Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 120889
Attention: XXXXX XXXXX
January 21, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
PROPOSED LAW/REGULATION
HST and advance payments for accommodations
Thank you for your XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of short term rental accommodations and seasonal camping sites in Ontario.
The Government of Canada and the Government of Ontario have signed a Comprehensive Integrated Tax Coordination Agreement on the implementation of the HST in Ontario. The HST will come into effect on July 1, 2010, at a rate of 13%, consisting of a 5% federal part (equivalent to the existing GST) and an 8% provincial part.
Legislation required to implement the HST in Ontario was introduced in the Parliament of Canada and the Legislative Assembly of Ontario and has received Royal Assent. However, many of the rules which would apply to transactions that straddle the July 1, 2010 implementation date will be contained in regulations made under the Excise Tax Act (ETA). Although the Government of Ontario has announced details of the rules which may eventually apply, the required regulations have not yet been made.
The following interpretation is based on the transitional rules for the HST in Ontario as announced in Information Notice No. 3, General Transitional Rules for Ontario HST, released by the Ministry of Revenue, Government of Ontario on October 14, 2009. This interpretation should not be taken as a statement by the Canada Revenue Agency (CRA) that the transitional rules will be made in their current form.
We understand as follows:
1. XXXXX supply short term accommodations in hotels, motels, inns and resorts located in Ontario. XXXXX receive payments, as consideration for the supplies of the accommodations, prior to May 1, 2010, or after April 2010 and before July 2010, where the accommodation is for periods:
(a) that start and end before July 1, 2010;
(b) that start before July 1, 2010 and end after June 2010; or
(c) that start and end after June 2010.
For purposes of this interpretation, the payments received by XXXXX in the above situations are not deposits and do not become payable on an earlier day, i.e., the payments are made without having become due before they are paid.
2. XXXXX supply camping sites on a seasonal basis for the period May XXXXX through September XXXXX, 2010. We understand that the supplies of these sites are currently subject to the GST. Invoices in respect of the consideration payable for supplies of camping sites are issued on January 1, 2010, and a single amount is payable for the entire period. The consideration is paid in full by March 31, 2010.
3. XXXXX are registered for GST/HST purposes.
INTERPRETATIONS REQUESTED
1. You would like to know how the GST/HST would apply to the supply of short term accommodation described above where the consideration is paid before May 1, 2010 or where the consideration is paid after April 2010 and before July 2010.
2. You would also like to know how the GST/HST would apply to the supplies of camping sites in the situation described above.
INTERPRETATIONS GIVEN
1. Supply of short term accommodation in hotels, motels, inns and resorts
Consideration paid after October 14, 2009 and before May 1, 2010
Where the consideration for a supply of short term accommodation is paid after October 14, 2009, and before May 2010, XXXXX would not charge the HST for the supply of the accommodation regardless of whether the accommodation is for periods that start and end before July 1, 2010, that start before July 1, 2010 and end after June 30, 2010, or that start and end after June 2010. Certain non-consumers (e.g., a business or public service body) to whom XXXXX may supply short term accommodation may have to self-assess the HST in these circumstances; however XXXXX would not charge the HST.
Supplies made in these circumstances would be subject to the GST at 5%.
For example, XXXXX supplies accommodation from August 1, 2010 to August 15, 2010 to an individual consumer. The individual pays for the accommodation on April 1, 2010. In this case, the HST would not apply to the payment made on April 1, 2010, and XXXXX would collect the GST at 5%. The GST paid in respect of the accommodation would be included in the XXXXX GST/HST return for the reporting period that includes April 1, 2010.
Consideration paid on or after May 1, 2010 and before July 2010
Generally, the HST would apply to any consideration that is paid to XXXXX after April 2010 and before July 2010 for supplies of short term accommodations, to the extent that the consideration is attributable to a period that begins on or after July 1, 2010 (other than a period, i.e., a lease interval, that begins before July 2010 and ends before July 31, 2010). Where XXXXX would be required to account for the HST in such circumstances, the provincial part of the HST would be included in the XXXXX GST/HST return for the reporting period that includes July 1, 2010.
For example, XXXXX supplies accommodation to an individual consumer from June 26 to July 5, checking out on July 6, 2010, i.e., 10 nights, for consideration of $150 for each night. Where a nightly rate is used, each night is considered to be a period for GST/HST purposes. The individual pays for the accommodation in full on May 15, 2010. The consideration for 5 of those 10 nights is attributable to periods beginning on or after July 1, 2010. As such, 1/2 of the payment made to XXXXX would be subject to the HST at 13%. The remaining part of the payment would be subject to the GST at 5%. In this case, the GST and the federal part of the HST paid in respect of the accommodation would be included in the XXXXX GST/HST return for the reporting period that includes May 15, 2010. The provincial part of the HST paid in respect of the accommodation would be included in the XXXXX GST/HST return for the reporting period that includes July 1, 2010.
Please note that where the consideration for a supply of accommodation is paid or becomes due after June 2010, different rules apply. For further information in this regard, see GST/HST Notice No. 244, Harmonized Sales Tax for Ontario - Questions and Answers on Housing Rebates and Transitional Rules for Housing and Other Real Property Situated in Ontario, available on the CRA Web site at http://www.cra-arc.gc.ca/E/pub/gi/notice244/README.html.
Deposits
Please note that deposits given in respect of a supply are not consideration for a supply unless and until the supplier applies the deposit as consideration for the supply. A deposit is an amount, whether or not it is refundable, given by a recipient as security for the performance of an obligation by the recipient. An indication of whether an amount is a deposit or consideration for a supply may be determined by reference to how the supplier accounts for the receipt of funds in its books and records. An amount paid to XXXXX that is not recorded in the XXXXX books and records as revenue would generally be considered to be a deposit until such time that XXXXX applies the amount as a payment for the supply and records the amount as revenue.
For example, if a hotel guest makes a deposit before May 2010 in respect of a supply of accommodation made by XXXXX in August 2010 and the deposit is not applied as consideration for the supply until the guest checks out of the hotel in August 2010, then the supply of accommodation would be subject to the HST at 13%. The rules explained above for the application of the HST to prepayments would not apply.
2. Supplies of camping sites
Where the consideration for a supply of a camping site is paid or becomes due after October 14, 2009, and before May 1, 2010, XXXXX would not charge the HST on the supply; however the GST would apply at 5%. We note in the situation you described that the consideration becomes due and is paid before May 1, 2010. If the consideration either becomes due or is paid before May 1, 2010, this rule applies.
Similar to the foregoing interpretation, certain non-consumers (e.g., a business or public service body) to whom XXXXX may supply camping sites may have to self-assess the HST in these circumstances, however XXXXX would not charge the HST.
Reference may be made to questions 79 to 81 of Notice 244 for additional information on camping sites that are taxable for GST/HST purposes.
The foregoing comments represent our general views with respect to the transitional rules for the HST in Ontario as announced in Information Notice No. 3, General Transitional Rules for Ontario HST, released by the Government of Ontario on October 14, 2009, as they relate to the subject matter of your request. Any change to the wording of the transitional rules or any regulations regarding the HST in Ontario, if made, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretation Service, do not bind the CRA with respect to a particular situation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-8852. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Hugh Dorward
Real Property Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate
XXXXX
UNCLASSIFIED
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