Taxes

[Natia2]

Can you please explain if I as a host bear any tax liability? I am not that active in total i even do not have 10 payouts, but I never though that I should declare, I thought the fee AIRBNB was deducting included all the liabilities from my side as a host. my listings are in Georgia. please advise. thank you in advance, Natia

[Judy29]

Air BnB had connected with Tourism Ontario and legislation has been impacted so that we must report all money collected as earnings.  In Ontario business, we are allowed to collect earnings of $30,000 before paying business taxes.  Also in Ontario we are allowed to earn up to $10,500 for personal earnings without paying taxes. Check with your state taxation department to see how this impacts your earnings. 

There is no way that we will be able to consider running a bed and breakfast as a "cash under the table" business.  Now that Airbnb is working directly with the government, all their accounts have a "paper trail".

The one thing that is positive about working with Airbnb is that we do not have to pay for business registration, or banking terminals/business bank accounts which are costly and unnecessary for small businesses.  The small fee for each booking is far less that these extra unneccessary fees.

However, keep all reciepts for linens, toiletries, sundries, utilities, food, etc that is used for your business and use these as deductions.  You will discover that there is very little profit at the end of the day.  You can deduct your damages and a portion of maintenance on this as well.

We originally started BnB as a way of off setting hefty property taxes.  If you already hire an accountant they will help you figure out how to "work the numbers".  Keep in mind though that earnings must be kept in your personal account or there will be another unexpected payout for separate business account.

[Dave-and-Deb0]

Hi @Judy29,

You are reporting all earnings to CRA right?  The $30,000 means you are exempt from charging GST.

[Matt26]

To clarify, in Canada you are premited to earn up to $30,000 in revenue before you are required to charge and remit HST (GST). If you think you're going over the $30,000 limit, it's best to open an account in advance and choose a likely payment scheme. In this situation you'll really want to ensure that you're saving every receipt, because the HST(GST) that you pay on items used for your business will be deducted from the amount you owe CRA. To clarify, lets say you've collected $1000 in revenue and now need to remit $130 in HST(GST) and you've purchased $100 worth of cleaning products and paid $13 in tax on those purchases. You will remit $87 in HST, because HST(GST) is a through put tax and only the final consumer of the goods and services pays tax.

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