Canada - HST to be charged on Digital Sales (AIRBNB) effective July 1, 2021

[Tracey423]

Revenue Canada changed the rules for HST on digital sales for non-resident companies effective July 1, 2021.  Is anyone familiar with this change?  I did a preview listing, and would have expected to see 13% HST specified on the costs below the 14% AIRBNB service fee.   It wasn't there.  Also, there should be a way on the website for us to input our HST # so that we receive full revenue + HST.  Prior to this change we received our portion of the revenue, and then manually we split out the dollar amount received into Rent vs HST.   

I reported this tax change to AIRBNB months ago asking for guidance re: when invoices were created, changed, etc and how that would impact taxation.  eg. Client books reservation for Aug, in June.  Only 14% service fees on AIRBNB invoice.  If client changes their reservation in July to add a guest, or add a night, how is that implemented on the platform?  Does 13% HST apply to the whole invoice since it is being edited post July 1, 2021?  Or does the HST only apply to the services that were added to the invoice?  Lost of questions.  AIRBNB had no answers for me.  And now it's post July 1st, and they aren't quoting HST to clients. 

Hoping someone has guidance.

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-ec...

[Tracey423]

I read on one of the AIRBNB webpages that taxes could be withheld by AIRBNB prior to remittance to the Host.  That means we'll be earning 13% less on our payouts from AIRBNB.  However I just had my daughter book a reservation for the fall, to see what was indicated both in fees to the Guest, and on the Payout to the Host.  There was no line item for HST being withheld, nor was there an HST on the Guest list of charges.    Very odd.  

[Justin1328]

I have the same issue.

Very odd indeed. 

I can't get any useful information from AirBNB. If anyone has learned anything new regarding this matter I'm sure there are lots of people that would benefit from it!

[Tracey423]

Good Morning @Justin1328  - I watched a BDO education video in Feb/March time frame re: the HST changes that were coming effective July 1, 2021.  At that time, I reached out to AIRBNB asking for clarification re: how they would be implementing these changes on their platform.  Inadequate answers.  I followed up multiple times.  There should have been a development project under way to implement these changes. They should have been in testing/development.

After July 1st, I continued to ask, test the website logic, no HST being charged.  Completely inadequate and incompetent answers from the support desk.  It looks to me like they have no plans to do HST remittances, and are pushing the responsibility to the individual hosts.  Personally I have my own HST #, do my own remittances, bury the 13% in my nightly rate on AIRBNB.   I'm collecting, and track within my own invoicing application.

My gut is that either AIRBNB doesn't understand the CRA guidelines, and how to do an HST return, or they are flat out refusing to do it, and passing the buck to the host.  From what I know of the legislation, the HST invoicing obligation is with AIRBNB platform, not the host.  I predict they'll have a rude awakening the first time they miss an HST return, and get audited by CRA. 

That is my personal opinion. 

Good Luck, Justin.

[Justin1328]

Thanks for all of the information Tracey! It's so hard to find good information on the subject so it's refreshing to see someone else that realizes how weird this situation is.

The nice thing about CRA mandating that AirBNB collect and remit is that it puts everyone on a level playing field. 

By collecting the HST ourselves, we make ourselves less competitive compared to other hosts that aren't charging HST. But it is definitely the safest way to go... I think most hosts read the headlines that AirBNB is required to collect and remit the HST so they don't worry about remitting HST. They don't see that something isn't adding up with the service fees.

I don't plan on remitting HST because AirBNB are required to be doing that, but I might be taking a risk. But the way I see it, I can't even get a clear answer from AirBNB regarding whether or not they're collecting HST and their website says that "National law will require Airbnb to collect and remit these taxes". If they want to try to skirt the CRA then that's on them and I agree that they will have a really tough time with the CRA.

Hopefully this all gets sorted soon and we don't have to guess at how we should be taxing our AirBNBs.

Thanks 🙂

[Tracey423]

@Justin1328- For many years now, there has been a CRA rule that if you earn more than $30K revenue on your T2125 Business Income, that you must collect/remit HST.  I met that criteria a few years ago, and have been doing my own HST returns for about 4 years now.

I agree with you, it puts hosts like me on an uneven playing field, from a pricing perspective.   If you preview your own listing and go through the reservation process you can see the fees your guests will see.  HST is missing.   

When AIRBNB figures it out, I will potentially get an invoice for HST owing, and in my case it will simply be a recovered ITC and reduce the amount owing on my next HST return, I'll probably get an HST refund.   It will all sort itself out in the wash. 

Thinking about possible scenarios ... Supposed CRA audits AIRBNB and fines them $100,000 in HST owing.  Would AIRBNB just absorb that expense as a cost of doing business?  Or would they want to recover the expense from the hosts?   It is quite possible that AIRBNB will reduce future payouts to the hosts until the HST obligation (host to AIRBNB) has been sorted out.  That's why I think it is important for hosts to just do it on their own.   To accelerate the process, you could report AIRBNB to CRA and see what happens.  LOL

Tracey

[Justin1328]

Ya, I think that's what I will have to do (register an HST#). I guess it won't be a level playing field, but with the arbitrary $30k number from the government, it wasn't a level playing field even before they implemented this new law. And I can totally understand hosts who make less than 30k not wanting this law to come into effect. 

LOL I won't be reporting AirBNB because I'm still grateful for all of the business that I get through them, but this just really highlights how expensive their service really is and the benefit of having a direct booking website. When I saw the difference in price from what a guest pays compared to what I receive I assumed that they MUST be collecting HST.. I guess not.

Oh well..

I will re-post if I discover anything new.

Justin 

[Tracey423]

Justin @Justin1328 - that would be great.  Likewise, if I have new information I will post for you, too.  

Second guessing my choice of sarcastic humour re: "reporting".   Glad you took it as a joke too. 

Have a great day!

T.

[Matt4527]

Called the CRA and if someone is under the 30k threshold they will have to get a HST# report the taxes on their my business account and then at the end of the year get a refund for the collected HST amount?

[Joanna572]

But who will collect that HST amount. Me or Airbnb in the fees.   I am under the 30 K amount.  Very confused by all this because my understanding is under 30 K you don't need too. Sounds like a lot of paper work for no gain.   Anyone have any clarity.                           @ Joanna572   

[Shaival0]

@Joanna572 I am in the same boat. Did anyone figure out how to simplify pricing and taxes when one doesn't cross 30k threshold? 

[Paula]

Hello @Shaival0 Since this post has been in our community for a couple of years, I would like to suggest that you ask your question in a new post to gain more visibility. You can do so by clicking here.

[Patricia2845]

I also applied for an HST account # through CRA. Then I added it to my listing in January of 2022 and hope that any bookings going forward will have that charged and calculated at the time for the guest to see.

My concern is for the guests who prebooked (returning summer guests).  Will I need to ask them for a special order amount manually? Or be left owing the HST from out of pocket?

Any clarification would be helpful.

Patricia

[Lisa6173]

Tax Considerations for Airbnb Hosts | BDO Canada

Here is a great article for everyone.  

If you do not register it is my understanding Airbnb will collect and remit on your behalf. 

If you do register you will be paid out the HST with your rental income.  You will then be required to submit it to the government but you will also be able to claim the ITC's back (any HST you pd on purchases).  

[Janice506]

I read that Airbnb was supposed to start collecting HST in July 2021. Then it got pushed to July 2022. 

I have guests who booked after July and no HST was charged.

I am at the end of my rope with Airbnb. I added the HST as part of the booking. Base price + cleaning fee + HST. What I am finding now, is sometimes they add the tax to the guests total to be paid to me and sometimes they don't. This obviously is driving me crazy. I can't get anywhere with them. 

I also have my property listed on VRBO. They add the HST to the total price that guests pay and they submit it to the government. Easy peasy. I am on the verge of removing my listing from Airbnb. The customer service is a joke.