, which makes the test marginally harder in exactly the first years when it is hardest anyway.
A Correction To Our Own Working
Published rather than quietly fixed, as this publication does throughout.
Our first pass at this modelled a shareholder loan into the business as neutral or unhelpful, reasoning that if shareholder balances are excluded then owner support earns no credit. We had mis-entered it. We stripped the loan payable without recording the cash that arrived with it.
Redone correctly, the answer reverses.
Four observations, ours.
Cash lent in by an owner is a current asset like any other, and nothing excludes it.
The matching shareholder loan payable is a shareholder balance and is excluded, on the regulator's wording.
So the injection increases current assets and its corresponding obligation is removed, which improves the regulatory position by the full amount lent.
And we would have published the opposite had we not rerun it, ours, which is the third time in this series that our own arithmetic has contradicted the claim we set out to make.
The Exclusion Cuts Both Ways
Our own arithmetic, corrected, on an invented agency with current assets of $500,000 and current liabilities of $350,000.
Clean, no related balances: book working capital $150,000, regulatory $150,000. With a $200,000 receivable from a related company: book $150,000, regulatory minus $50,000. Where the owner lends in $150,000 of cash: book $150,000, regulatory $300,000. Where the owner instead subscribes $150,000 for shares: book $300,000, regulatory $300,000. With both a $200,000 related receivable and a $150,000 owner loan: book $150,000, regulatory $100,000.
Four observations.
A related party receivable is stripped from assets and hurts. A shareholder loan payable is stripped from liabilities and helps. Both follow from the same five words.
So the exclusion is asymmetric in effect while being symmetric in wording, and which way it cuts depends entirely on the direction the money is owed.
An owner lending in improves the regulatory measure by the full amount while leaving book working capital unchanged, because the cash counts and the obligation to repay does not.
And subscribing for shares reaches the same regulatory answer by a different route, ours, with the difference showing up in the book figure instead.
The Related Party Trap
The direction that costs a registration. Ours.
Four observations.
$150,000 of positive book working capital becomes minus $50,000 when $200,000 of the current assets is owed by a sister company.
Nothing about the business has changed. The same cash, the same bookings, the same creditors, and the regulatory answer flips from pass to fail.
The arrangement that causes it is completely ordinary: an owner with two companies, one lending working capital to the other, which happens constantly in owner-managed groups and is usually good housekeeping.
And the timing is the cruel part, ours. The test is applied to filed annual financial statements, so a registrant discovers the problem after the year it relates to has closed and the balance is historical.
Which makes it a housekeeping problem rather than a solvency one, ours. The fix is often to settle the intercompany balance before year end, and that is a decision made in the weeks before the date rather than in the months after it.
What We Could Not Resolve
Stated plainly because our own arithmetic depends on it. Ours.
The regulator's wording is that related party and shareholder balances are excluded from the working capital[2].
Four observations.
We read that as stripping both sides, assets and liabilities, which is what produces the asymmetric result above.
It could instead be read as stripping related party assets only, which would remove the favourable half entirely and leave an owner loan as neutral at best.
We did not obtain section 24 of the regulation and cannot resolve it from what we have.
And the practical instruction is therefore narrow, ours. The unfavourable direction is safe to rely on and the favourable one is not, so a registrant should treat a related party receivable as a problem and should confirm with the regulator before treating an owner loan as a solution.
A Calendar Trigger And An Event Trigger
A comparison with the other Ontario trust regime in this silo. Ours.
The regulator states that the trust reconciliation is required to be prepared at a minimum when the registrant wishes to make a transfer of surplus from the trust account to the general account[3].
By comparison, and as set out in our article on law firm trust accounting, an Ontario law firm must reconcile monthly, within 25 days of the period end, in every month, including months with no transactions.
Four observations.
One regime triggers on the calendar and the other on an event.
On the wording we obtained, a registrant that never transfers surplus has never hit the stated minimum, which is a materially weaker floor than a monthly obligation.
We flag this carefully. This is our reading of a guidance page, not of the regulation, and sections 28 and 29 which we did not obtain may impose a periodic requirement that the guidance does not restate.
And the comparison is useful whichever way it resolves, ours. A trust regime without a calendar trigger relies on inspection to find problems, and inspection is periodic and sampled while a monthly reconciliation is neither.
Ten Thousand Or Twenty
The entry deposit, from the regulator's explanatory material.
The regulator's explanatory paper records that a person applying for registration who has not been registered during the previous 12 months must provide $10,000 in security, and that if the registrar has concerns regarding the registrant's compliance the security can be held by the administrative authority until those concerns are resolved[5]. The working capital guidance refers to the $10,000 or $20,000 security from all new registrants[2].
Four observations, ours.
Two figures appear and we did not establish what distinguishes them, though the natural inference is a difference between categories of registrant.
The security is excluded from working capital, so it is capital tied up that cannot be counted toward the test it sits alongside.
It can be held longer where the registrar has compliance concerns, which converts it into a supervisory instrument rather than only an entry cost.
And it is one of several fixed entry costs, ours. The same explanatory paper records a registration fee of $2,375[5], which with the security is a meaningful barrier for a very small operator.
The Fund And What It Will Not Pay
The consumer-facing half of the regime, and a limit worth knowing.
The regulator's explanatory paper records that the Compensation Fund will not reimburse a customer for a travel counselling fee, because that is a fee for services that have been provided as opposed to travel services that have not been provided, and that the Fund will reimburse customers for taxes on travel services[5].
Four observations, ours.
The distinction is between services delivered and services not delivered, which is coherent and has a commercial consequence.
An agency charging a separate counselling or booking fee is charging for something outside the protection its customers assume they have, which is a disclosure question as much as a pricing one.
It also has an accounting edge. A counselling fee is the agency's own earned revenue at the point of service, which distinguishes it cleanly from the trust money around it.
And that makes the fee attractive for exactly the wrong reason, ours. It converts trust-bound cash flow into general-account revenue, and a registrant under working capital pressure has an incentive to push it that the customer does not share.
If You Run An Agency
Practical, and not accounting, legal or regulatory advice. Ours.
Four points.
Compute the regulatory working capital figure separately from the book one, stripping related party and shareholder balances and the security deposit. On our arithmetic the two can differ by enough to reverse the answer.
Treat a receivable from a sister company as a regulatory liability, because it is removed from the assets that count.
Reconcile the trust monthly whether or not you are transferring surplus. The stated minimum is an event trigger, and an event trigger is not a control.
And audit the two banking day deposit rule against your actual settlement timing, particularly for card receipts and for money received before a weekend.
If You Advise One
For our own profession. Ours.
Four points.
The annual financial statements are a regulatory filing, not only a tax input, and the working capital presentation in them will be read against a modified test.
Flag related party balances well before year end, since the test is applied to a balance that is historical by the time anyone looks at it.
Establish the gross versus net presentation deliberately, because on our arithmetic it moves reported revenue by a factor of over eight and feeds the compensation fund contribution.
And separate trust from general in every analysis you produce. On our figures the trust balance can exceed two years of commission, and any ratio computed across both is meaningless.
What To Do
Run the regulator's working capital calculation, not yours. Related party and shareholder balances come out, and so does the security deposit.
Watch the direction of the related party balance. A receivable hurts; on our reading a payable to a shareholder helps, and that reading is the one we could not confirm.
Confirm the ambiguous half with the regulator before relying on an owner loan to pass the test.
Reconcile the trust on a calendar, not on an event.
Keep to one trust account unless you have written consent obtained in advance.
Never pay overhead from trust, and extract earned commission deliberately rather than by omission.
Read the trust declaration before signing it, including the irrevocable information consent and the pre-authorised freezing order.
And decide gross versus net on principle, since it moves reported revenue eight-fold without moving profit at all.
The Limits Of This Analysis
Several caveats matter. This article discusses Ontario provincial regulation and is not accounting, legal or regulatory advice. We attempted to obtain Ontario Regulation 26/05 in full and could not, because the legal database carrying it declines automated access; we therefore have sections 26, 26.1 and 27 in the regulation's words as reproduced in that database's indexed text, and we do not have sections 22 to 25, 28 or 29, which the regulator states contain the rest of the financial criteria. That gap is most serious at section 24, the working capital provision, which is the subject of this article's central finding and which we know only through the regulator's guidance. The phrase our arithmetic turns on is ambiguous and we do not resolve it: we read the exclusion of related party and shareholder balances as stripping both assets and liabilities, it could be read as stripping assets only, and the favourable half of our result disappears on the narrower reading. Our reading of the reconciliation trigger is a reading of a guidance page rather than of the regulation, and sections 28 or 29 may impose a periodic requirement the guidance does not restate. We did not establish what distinguishes the $10,000 security from the $20,000 security. We have not researched the agent versus principal determination for this industry and do not resolve the gross versus net question; we only size it. Everything here is Ontario, two other provinces operate comparable regimes we have not researched, and most of Canada has no equivalent scheme. All arithmetic is ours: the $8,000,000 of bookings, the 12 percent commission, the hold periods and every balance sheet figure are invented, and the hold period assumption in particular drives the trust float result entirely. And one section of this article is a correction to our own working, published because we modelled a shareholder loan incorrectly on the first pass and the corrected answer reverses.
Frequently Asked Questions
What does an Ontario travel agency have to do with customer money?
Can overhead be paid from the trust account?
What is the working capital requirement?
How much difference does that exclusion make?
Does an owner loan help or hurt?
How often must the trust be reconciled?
How big is the trust balance relative to the business?
References
- Ontario Regulation 26/05 made under the Travel Industry Act, 2002, sections 26, 26.1 and 27, as reproduced in the indexed text of a Canadian legal information database. Section 26(1) requires a registrant to maintain all accounts in Ontario in a bank listed in Schedule I or II to the Bank Act (Canada), a loan or trust corporation, or a credit union as defined in the Credit Unions and Caisses Populaires Act, 2020, as amended by O. Reg. 134/22. Section 26(2) requires each account to be in a name under which the registrant is permitted to carry on business. Section 26(3) requires the registrant to promptly deposit all funds received as payment for travel services into such an account. Section 26.1 defines, for sections 27 and 28, money received from customers for travel services in reference to a period of time. Section 27(1) requires a registrant to maintain a trust account for all money received from customers for travel services. Section 27(2) requires the trust account to be designated as a Travel Industry Act trust account. Section 27(3) requires a registrant to hold all such money in trust and to deposit it into the trust account within two banking days after receiving it. Section 27(4) prohibits maintaining more than one trust account under subsection (1) without the registrar's written consent obtained in advance. Note: the regulation's own words. WE COULD NOT OBTAIN THE FULL REGULATION: the database carrying it declines automated access, so these sections reach us through its indexed text rather than from the instrument as served. Sections 22 to 25, 28 and 29, which contain the remainder of the financial criteria including the working capital provision, were NOT obtained.
- Travel Industry Council of Ontario, Working Capital, obtained directly. States that registrants are required, pursuant to section 24 subsection 2 of Regulation 26/05 and its amendments under regulation 101/20, to maintain current assets greater than current liabilities, being positive working capital; that working capital is calculated as current assets less current liabilities; that working capital is calculated in accordance with CPA Canada Standards, with the exception that related party and shareholder balances are excluded from the working capital, as well as the value of the security that TICO holds in relation to the $10,000 or $20,000 security from all new registrants; and that effective 1 July 2016 a working capital exemption exists for lower risk businesses that promote tourism and are closely tied to the government. Note: guidance published by the administrative authority delegated to administer the Act, so REGULATOR guidance rather than a commercial source, but NOT the regulation itself. The exclusion sentence is the basis of this article's central finding and is the phrase whose scope we identify as ambiguous and do not resolve. tico.ca
- Travel Industry Council of Ontario, Trust Accounting, stating that all registrants are required to maintain trust accounting pursuant to section 27 of the Regulation; that the registrant must maintain a Travel Industry Act trust bank account and have the bank specifically acknowledge that the trust account is properly designated; that all consumer funds must be deposited into this account and all payments to suppliers for which those consumer funds have been collected by the registrant must be paid out of this account; that no overhead expenses can be paid from this account, such as rent, payroll or phone; and that the trust reconciliation is required to be prepared at a minimum when the registrant wishes to make a transfer of surplus from the trust account to the general account. Note: regulator guidance, not the regulation. The reconciliation sentence is the basis of our comparison with the law firm regime, and we flag that sections 28 and 29, which we did not obtain, may impose a periodic requirement this page does not restate. tico.ca
- Travel Industry Council of Ontario, Financial Requirements, obtained directly, stating that one of the requirements of being registered under the Travel Industry Act, 2002 is to meet certain financial criteria; that sections 22 to 29 of Ontario Regulation 26/05 detail the specifics of the financial criteria; and that all registrants must file financial statements with TICO at least annually, maintain minimum working capital, trust accounts and make contributions to the Compensation Fund based on their sales. Note: regulator guidance. Our source for the four-part structure of the financial obligations and for the fact that compensation fund contributions are based on sales, which is what makes the gross versus net question consequential beyond presentation. tico.ca
- Travel Industry Council of Ontario, explanatory paper on the Travel Industry Act, 2002 and Ontario Regulation 26/05, recording that a person applying for registration who has not been registered during the previous 12 months must provide $10,000 in security; that if the registrar has concerns regarding the registrant's compliance the security can be held by the administrative authority until those concerns are addressed; that section 26 of the regulation relates to bank accounts and that all accounts must be maintained in an acceptable financial institution; that the Compensation Fund will not reimburse a customer for a travel counselling fee, since that is a fee for services that have been provided as opposed to travel services that have not been provided, while the Fund will reimburse customers for taxes on travel services; that registration fees have been removed from the regulation and will be set by the administrative authority in a published fee schedule, with no intention to change the then-current registration fee of $2,375; and that all individuals selling travel services directly to the public, including supervisors and managers, will be required to take an exam to receive certification. Note: regulator explanatory material accompanying the regulation. UNDATED in what we obtained and describing the regime at the time the regulation was introduced, so figures including the registration fee may have changed. Cited for the security deposit, the compensation fund exclusion and the fee only. tico.ca
- Travel Industry Council of Ontario, Trust Declaration form, recording that the Act and Ontario Regulation 26/05 require the travel seller to maintain a trust account for all money received from or on behalf of customers for travel services, designated as a Travel Industry Act Trust Account; that TICO's Trust Accounting Guidelines provide the details of how the trust account shall be operated; that the travel seller establishes the trust account and appoints itself as trustee; that the travel seller accepts the trust and undertakes to deposit, hold, distribute and administer the trust account in accordance with the declaration, the Act, the regulation and the guidelines; that it is the intent of the registrant that all funds deposited be held at all times for the benefit of customers and that at no time shall any part of the trust account be used for or diverted to purposes other than for the exclusive benefit of customers; that the travel seller irrevocably consents to the Registrar obtaining any financial information about the listed accounts from its bank and authorises the bank to disclose that information to the Registrar; and that the travel seller further authorises the bank to apply any property freezing order issued by the Registrar against the travel seller's property held on deposit, under its control or for the travel seller. Note: a form published by the regulator and executed by registrants. Cited for the trustee appointment, the irrevocable information consent and the pre-authorised freezing order, all of which are obligations a registrant assumes by signing. tico.ca
This article discusses Ontario provincial regulation and is not accounting, legal or regulatory advice. Ontario Regulation 26/05 could not be obtained in full; sections 22 to 25, 28 and 29 were not obtained, including the working capital provision on which this article's central finding rests. The phrase that finding turns on is ambiguous and is not resolved here. All arithmetic is the authors' own and every figure is invented.