Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Client Address]
Case Number: 245179
Business Number: […]
Dear [Client]:
Subject: GST/HST ruling and GST/HST interpretation
Supply of short-term accommodation through an accommodation platform
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supply of short-term accommodation through an accommodation platform. We apologize for the delay in this response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; 14% in Nova Scotia; and 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
Based on the information provided in your letter of [mm/dd/yyyy] and the information available on […][Company]’s website [...], we understand the following:
1. You, [Client], are registered for GST/HST purposes, as a sole proprietor, under Subdivision D of Division V (regular GST/HST registration regime) with a GST/HST registration number of […], effective [mm/dd/yyyy].
2. You make supplies of short-term accommodation of a property located in […][Canada] (the Property) over the [Company] ’s platform in accordance with [Company]’s Terms of Service ([…] ToS). For purposes of this supply, you are referred to as the “[…][Supplier]”.
3. […] ([Company]) owns and operates the [Company]’s platform. [Company] is registered for GST/HST purposes under the simplified GST/HST registration regime under the Business Number […](footnote 1) [[…]].
4. [Company]’s ToS govern the contractual relationship between [Company] and its users. […] the [Company]’s ToS includes the following:
These Terms […] are a […] legal agreement […] that governs the right to use the […] ([…] “[Company] Platform]”).
The [Company] Platform enables users […] to publish, offer, search for and book services. […][Users] who publish and offer services are “[…][Suppliers]” and users who search for, book or use services are “[…][Recipients].” [Suppliers] offer accommodations […] and other services ([…] “[…][Accommodations],” and each [Accommodation] offering, a “Listing”).”
The following are pertinent provisions of the [Company]’s ToS for [suppliers]:
[…]. As a [Supplier], [Company] offers you the right to use the [Company] Platform to share your Accommodations […] with […] [Recipients]
[…]. When you accept a booking […] through the [Company] Platform, you are entering into a contract directly with the [Recipients], and are responsible for delivering your [Accommodation] under the terms […] specified in your Listing. You are also agreeing to pay applicable fees […] (and applicable taxes) […]. […].
[…]. As a [Supplier], you are responsible […] to report, collect, remit, […] any applicable […] taxes (“Taxes”).
[…]. […] where [Company] facilitates the collection and remittance of Taxes on behalf of [Suppliers], you instruct and authorize [Company] to collect Taxes on your behalf, […].
5. As stated on [Company]’s website, in part:
“[Recipients] […] pay the […] […][GST/HST], […].
[…].
[Suppliers] […] who aren’t registered won’t […] collect […] the [GST/HST], […]. […] [Company] […] collect[s] and remit[s] these taxes […].
[Suppliers] […] who are registered for [GST/HST], […] account for the [GST/HST], […]. […],you’ll need to provide your [GST/HST], […] […][registration number] to [Company] […]. […].”
6. According to a conversation between you and [Company], […], [Company] will collect and remit the GST/HST on behalf of [suppliers] that did not provide their GST/HST registration number. [Company] also advised that as you provided your GST/HST registration number on [mm/dd/yyyy], you will be responsible for the GST/HST on reservations booked after that date. However, for all reservations booked prior to [mm/dd/yyyy], [the Company] will collect and remit the GST/HST […].
7. You explained that [recipient] pays the full amount for their stay […], in advance of the stay. You only receive your consideration (“payout”) from [Company] once the stay has concluded.
RULING REQUESTED
You would like to know what are your obligations in terms of charging, collecting and remitting the GST/HST on the following 2 scenarios submitted:
1. Your taxable supplies of short-term accommodations booked over the [Company]’s platform following your date of GST/HST registration (on or after [mm/dd/yyyy]); and
2. Your taxable supplies of short-term accommodations booked over the [Company]’s platform prior to your GST/HST registration date […], for stays that occur on or after […][your GST/HST registration date].
We acknowledge your request for rulings on the above matters. However, as noted in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, a ruling provides the Canada Revenue Agency’s (CRA) position on specific provisions of the legislation as they relate to a clearly defined fact situation of a particular person, supported by relevant documentation. The CRA reserves the right not to issue a ruling where it considers that one would not be appropriate. We were able to rule on your first scenario with respect to your GST/HST obligations on your taxable supplies of short-term accommodations booked over the [Company]’s platform following your date of GST/HST registration.
With respect to your taxable supplies of short-term accommodation booked over the [Company]’s platform] prior to your GST/HST registration date for stays that occur on or after your GST/HST registration date and the determination of whether [Company] is an accommodation platform operator as defined in subsection 211.1(1), the CRA is generally prohibited from using or communicating confidential information obtained in the course of administering the goods and services tax/harmonized sales tax (GST/HST) legislation unless it is specifically authorized to do so. We have therefore provided an interpretation of the applicable provisions and how the legislation would generally apply with respect to your second scenario which can be found following the Explanation section.
RULING GIVEN – Scenario #1
Based on the facts set out above, we rule that:
1. You are responsible for charging, collecting and remitting the GST/HST with respect to taxable supplies of short-term accommodation made on or after […][your date of GST/HST registration] in accordance with sections 165, 221 and 228.
EXPLANATION
Generally, most supplies of goods and services that are made in Canada are taxable supplies subject to the GST/HST unless they are specifically identified as exempt. Taxable supplies include zero-rated supplies (subject to the GST/HST at the rate of 0%) which are listed in Schedule VI. Exempt supplies are not subject to the GST/HST and are listed in Schedule V.
Under section 165 of the ETA, every recipient of a taxable supply made in Canada is required to pay the GST on the value of the consideration paid or payable for the supply unless the supply is specifically exempt under Schedule V or zero-rated under Schedule VI. Subsection 221(1) further provides that every person who makes a taxable supply is required to collect the GST/HST that is payable by the recipient in respect of the supply and file a GST/HST return pursuant to subsection 238(1) for each reporting period of the registrant and remit that tax in accordance with subsection 228(2).
Where a supplier […] is registered for GST/HST purposes and is making taxable supplies of short-term accommodation located in Canada, the registered supplier is responsible for charging, collecting and remitting the GST/HST on its supplies in accordance with sections 165, 221 and 228.
Paragraph 133(a) provides, in part, that the entering into of an agreement shall be deemed to be a supply of the property(footnote 2) made at the time the agreement is entered into. Accordingly, the entering of an agreement or provision of any property or service under an agreement can constitute a supply for GST/HST purposes. The timing of when an agreement has been entered into between the supplier […] and the recipient […] to provide property is determined in reference to the terms of service governing supplies that are facilitated through the platform in question (i.e., [Company]’s platform]).
Pursuant to […] the [Company]’s ToS, “ When you accept a booking […] through the [Company] Platform, you are entering into a contract directly with the [Recipient], and are responsible for delivering your [Accommodation] under the terms […] specified in your Listing.”
Accordingly, the [Supplier]’s supplies of short-term accommodation are made in time as of the point at which the [Supplier] confirmed the recipient’s […] booking through [Company]’s platform . Where a recipient […] books a stay in the Property on a particular day that is on or after [your date of GST/HST registration], that is the date the supply is deemed to be made pursuant to paragraph 133(a).
As you were registered for GST/HST purposes as of [mm/dd/yyyy], you are responsible for charging, collecting and remitting the GST/HST with respect to supplies of short-term accommodation made on or after that particular date under sections 165, 221 and 228.
INTERPRETATION GIVEN – Scenario #2
The ETA generally requires every registrant making a taxable supply in Canada to collect the GST/HST from the purchaser and remit it to the CRA. The ETA was amended, effective July 1, 2021, to include GST/HST provisions that generally apply to non-resident suppliers, distribution platform operators and accommodation platform operators that participate in the digital economy.
Non-registered supplier of short-term accommodation
Under the digital economy provisions and more specifically pursuant to subsection 211.13(3), where an accommodation platform operator, registered for GST/HST under the simplified GST/HST registration regime, facilitates the making of taxable supplies of short-term accommodation(footnote 3) situated in Canada through its accommodation platform(footnote 4), on behalf of non-registered suppliers (footnote 5) […], and where the recipients […] of short-term accommodation did not provide evidence satisfactory to the Minister that they are registered under the regular GST/HST registration regime, the accommodation platform operator is considered to be the supplier of the short-term accommodation. In such circumstances, the accommodation platform operator registered under the simplified GST/HST registration regime is now required to charge, collect and remit the GST/HST on those supplies it facilitated.
Subsection 211.1(1) defines an “accommodation platform operator” as “in respect of a supply of short-term accommodation made through an accommodation platform, means a person (other than the supplier or an excluded operator in respect of the supply) that
(a) controls or sets the essential elements of the transaction between the supplier and the recipient;
(b) if paragraph (a) does not apply to any person, is involved, directly or through arrangements with third parties, in collecting, receiving or charging the consideration for the supply and transmitting all or part of the consideration to the supplier; or
(c) is a prescribed person.”
In accordance with the definition of an accommodation platform operator (APO), a person (other than the supplier or an excluded operator) would be considered an APO if it meets either paragraph (a), (b) or (c) of the definition of APO. As there is currently no prescribed person, paragraph (c) would not apply. Therefore, [Company] would be considered an APO if it meets either paragraph (a) or (b) of the APO definition. Where [Company] is an APO and is registered under the simplified GST/HST registration regime, taxable supplies of short-term accommodation situated in Canada made through its accommodation platform would be considered as having been made by [Company] with which the [supplier] is not registered for the GST/HST. Accordingly, [Company] would be required to account for the GST/HST on such supplies on behalf of non-registered [suppliers]. In the situation being considered, despite the actual stay at the Property took place after your GST/HST registration date […], a booking that is entered into prior to that particular date is deemed to have been an agreement entered into as of that particular date pursuant to paragraph 133(a). Where [Company] is an APO and is registered under the simplified GST/HST registration regime, [Company] would be required to charge, collect and remit the GST/HST on such supplies.
For more information on the new digital economy rules, more particularly in the section entitled Platform-based short-term accommodation, please visit our website at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy.html
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
CONTACT
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-706-8742.
Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Teresa Lau
Senior Rulings Officer
Digital Economy Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
FOOTNOTES
1. According to subsection 211.12(12) ETA, the CRA must publicly disclose information about persons, including businesses that have registered for the simplified GST/HST, including their name and registration number. For more information, please consult the registry for simplified registered suppliers at: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy-gsthst/confirming-simplified-gst-hst-account-number.html
2. Subsection 136(1): “(…) a supply, by way of lease, licence or similar arrangement, of the use or right to use real property (…) shall be deemed to be a supply of real property (…)”
3. Under subsection 123(1), a “Short-term accommodation” is defined as a residential complex or a residential unit that is supplied to a recipient by way of lease, licence or similar arrangement for the purpose of its occupancy by an individual as a place of residence or lodging, if the period throughout which the individual is given continuous occupancy of the complex or unit is less than one month.
4. Pursuant to subsection 211.1(1), an “Accommodation Platform” is defined as a digital platform through which a person facilitates the making of supplies of short-term accommodation situated in Canada by another person that is not registered under the regular GST/HST.
5. Non-registered suppliers would generally include small suppliers (suppliers with sales that do not exceed the threshold amount of $30,000).
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