Hotel/PST taxes in BC - Canada?

[Dave264]

Hi there - just setting up my airbnb here and a little confused about the collection of taxes.  I know many people are collecting and are required in the US, but up here?  There is talk that airbnb will start collecting for us, but why?  According to this: https://www2.gov.bc.ca/assets/gov/taxes/sales-taxes/publications/pst-120-accommodation.pdf less than 4 units is tax exempt.  Am I missing something?

If that is the case, IS there a tax I should be collecting for BC?  Not clear where to find out if your community collects the MRDT.

[Kimberly-and-Randy0]

Hi Dave,   I am wondering the same thing and read the very same link you posted!   I wish there was someone out there who knew the answer.   I believe depending on where you live they all have different rules or guidelines.   Sorry I am not much help but would like to know as well 🙂 

[Dave264]

Hi u2 - since then, I have got a few more feedbacks and pretty sure things are status quo for around are parts.  GST is only required if you make more than $30000 in a calendar year, and then PST/MRDT as above - if you have 4 or less units, you have an exemption.  

[Claire476]

Hi Dave, 

I've just been doing some reading and my understanding is that it used to be 4 units or more, but that exemption was eliminated in the July budget. 

https://www2.gov.bc.ca/assets/gov/taxes/sales-taxes/publications/notice-2018-004-pst-mrdt-accommodat...

Under the exemptions section (page 2) you can see that the 4 unit exemption has been eliminated. 

However, it does appear that Airbnb will collect and remit these taxes so no additional work is required on the part of the host. This is what I'm trying to double check. If anyone has more info on how Airbnb will do this, I'd love moore details. There's a section on the airbnb site: https://www.airbnb.ca/help/article/1036/how-does-occupancy-tax-collection-and-remittance-by-airbnb-w...

But we have some bookings that were made prior to the new rules - I'm wondering if Airbnb would have already collected taxes on those.  

Claire

[Alisha31]

Darn, no longer straight forward!  Please keep me posted on this as I had no idea.  Yes, as you say, I wonder what happens with my bookings already booked past Oct 1 - wonder if Airbnb retroactive will get those covered or if we have to go to the renter and ask for additional funds!  Thanks for following up!

Dave

[Alisha31]

(oops, same Dave, logged into wifes account!)

[Daniela888]

Hi Claire,  if the booking is made prior to October 2018 then the old rules apply. 

[Jennifer1439]

I am also having a very frustrating time getting any relevant help and answers. I've been told numerous contradicting things by both CRA and Airbnb. Cra rep told me that if I use a platform such as airbnb, VRBO then not to worry as they remit all taxes on home owners behalf. I have no evidence that this is being done and Airbnb seems to have no idea what I'm talking about. I'm really worried about a huge tax bill and would really like some solid answers. Any help from the community is greatly appreciated!

[Dave264]

Hi Jennifer - I am pretty comfortable in everything I have read and understood.  Yes, there is confusion between CRA and Airbnb - I always did get different answers prior to October, but its pretty clear now.  Airbnb will be filing your PST for you - the new rules came in place Oct 1 (removed the exemption most of us were under with 4 or less units).  There is a grey area IF you had a post October booking booked prior to Oct, but as I understand, IF you had collected 100% of the proceeds (in hand), it can still apply under the exemption.  There are some confusing terms based on booking - pay 1/2 now, full later, pay entirely now?  If the guest paid on credit card fully, I 'assume' thats exempt since Airbnb (now the collector) would be 'holding' the money and they are paying the tax.  Definitely open to different interpretations so can be concerning if you had a whole season of say ski retreat booked already prior to Oct.  Personally, we had just a couple bookings in place so are not concerned about dealing with it.  I think it would be a gong show if everyone 'tried' - we aren't about to go get a BN number just a few stray bookings.   Letter of the law thou, grey area for sure so if you had 5 months of winter booked prior to October, best to get on phone with CRA again or just deal with your accountant and get them to do the leg work!

As for VRBO - I don't know specifically, but it comes down to 'do you receive the tax amount the guest pays in your payout or do they keep it?'  I am pretty sure they aren't collecting for you, so that is where listing with VRBO would suck - you WILL have to get that business number and file your PST/MRDT every year just for the VRBO bookings, while ignoring the future Airbnb collection which they themselves collected!  Makes sense right?  ha....not.  Hopefully you get what I am trying to say though.  

In nutshell, you file the PST/MRDT received from VRBO, and don't do anything with your Airbnb bookings besides report income (unless you are over 30k in which case you should be collecting GST - thats another nightmare to deal with though since you have to get that privately from the guest!).

Best to confirm everything with your accountant in the end, but I am comfortable with my understanding of everything (besides the Oct pre-book, post stay thing though!)

[Dave264]

back on right profile!  We received a useless reply from Airbnb stating that they don't answer tax questions and we should contact a tax professional.  I replied with a snarky response stating that I didn't need to get tax advise as I already know I need to collect Oct 1, and this was purely a 'who collects the pst/local tax' question and if I have to, 'how should I best set up my platform to do so'.....hopefully I get a more useful reply!

[Matthew517]

HI Dave. Thanks for this. I definitely have the same question too. I have read many articles suggesting the BC Government has agreed with AirBnB that they would collect and remit PST. However, I am concerned for my winter bookings where PST does not appear to have been collected.

[Matthew517]

I just received a response from AirBnB which suggests that they will start collecting this tax from bookings made post October 1st. Still unclear as to whether the guest will pay for this, or if it will be reduced from a hosts' payout. Additionally, I have some bookings from October 1st, so I will have to figure out how to collect and remit PST for these existing bookings.

[Dave264]

well heck, plot thickens - guess I got the support person that has no clue or was too lazy to actually research it?  Hopefully they respond to the article I replied with stating they were infact working with our government to take care of it.

If they do in fact cover, it will be like the US and it will show up as a tax line (like their service charge) - we wouldn't see that part of it deposited into our account, no impact to our base rate, and they would take care of all of it on our behalf.

Figures crossed they get on this!

[Matthew517]

Following back up here. I talked to the Tax Authorities who said that PST will be applicable for transactions post October 1st. Given Airbnb transacts guest's money at the time of booking, this means that there is no PST prior to October 1st for stays post October 1st. Post October 1st bookings will have PST collected by Airbnb. Essentially, guests who book and pay for their stay before October 1st will pay no PST.

[Dave264]

wow, can this not get any more confusing - I LOVE your response for sure, but I also heard back from the tax guys and this is the cryptic reply they came up with!

Thank you for your inquiry.

The answers to your questions are as follows:

1. Can you confirm if AirBnB is registered or will be registered by October 1, 2018 to collect and remit on my behalf ?

In order to determine whether AirBnB is registered or will be registered by October 1, 2018 to collect provincial sales tax (PST) and the municipal and regional district tax (MRDT), you must contact AirBnB. Due to privacy concerns, we are unable to provide information on another business.

If they are not registered to collect and remit, you will be required to register to collect and remit PST and MRDT (if applicable).

Please note that if AirBnB provides you with an 8-digit PST number (PST-XXXX-XXXX) and their 9-digit CRA-issued business number (BN), you can confirm the PST number’s validity by using the “Verify a PST Number” tool on our Tax Exemptions Page.