The new BC (Canada) Tax deal between Airbnb and the tax man has left me with a lot of questions

[Lynne88]

Very confusing Here's are a couple of CBC articles

http://www.cbc.ca/news/canada/british-columbia/airbnb-vancouver-bc-1.4524284

http://www.cbc.ca/news/canada/british-columbia/calls-to-tax-other-online-vacation-renters-1.4529215

So is it only Airbnb that'll be obligated to collect and remit this new tax? 

What about properties that are already booked out through most of this coming summer? Will Airbnb withhold this new tax from those bookings?  Or will the tax only kick-in with reservations booked once legislation has passed?

Are we allowed to add a new 11%tax line item now, even though there's no tax until they pass legislation?

A new tax is one issue, I can (reluctantly) accept. But uncertainty through a transition and un-equal enforcement is tricky to manage.

Anyone else in BC a bit worried about this?

[Tim-and-Holly0]

@Lynne88: I cannot speak for B.C. itself, however we went through the same transition in Arizona, USA a year ago. The state legislature set a January 1 date for collection of taxes. Airbnb began adding tax to everyone whose booking was after January 1 as soon as the legislation passed.

In addition, the state only made agreements with Airbnb so I have to collect and remit for bookings that come through other websites.

[Deana11]

I'm not too worried about the tax when it's global and everyone has to charge it. I imagine that all the platforms will have to comply or hosts will have to submit for the website that won't collect on our behalf. What I have not been able to uncover is the date set for these changes. When is this going to take place?

I'm considering creating new listings on other websites just in case the consumer thinks this tax is already effective and has decided not to shop on Airbnb.

I really hope the municple taxes collected from Airbnb in Kelowna go towards improving amenties for our visitors and not just to non-related projects City council is working on. *just throwing in my 2cents there 😉

[Dave264]

Thx Lynne for this thread as well as posting on mine.  Deana, until its clear how this will be collected, I think we do need to be concerned!   I have asked Airbnb and the government - so far Airbnb passes the buck to an accountant which is useless, or has said we have nothing to do with it, and the government passes the buck to Airbnb (or, depending on who you get), says perhaps Airbnb has this...or, maybe they don't!   We are left totally in the dark as to whether we need to get a BN and deal ourselves, or whether we don't have to do anything at all.  On top of that, like Lynne says, it isn't clear how we handle post Oct stays for pre Oct booking.  The way I read it, IF Airbnb does infact collect, they won't need to collect these taxes since they should have the money paid in full.  IF, however, we are forced to collect, we will now have to collect tax ourselves for these bookings since we dont' actually have the money yet until the guests stay.  So that gives us two options - 1. we eat it ourselves, 2. we beg the guests for it after not disclosing likely when they booked = bad blood and bad review highly likely.  

This really is a nightmare with ZERO media attention locally here in Victoria so far about this change and no clue how to deal with it IF we have to ourselves.  It 'appears' we need to ask each guest for 'additional payments' every time.  That isn't fun and will take much more time and talking through for guests that may not know their way around Airbnb well.  My bigger concern is without media getting involved, most hosts will have no clue and just won't collect any tax, creating a disadvantage for those of us doing it the proper way!

I have sent a note directly to Carole James as she was the one at beginning of the year that claimed it will be in place for Airbnb to take care of the taxes....even though one of the replies I received from Airbnb said 'we will not be collecting the tax'.....

Very frustrating!

[James732]

Still unclear if the host is to remit this new BC tax,or if AirBnb simply plans to add it to each transaction and pay the tax automatically.

[Lynne88]

From my understanding they will tack it on to the quote. Collect it and pay it for us. 

Once it's law it must be paid so my question is. Where will the 11% come from if it was never quoted or collected. Yet is still due.

I am going to pause listing until someone can explain how they intend to transition this new tax. 

In otherwords if I book an August week now (no tax to add) Then new 11% tax becomes law in May for example. We can't turn around and revise the guests bill. The BC government will still want thier cut. So guessing (no one will give me a straight answer) Airbnb will withold it from our pay-out? Someone has to pay it.

[Kayla53]

When are they going to release details on this or send hosts a formal notice of change? 

[Lynne88]

Follow up,

Here it is Takes affect Oct 1.  All they've done essentially is remove EXEMTION of 4 unit  minimum. 

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

[Cormac0]

@Lynne88

this is interesting as any person doing Airbnb under the carpet is now brought into the tax net it will be interesting to see how this effect the nightly rates.

[Lynne88]

In BC anyway, wasn't about being under the carpet. Anyone with less than 4 units was exempt from our provincial 8% sales and hotel 3% tax. 

"Exemptions Fewer than 4 Units (Eliminated) Effective October 1, 2018, the exemption for accommodation provided by a person who offers fewer than 4 units of accommodation will be eliminated. This means you will be required to register to collect PST and MRDT even if you offer fewer than 4 units of accommodation, unless you sell only exempt accommodation or only list your accommodation on an online accommodation platform that is registered to collect PST and MRDT (see Accommodation Listed on an Online Accommodation Platform below)."

[Joe490]

Has anyone figured out how they will collect the PST on Airbnb come October 1?

[Lynne88]

Still not certain how Airbnb will handle this. But here's an official response from Ministry of Finance addressing "transition"

__________________

CTBTaxQuestions@gov.bc.ca

Thank you for your reply and follow-up inquiry.

Our understanding is that you are concerned with accommodation booked prior to October 1, 2018, but not provided until after that date. Otherwise, there is no change in the application of the PST.

Information on the “transitional rules” relating to accommodation, as of October 1, 2018, are found on page 3 of Notice 2018-004, Notice to Accommodation Providers, with examples.

The date a “confirmation” for the booking for accommodation is issued (including the acceptance of a deposit) does not determine whether the old (current) or new rules apply. Please note, however, that deposits are not subject to PST. The PST becomes payable when a deposit is applied against the purchase of a room.

If the guest has already booked a stay (before October 1, 2018) for some time after the date when the new rules come into effect, in almost all cases the new rules will apply – that is, they will need to pay the 8% PST (plus the up to 3% MRDT, if applicable).

For the most part, the current rules (i.e., no requirement to collect PST if offering three or fewer units of accommodation) would apply only if the room was paid in full before October 1, 2018. This would include a case where the accommodation provider has a “no-cancellation” policy, or a policy that the purchase price will be charged unless the cancellation occurs before a particular date (this is considered to constitute a purchase of accommodation, even though it is not actually used), and the purchase price for the accommodation is charged under those policies prior to October 1, 2018.

This correspondence describes how the Ministry interprets the relevant tax provisions for information purposes only. This response may be impacted by variations in circumstance, subsequent changes to legislation or subsequent court decisions. The Ministry is not responsible for updating this response if there are any subsequent changes to the law. This response is provided as an aid to understanding the legislation and is not intended to replace the legislation.

Rulings and Interpretations Team
Ministry of Finance
www.gov.bc.ca/consumertaxes

[Catherine232]

This is really confusing because technically all of our guests have paid in full already, but not to us. You pay Airbnb the moment you book. I am pretty upset that Airbnb has not been in communication about this. I am also quite stunned that we are potentially on the hook now for another 11% tax when we already declare and pay a good whack of tax on our revenue. I can't see charging the guests for it after the fact.

[Jennifer347]

I am wondering how the tax will affect the overall pricing of airbnb accomodations in BC.  I hope it is not going to be a price war.

[Lynne88]

And still confusion... 

Airbnb sent us a news letter explaining that.... Starting Oct 1 Airbnb will start collecting and paying 

BC Provincial Sales Tax   ( 8%)

Vancouver Municipal and Regional District Tax     (3%)

I'm in Kelowna though. And they are also due 3% MRDT.

Assuming they will collect for all participating cities. But hate to go based on my assumptions.

And yes Jennifer , I suspect there will be a price war between those not collecting and those collecting. We have our own booking site as well where I've added the tax and will collect and remit. I've added cushion to my VRBO listing too. 

By and large a lot of VR owners are unfamiliar and unaware. So my guess is the majority listed elsewhere will not charge the additional 11%. 

It'll be interesting to see how BC Gov intends to enforce. 

Will have to wait and see.