Canadian hosts claiming CERB during Covid, facing CRA issues

[Paulette23]

Hello fellow Canadian hosts,

I'm wondering if others are facing the same issue: I claimed and received CERB and now CRB to compensate for my Airbnb income virtually drying up. I met all the criteria, including 'self employment' income of a minimum of $5000 in 2019, which I reported on my 2019 tax return.

On Friday I received a generic email stating that, according to their records, I didn't qualify and it listed options for repayment.

I spent a great deal of time on the phone seeking clarification and was advised to proactively submit proof of Airbnb income.

However, one agent, who conferred with his manager, said that, although there was no final decision, my Airbnb income doesn't appear to qualify for self employment, but rather as rental income arising from an investment.

I rent two bedrooms in my own home, my primary residence, so didn't buy investment property specifically to obtain rental income. I've owned the house since 2005 and only started hosting in 2017.

Maybe the fault lies with the way I reported the income, i.e. as rental income rather than self employment which seemed quite onerous and complicated. 

I'd appreciate any thoughts, feedback from other hosts in Canada.

Thanks!

Paulette

[José1951]

@Paulette23  @Ricardo1348  @Nancy1456  @M199 

Any update on this issue?

Did Airbnb step up to help its hosts?

Do we have a canadian airbnb department that could be more helpful with canadian rules?

[M199]

@José1951 

@Paulette23, @Ricardo1348 , @Kerem12 , @Nancy1456 

There likely no change.  I highly doubt that Airbnb is going to change another countries tax laws.

In Canada, rental income is a business, not self employment.  CERB and it's related programs are for employed persons.  Rental Income is not, under tax legislation, considered employment income.

Sorry😔

[Karole3]

Hi Paulette,

I have received a Notice of Redetermination (March 2023) and have been researching my options (if any).  

My situation is like yours and many other Canadian Aribnb hosts.

I have read the comments here and I was just wondering if there have been any updates with your efforts to rectify this unfair situation?

Kind regards,

Karole

[Melanie-And-David0]

Same here. I wish the CRA had specified from the get-go that rental income did not count.

I take it that no one has really had any luck on this front.

[Nancy1456]

Hi there @Melanie-And-David0 , I know on my end there was no other resolution but to pay back CERB and CRB.  CRA was definitely not interested in my decisions on why I applied for the help.  I guess what else bothers me, is it was not the same decision for all airbnb-ers.  I know of one couple, who, after CRA contacted them, they changed their status to self employed and both were able to keep the money. 

I wonder how many hosts across Canada were affected and if we were to band together, maybe, the laws could be changed.  After all, "rental income" was not on the original list of criteria to apply for CERB, but later was added.  There is a huge difference between hosting out our homes or rooms or apts to make a little bit of money to live on and others that are landlords to apt complexes, condos, etc.  

I am a host for 3 months during the summer,  as we live in a small beach community.  I do not make tons of money from airbnb-ing, but it does help with being able to keep my house.

So that is my latest news, certainly not happy with it but....

warm regards to everyone and I guess this April, during income tax time, we will be labeling ourselves "self-employed!"  lol!! Nancy

[Judith177]

Did you get any resolution in your favour Paulette, or did you have to repay the CERB? I, too, thought my Airbnb income counted as self-employed income. I rent a suite within my owner-occupied home, provide cleaning, meals and snacks, tourism advice, etc. I consider it a business. I claimed the CERB, but not the CRB, as my gross self-employment income including my Airbnb income put me just over the $5000 minimum. I am in the process of filing my overdue tax returns now (I am confident that I do NOT owe CRA anything so no worries about penalties), but I am now worried that I will have to repay the $14,000 CERB I received while I was unable to host during the COVID lockdowns. I simply do not have the means to repay it and am no longer an Airbnb host.

[Donna1544]

Hello Paulette,

I am facing the same issue as I received CERB during COVID-19. I also filed my 2019  & 2020 and claimed well over $5000 ,as a self-employed short-term rental operator.  CRA asked that I provide proof of income, (PayPal bank statements) which I did, and my case is now undergoing it's second review. I recently received a call from CRA informing me that rental income does not qualify as self-employment and have until March 8th to build my case. 

I am no longer a and Airbnb host. However, in 2022, I received my Registration Number from the Municipality,  allowing me to operate my Short-Term Rental.

While I was trying to find information on why, Airbnb income is considered rental property income and not as a small business or self-employed income. And I came across an article that mentioned;

Business income includes active involvement, whereas rental/property income is passive, meaning less involvement.

As host, we were actively involved with communicating & booking guest, cleaning units, buying toiletries, coffee  & marketing etc...why would our short term rentals not fall under operating a small business?

I was told that if I submit additional information, showing this was a business, that it might help with the decision, but after reading the comments I'm not feeling very confident.

Does anyone have any updates or advice?

Best regards,

Rae