Air bnb taxes-GST, PST, MRDT

[Sam4794]

Morning,

Experts and fellows,

After running Airbnb a few years, I incorporated it in BC. 

Questions:

1. Airbnb platform collects taxes, but have they covered 5% GST,  8% provincial sales tax (PST), and  3% municipal and regional district tax (MRDT)?

2. Any guidelines, articles, links, or advice to share, for the hosts to collect the above-mentioned, if some types of taxes are actually hosts' responsibility?

Thanks in advance!

[M199 · Accepted solution]

@Neill23, @Glenda142

Cdn hosts need to have clarity in case of a CRA audit.  A tax accountant would help explain.  FYI, I have over 30 years if payroll experience, so taxes are simpler for me.  Disclaimer, I am not legally allowed to provide advice.  I  can however relay my  thoughts and ideas.

I have set up my listing in a way that the room rate is the base price and other items such as cleaning and pet fees are noted individually. With regards to various taxes, they need to be itemized correctly.

Below is a print screen of how I have set up the Municipal Accommodation (4% on room rate only) and   GST/HST (13% on all items).  You can find this on your listing under manage your listing (If I am correct).

Another point is that for GST/HST there is a tax benefit if an account earns $7500 per year.  If this happens, there is an input tax credit for business related expenses that can be used to reduce GST/HST payable.

Ultimately, my comments are for information and truly, hosts with little tax accounting experience are well advised to find and hire an experienced professional tax service.

@Neill23, @Glenda142 Ultimately if you have a CRA GST/HST number and register it in the tax section on your Airbnb listing, Airbnb will collect the monies and remit to you as a "pass through total".  Note-you will be required to remit these pass through amounts (taxes collected) based on your remittance requirements.

Again, my best recommendation is that you contact a local tax professional for further legal guidance.

@Sybe, @Emiel1 

[Neill23]

Hi @M199 thank you for your detailed reply.  We are definitely going to reach out to our accountant to see how to manage this transition.

I cannot find a way to set my own taxes on the listing - the help article states to turn on Professional Tools, which I did, 
https://www.airbnb.com/help/article/2523/how-to-add-taxes-to-listings#section-heading-0-0
but it still comes up as ABB collecting and remitting them, with no option for me to customize/remit the way that you have done.  It might be due to location - BC vs ON

- I called ABB host support to ask if I can set custom taxes in BC, and she is investigating and will call me back. 
- I have also asked what happens with existing bookings, if they will have the GST added to their bookings (I suspect not, but one never knows...)
- I will post an update once I hear back

[Juhlie0]

Hi @Neill23 have you had an update on this? I have been in contact with Air BnB and they aren't very helpful with this and I am also not able to add a tax spot.  I am located in BC and am a newly GST registrant.

[Neill23]

Hi @Juhlie0 - I have not received what I would consider to be a satisfactory explanation yet.  The last rep that called sent me a message saying that she had already answered my questions, and considered the matter closed.  I called back, and have requested a new "escalation" specialist, but haven't responded to the last set of questions sent by them yet.

Here is what I think (emphasis on the "I think" part of things) is going to happen.  I spoke with my book-keeper, and you may want to do the same.  

- Currently ABB adds 11% to the total price, which should represent 8% PST and 3%MRDT.
- For those folks that do not add their GST registrant number to their listing (because they are either below the $30k annual threshold, or choose not to, starting July 1, I am guessing that ABB will run that figure up from 11% to 16% to reflect GST as required by CRA on all STR platforms.
- For those folks (like you and I are doing) that add their GST R number to their accounts, the tax line will remain at 8%, and the GST will be deemed to be included in your nightly rate and fees  (if you use quick method - see your acct, you would remit 3.6% instead of 5%, but that's another topic lol).  ABB's fee may or may not be GST exempt, but that would likely be on them to report and remit as required.

I will update if I hear anything else - otherwise, see you on July 1, when we both do trial bookings to see what, if anything, has changed lol.  Sorry for not being of much help, other than wild guesses.

As an interesting aside, the "other" site that begins with a V and ends with an O and currently features Kermit the Frog singing has two tax lines on our bookings, neither of which matches BC PST or MRDT percentages.... go figure.

[Juhlie0]

Thank you for the information! .@Neil23 

I was able to get a hold of someone at Air BnB who was quite helpful.  Here is part of our conversation:

Community Expert10:12 PM

Hi

Thanks for contacting us.

My name is Adrian, I am a Community Expert and a Superhost from Vancouver BC and I will be assisting you today.

Airbnb will be automatically collecting GST on hosts behalf countrywide from July 1st, 2022. Between now and then I'm afraid it is necessary to either include the GST amount in your nightly rate (easiest option) or state clearly the additional taxes in your house rules and then collect it separately from accepted reservations guests using the Resolution Centre here https://www.airbnb.com/resolutions

If you have any other questions on this matter, don’t hesitate to ask.

Best regards

Adrian

Juhlie10:15 PM

Hi Adrian,

I am GST registrant, so what will happen after July 1st? will I be able to add it separately so it just isn't included in my price?

If I am GST registrant will they be collecting the GST or do I still have to do it?

Community Expert10:17 PM

Yes, you have the option after July 1 to either provide your GST number and then GST will be added to your posted rates and paid to you to remit to the CRA yourself. Alternatively, you can choose not to provide your GST number and then Airbnb will still add the GST on top of your posted rates but they will pay it directly to the CRA on your behalf.

Juhlie10:19 PM

ok, so it is just between now and July 1st that are a little tricky. I will have to include it in my prices until July 1st and then Air BnB will automatically charge it and remit it to me so I can submit it to CRA...?
I am so glad to be hearing from you on this, I have had a hard time getting answers from other Air BnB support.

Community Expert10:20 PM

Yes, you understand it correctly.

My apologies for the confusion in previous communication as it's a very localized issue and as support we are located all around the world and others may not be so intricately aware of the process here in Canada.

I hope this helps!

I better look into the quick method of GST...3.6% is better than 5% but I am guessing then you don't claim any ITCs.

[Neill23]

Hi @Juhlie0 

Happy (one day early) Canada Day to you.  

I added our GST R number today to our listing.  I had read your reply back in May, and meant to respond sooner.  Thank you belatedly for sharing.

We have had two entirely different responses from ABB with regards to GST.

My interactions with ABB support indicate that nothing will change on any new bookings effective tomorrow.  AKA the GST will be considered to be included in our nightly rate and cleaning fees.

Your interactions with ABB suggest that they will increase the tax component from 8% (BC PST & MRDT) to 13% and send you the GST to remit to the CRA.  

Time will tell...  I plan to check in the morning to see what a prospective guest sees when looking at our listing.

[Neill23]

Typo above:
Your interactions with ABB suggest that they will increase the tax component from 8% (BC PST & MRDT) to 13% and send you the GST to remit to the CRA. 

Should state:
Your interactions with ABB suggest that they will increase the tax component from 10% (8% BC PST & 2% MRDT) to 15% and send you the GST to remit to the CRA. 

I forgot to add the MRDT amount in my initial reply

[Lee4141]

Do you happen to know where we can find what amount of GST Airbnb has paid to CRA on a host's behalf?

[Neill23]

On a separate note - ABB recommends that we publish our R number, but when I went to add it to our listing, ABB thinks that it is a phone number and will not allow it.

Has anyone figured out a work-around?  Or do we only need to provide to folks once they have booked?

[Neill23]

Happy Canada Day fellow Canucks!

We added our GST R # to our account yesterday.

Two main pieces of info to add to this thread - as always, please speak with your accountant for official advice:
1)  As of today, when I went to look at our listing as a guest would, there was no change to the pricing.  Our nightly rate, plus cleaning fees, plus ABB service fee, plus 10% (BC PST and BC MRDT).  As suspected, once we provide our R number, the GST component is considered to be included in our nightly rate, and we have to remit it out of the amount collected.  

2)  I was able to add in the GST manually.  In order to do this, 
   a)  I turned on professional tools
   b)  I went to our listing, and scrolled to the Pricing and Availability/Tax section, and clicked the "Edit" button to the right of the Taxes section.
   c)  Half way down the Occupancy tax collection page that came up, there is a section called Custom Tax Collection  NEW,  and I was able to select VAT/GST from the dropdown menu and add 5% to our base price and cleaning fees.  

Once saved, a refresh of our listing page now shows closer to 15% tax collected - still not quite perfect, and disclosed as "Increased Rated HOTEL and OTHER LODGING PLACES (British Columbia) MRDT (British Columbia Mrdt) VAT/GST"   I will likely contact ABB to try and figure out the discrepancy - I am betting that they are charging the VAT/GST on top of the 10% BC PST/MRDT figure...

See attached screen shots.

Bottom line - we do not have to eat the GST out of our nightly rate for bookings from July 1 onwards.  

[Juhlie0]

Hi @Neill23 

Thank you for the information!  

I have added the tax as well.  Please let me know if you find out any other information about this.