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
[Addressee]
Case Number: 245893
Dear [Client]:
Subject: 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) on the supply of short-term accommodation made 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; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, 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.
Based on the information provided in your letter of [mm/dd/yyyy] and our telephone conversations, we understand the following:
1. You are a currently making supplies of short-term accommodation of a home […], in […][a non-participating province A].
2. You are not registered for GST/HST purposes and you do not exceed nor do you expect to exceed the $30,000 small supplier threshold amount in a calendar year.
3. You are a host and user of […][the Company’s Platform] since [yyyy]. You explain that in the month of [mm/yyyy] you stop renting out your property and resumed your activities on [the Company’s Platform] in [mm/yyyy].
4. You indicate in your letter that since the month of [mm/yyyy], […][the Company] did not charge guests GST on their bookings. In [mm/yyyy], [the Company] began to send you invoices labelled as […] for GST amounts on prior transactions. You explain that [the Company] was attempting to rebill to you the GST amounts on the consideration of the short-term accommodation on bookings made in the month of [mm/yyyy] and subsequent months.
5. You also explain that [the Company] is charging you a commission fee for using their platform to make supplies of short-term accommodation. You indicate that [the Company] is adding the GST on the commission fees on their invoices.
RULING REQUESTED
You would like to know the tax collection and remittance obligations on the supply of short-term accommodation made through an accommodation platform.
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 these relate to a clearly defined fact situation of a particular person, and where all of the relevant facts and supporting documentation have been presented in writing. As we are not in possession of all of the pertinent facts, we are unable to provide a ruling. However, we are pleased to provide an interpretation of the relevant ETA provisions for your assistance.
INTERPRETATION GIVEN
1. Supply of short-term accommodation made through an accommodation platform
The CRA is responsible for administering the ETA, which governs the application of the GST/HST. 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 new GST/HST provisions that generally apply to non-resident suppliers, distribution platform operators and accommodation platform operators that participate in the digital economy.
1.1 Non-registered supplier of short-term accommodation
Under the new digital economy provisions and more specifically pursuant to subsection 211.13(3), where an accommodation platform operator (Footnote 1), registered for GST/HST under the simplified regime (Footnote 2), facilitates the making of supplies of short-term accommodation (Footnote 3) located in Canada through its accommodation platform (Footnote 4), on behalf of non-registered suppliers (i.e. hosts), and where the recipients (i.e. guests) of short-term accommodation did not provide evidence satisfactory to the Minister that they are registered under the regular GST/HST 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 regime is now required to charge, collect and remit the GST/HST on those supplies it facilitated.
Also, in the circumstances where subsection 211.13(3) applies and where the accommodation platform operator is required to charge, collect and remit tax on the supply of short-term accommodation, the new measures provide that the supply of services, made by the accommodation platform operator to the non-registered supplier in relation to the supply of short-term accommodation, is not subject to tax. An example of this may be where an accommodation platform operator charges the supplier fees or commission fees for using the operator’s platform to supply the short-term accommodation.
Non-registered suppliers would generally include small suppliers (suppliers with taxable sales that do not exceed the threshold amount of $30,000). For more information on small suppliers please refer to GST/HST Memorandum 2.2, Small suppliers.
1.2 Registered supplier of short-term accommodation
Where a supplier (i.e. host) is registered for GST/HST purposes and is making taxable supplies of short-term accommodation located in Canada through an accommodation platform, the registered supplier remains responsible for charging, collecting and remitting the GST/HST on its supplies.
Such registered suppliers that make taxable supplies of short-term accommodation that are facilitated by an accommodation platform operators should ensure that they have communicated their GST/HST registration status to such accommodation platform operators. This will ensure proper collection and remittance of GST/HST pursuant to regular GST/HST rules.
For more information on the new digital economy rules, please visit our webpages at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy.html
1. Collection and remittance of tax
Generally, 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).
Therefore, as a deemed supplier pursuant to subsection 211.13(3), the accommodation platform operator would normally have an obligation to collect the GST/HST on the taxable supply of short-term accommodation and the guest as the recipient of the supply of short-term accommodation would have an obligation to pay such GST/HST to the accommodation platform operator.
It is important to note that despite these provisions, an accommodation platform operator and a supplier may together agree on a method to collect and remit the GST/HST. Whether those arrangements can be used under the ETA depends on specific facts. Also, these arrangements are private business decisions made by the supplier (host) and the other person (platform).
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 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 343-630-4822. 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,
Batoul Hassan
Senior Rulings Officer
Digital Economy Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
FOOTNOTES
1. Under subsection 211.1(1), an “Accommodation Platform Operator” is defined as a person (other than the supplier of the short-term accommodation) that controls or sets the essential elements of the transaction between a supplier of short-term accommodation and the recipient, or if no such person exists, it would be a person that is involved, directly or through arrangements with third parties, in collecting, receiving or charging the consideration for the supply of short-term accommodation and transmitting that consideration to said supplier.
2. […][the Company] is registered under the simplified regime. 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
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.
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