Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 245455
Business Number: […]
Dear [Client]:
Subject: GST/HST interpretation
Supply of short-term accommodation through an accommodation platform
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supply of short-term accommodation through an accommodation platform. […].
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Based on the information provided in your letter of [mm/dd/yyyy], we understand the following:
1. You are the owner of […][a bed and breakfast], which you make available for rent for periods of less than 30 days.
2. You […] are registered for GST/HST purposes, as a sole proprietor, under Subdivision D of Division V (regular GST/HST registration regime) with a GST/HST registration number of […].
3. […] ([…][Company]) owns and operates the [Company]’s Platform. [Company] is registered for GST/HST purposes under the simplified GST/HST registration regime (Footnote 1), effective [mm/dd/yyyy].
4. You have been making supplies of short-term accommodation through the [Company]’s Platform since [yyyy].
5. In [mm/yyyy], [Company] began to issue you invoices […] for […][GST/HST] of [#]% on the total of your supplies of short-term accommodation made through [Company]’s Platform for the month of [mm/yyyy] and subsequent months. […].
6. […] you provided [Company] with your GST/HST registration number at the time of listing the first room after [mm/yyyy]. Despite providing the [Company] with your GST/HST registration number, [Company] attempted to rebill to you the [GST/HST] amounts on the consideration of the short-term accommodation on bookings made between [mm/dd/yyyy] and [mm/dd/yyyy].
7. […] you advised [Company] that the [GST/HST] amount has already been collected and remitted by you to the Canada Revenue Agency (CRA); however, [Company] has not been able to provide a reason as to why they are still seeking to collect this [GST/HST] amount from you that is attributable to […][total room sales] […].
8. You indicate that [Company] is also charging you a service fee for using [Company]’s Platform relative to your supplies of short-term accommodation […]. [Company] is adding the [GST/HST] ([#]%) on these service fees […].
9. You state that your activities on the [Company]’s Platform ceased in [mm/yyyy] and that the [Company] is no longer pursuing you for amounts invoiced as [GST/HST] on monthly consideration of your supplies made through the [Company]’s Platform for the period from [mm/dd/yyyy] to [mm/dd/yyyy].
INTERPRETATION REQUESTED
Despite your activities on the [Company]’s Platform ended in [mm/yyyy], you would like to know how the new digital economy rules apply to your supplies as a GST/HST registered supplier of short-term accommodation located in Canada.
INTERPRETATION GIVEN
The CRA is responsible for administering the ETA, which governs the application of the GST/HST. The ETA generally requires every registrant making a taxable supply in Canada to collect the GST/HST from the purchaser and remit it to the CRA. The ETA was amended, effective July 1, 2021, to include GST/HST provisions that generally apply to non-resident suppliers, distribution platform operators and accommodation platform operators that participate in the digital economy.
Registered supplier of short-term accommodation
Under the new digital economy provisions and more specifically pursuant to subsection 211.13(3), where an accommodation platform operator (Footnote 2), registered for GST/HST under the simplified registration regime (Footnote 3), facilitates the making of supplies of short-term accommodation (Footnote 4) located in Canada through its accommodation platform (Footnote 5), on behalf of non-registered suppliers (i.e. hosts), and where the recipients (i.e. guests) of short-term accommodation did not provide evidence satisfactory to the Minister that they are registered under the regular GST/HST registration regime, the accommodation platform operator is considered to be the supplier of the short-term accommodation. In such circumstances, the accommodation platform operator registered under the simplified regime is required to charge, collect and remit the GST/HST on those supplies it facilitated.
However, GST/HST registered suppliers that are making taxable supplies of short-term accommodation located in Canada through an accommodation platform continue to be responsible for charging, collecting and remitting the GST/HST on those supplies. Also, registered suppliers should ensure that they have communicated their GST/HST registration number to the accommodation platform operator and ensure appropriate collection and remittance of GST/HST on their supplies of short-term accommodation.
Services in relation to the supply of short-term accommodation
Subsection 211.14(1) provides a special place of supply rule that deems a supply made in Canada by a person that is registered under the simplified GST/HST registration regime (Footnote 6), provided certain conditions are met. Specifically, where a person is registered under the simplified GST/HST registration regime, specified supplies made to specified Canadian recipients are deemed to be made in Canada in accordance with subsection 211.14(1). As a result, such suppliers are required to account for tax on such supplies made to such specified Canadian recipients in accordance with sections 165 and 221.
A “specified supply” is defined in subsection 211.1(1), in part, as “a taxable supply of intangible personal property or a service”.
Furthermore and pursuant to subsection 211.1(1), a “specified Canadian recipient” means a recipient of a supply where the recipient has not provided to the supplier evidence satisfactory to the Minister of National Revenue of being registered for the GST/HST under Subdivision D of Division V of Part IX of the ETA (i.e., the regular GST/HST registration regime) and the usual place of residence of the recipient is situated in Canada.
In summary, a person that is registered under the simplified GST/HST registration regime would be required to charge, collect and remit the GST/HST on specified supplies made to specified Canadian recipients pursuant to subsection 211.14(1).
However, where a person that is registered under the simplified GST/HST registration regime makes a specified supply to a recipient that is registered under the regular GST/HST registration regime, such person would not be required to charge and collect the GST/HST on the supply. This is because the supply is not made to a specified Canadian recipient pursuant to that definition in subsection 211.1(1) referenced above.
In this case, a supply of the […] Service (a service fee for using the platform to supply the short-term accommodation) would generally meet the definition of a specified supply (a supply of either a service or IPP) pursuant to subsection 211.1(1). However, since you are registered for GST/HST purposes under the regular GST/HST registration regime, this would not satisfy the definition of a specified Canadian recipient. Therefore, subsection 211.14 (1) would not apply in cases where the […] Service is supplied to you as a GST/HST registered recipient under the regular GST/HST registration regime. Such supply would generally be considered to be made outside of Canada and as a result, would not be subject to GST/HST pursuant to subsection 143(1).
For more information on the new digital economy rules, please visit our website at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy.html
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-706-8742.
Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Teresa Lau
Senior Rulings Officer
Digital Economy Unit
General Operations and Border Issues Division
GST/HST Rulings Directorate
FOOTNOTES
1 [Company] is registered for GST/HST purposes under the simplified GST/HST registration regime, effective [mm/dd/yyyy]. According to subsection 211.12(12) ETA, the CRA must publicly disclose information about persons, including businesses that have registered for the simplified GST/HST, including their name and registration number. For more information, please consult the registry for simplified registered suppliers at: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy-gsthst/confirming-simplified-gst-hst-account-number.html.
2 Under subsection 211.1(1), an “Accommodation Platform Operator” is defined as a person (other than the supplier of the short-term accommodation) that controls or sets the essential elements of the transaction between a supplier of short-term accommodation and the recipient, or if no such person exists, it would be a person that is involved, directly or through arrangements with third parties, in collecting, receiving or charging the consideration for the supply of short-term accommodation and transmitting that consideration to said supplier.
3 [Company] is registered for GST/HST purposes under the simplified GST/HST registration regime. For more information, please consult the registry for simplified registered suppliers at : https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy-gsthst/confirming-simplified-gst-hst-account-number.html.
4 Under subsection 123(1), a “Short-term accommodation” is defined as a residential complex or a residential unit that is supplied to a recipient by way of lease, licence or similar arrangement for the purpose of its occupancy by an individual as a place of residence or lodging, if the period throughout which the individual is given continuous occupancy of the complex or unit is less than one month.
5 Pursuant to subsection 211.1(1), an “Accommodation Platform” is defined as a digital platform through which a person facilitates the making of supplies of short-term accommodation situated in Canada by another person that is not registered under the regular GST/HST.
6 Op. cit. note 3.
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