GST on AirBNB's in Canada - Must watch for short term rental owners!

[@kenseville9469]

I'll clarify something, when the host isn't registered or required to be registered, Airbnb is collecting on account of section 221 and its own tax obligations under Subdivision E of Division II of Part IX of the ETA. That's the reason that a registrant can't discharge their liability to account for the tax when Airbnb submits an amount collected from the guests. In effect, until the registrant provides Airbnb their registration number, Airbnb must continue to account for tax while the registrant is simultaneously incurring their own tax liability.

[@shawngander]

Thanks for the input Ken. Yes, you're right. The issue is hosts who don't register for GST/HST once they excess the $30k threshold (or, as you mentioned, hosts who are GST/HST registrants but haven't provided this info to AirBNB). These hosts (who haven't registered, but have exceeded $30k gross revenue) figure that since AirBNB is collecting/remitting it, they're fine. But then the CRA audits/reviews them and assesses the GST that should have been collected. AirBNB doesn't provide detailed enough documentation for the hosts to prove to the CRA that the GST/HST was collected/remitted by AirBNB. So the hosts need to eat the cost. Double taxation. Hosts really need to register for GST/HST and provide their registration number to AirBNB (and file their own returns) to avoid this situation.

[@theorbsarchive]

Yikes! This makes me want to stop doing Airbnb. I live in my house that I Airbnb, and just rent out short term in the basement. Is there any differences in the tax code for that? I also make less than 10k a year so far for the Airbnb, so it’s not a lot of money

[@simplifyaccounting]

Yeah, it can be pretty scary. But I imagine you're fine as long as > 50% of your property is used as your primary place of residence (i.e. the basement being rented short term is less than 50% of your house). As Ken had mentioned in another comment, GST shouldn't apply as long as your home meets the definition of a residential complex under the legislation. You can also check out this CRA publication that talks about their administrative policy regarding changes in use of a property. It's not directly related to GST/HST, but is important in relation to your principal residence exemption (not being taxed on the sale of your house): www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate/changes-use/changing-part-your-principal-residence-a-rental-business-property.html It's always best to consult with the right tax specialist about specific situations. This is one of the reasons why I'm not a big fan of tax outfits like H&R Block and Liberty Tax - they just don't have the proper training. It's important to use a licensed (CPA) tax accountant that, at a minimum, has a robust questionnaire or asks the right questions to ensure that things like this are caught and properly dealt with. There are a lot of tax traps that people fall into. The income tax act is far too complicated. It needs to be simplified, for the sake of Canadians.

[@SInnaCanada]

if the GST applies to the non-refundable cancellations charged for reservations that cancel their reservations and never arrive at the Short Term Rental accommodation?

[@simplifyaccounting]

GST would still apply to non-refundable charges when a guest cancels. It wouldn't apply to any of the fees not actually charged. So if a guest ends up paying 50% of the booking fee, then you'd still have GST on that 50% paid.

[@SInnaCanada]

@@simplifyaccounting Thank you!

[@amjadjaki]

I have home with studio which I run on Airbnb it is my primary residence and I have less 30000 Airbnb income if I sale does I have to pay HST?

[@shawngander]

If > 50% of your home is used as your principal residence then you'll likely be OK. Best to talk to a GST/HST specialist about your specific situation before selling the property. Cheers!

[@NimaNikseresht]

can you explain why in Canada some listings charge tax and some don't? for example there is no tax option on my listing but when i check other listings some of them charge 13% hst!

[@simplifyaccounting]

Great question! Every platform would be a bit different, but for AirBNB's they would collect GST/HST and remit it on your behalf if you dont add your own tax information to your listing. AirBNB doesn't split it out as HST though - they call it "Occupancy Taxes". If you add your GST/HST number to your listing and manually add HST, then they call it "Property Use Taxes" and give it to you so that you can remit these yourself. Not sure if that answered your question ... but if you're looking to add HST to your listing then there's a section in the video that shows you how to do this. Cheers !

[@gujyjk9075]

What if I have a princiapl residence, work remotely, and travel a lot. While travelling, the principal residence is an Airbnb. But, I move back and forth frequently throghout the year. Does this trigger a tax event?

[@simplifyaccounting]

You may run into issues with claiming the principal residence exemption along with potential change in use / GST issues. I recommend chatting with your accountant about your specific situation (I.e. approx number of days/year as an AirBNB / frequency) and coming up with a tax filing position (this may just be sticking with the status quo). If the CRA audits/reviews you and disagrees with your tax position then they can reassess your tax return... at which point you'd still have some options, but could be an uphill battle with no guarantee of success. You may be fine, but there's definitely potential exposure. Short term accommodations are a relatively new thing and tax legislation hasn't done a great job at keeping up with the times. Cheers !

[@kenseville9469]

For GST/HST purposes your home will remain an exempt supply unless it ceases to meet the definition of a residential complex (RC) under the legislation. As long as you treat it primarily (>50%) as your place of residence (or that of a relation) the whole building will remain a RC and there will be no GST/HST consequences on the sale. If you fall below the threshold, other tests are applied to determine if part or whole is taxable. Best to consult with a GST/HST specialist if the time to sell comes and you want certainty.