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: 245685
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 conversation with your firm, we understand the following:
1. You are a tax representative and your client is a person registered for GST/HST purposes.
2. Your client is making supplies of short-term accommodation of a real property located in Canada through an accommodation platform of an accommodation platform operator that is registered under the simplified regime of Subdivision E of Division II of the ETA. You confirm in your letter that your client has provided their GST/HST registration number to the accommodation platform operator.
3. You explained in your letter that the accommodation platform operator is collecting the GST/HST from the guests and is not remitting such GST/HST to your client. Instead, the accommodation platform operator is remitting that amount of GST/HST to the Canada Revenue Agency (CRA).
4. You have stated that “the platform is acting as an agent or billing agent at law in facilitating the supply of the Real Property”.
5. A billing agent election (GST 506) was not entered between the platform and your client.
INTERPRETATION REQUESTED
You would like to know what are the tax collection and remittance obligations on the supply of short-term accommodation made by a supplier registered for GST/HST through an accommodation platform. More specifically you would like to know whether Policy Statement P-131R, Remittance of tax collected by a person other than the supplier in limited circumstances, would apply to discharge the liability of the supplier to remit the GST/HST on supplies of short-term accommodation made through an accommodation platform.
INTERPRETATION GIVEN
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 GST/HST provisions that generally apply to non-resident suppliers, distribution platform operators and accommodation platform operators that participate in the digital economy.
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(Footnote 1), registered for GST/HST under the simplified regime, facilitates the making of supplies of short-term accommodation(Footnote 2) located in Canada through its accommodation platform(Footnote 3), 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 GS/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 required to charge, collect and remit the GST/HST on those supplies it facilitated.
However, registered suppliers that are making supplies of short-term accommodation located in Canada through an accommodation platform of an accommodation platform operator (irrespective of that operator’s GST/HST registration status) continue to be responsible for charging, collecting and remitting the GST/HST on those supplies. Also, registered suppliers should ensure that they have communicated their GST/HST registration number to the accommodation platform operator and ensure appropriate collection and remittance of GST/HST on their supplies of short-term accommodation.
For more information on the digital economy rules, please visit our website at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy
Collection and remittance of Tax
Under Policy Statement P-131R, Remittance of tax collected by a person other than the supplier in limited circumstances, the CRA confirmed that it does not intend to collect tax twice on the same supply, and where the supplier and another person are both required to account for the tax, under subsection 225(1) and 228(2), the liability to account for the tax of the supplier or the other person will be discharged where one of them accounts for the tax in its net tax calculation and remits the tax to the CRA.
However, Policy Statement P-131R does not apply in certain circumstances. For example, where a person acts as an agent in making a supply on behalf of a principal. Generally, in these situations, the principal is considered to have charged and collected the tax and is required to account for that tax in its net tax calculation. Nonetheless, whether an agency relationship exists between the parties is a question of law (common law or civil law) that requires an extensive review of the agreements.
In conclusion, the application of P-131R in the particular situation you presented will depend on the facts and will be at audit's discretion at the time of an audit.
For more information on this subject, please see GST/HST Policy Statement P-131R, Remittance of tax collected by a person other than the supplier in limited circumstances, which you can find at https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p-131r
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.
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 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.
3 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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