Do you have to charge HST for your AirBnB? You may be surprised!

Tuesday May 21st, 2019

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QUITE A SURPRISE FOR ME THIS YEAR!  The answer for ME was YES!   

I have an airBnB in Schomberg, Ontario.  My accountant non-challantly asked me, "Shouldn't you be charging hst on your AirBnB?"    My first response was, "Nnnooooooo......"    Of course a long weekend immediately followed this panic comment,  and I spent hours reading everything on-line I could find.  How could it be that every time I ever rented an AirBnb, there was no tax?   This must be wrong!

Very simply put, here's the bad news:  If you have a short-term rental and earn more than $30,000 gross, annually, from ALL SOURCES of business income, then yes, you do have to charge HST!   The difference between me and others was just that, I had two other self-employed business incomes and have been an HST registrant for years, while most people are not otherwise self-employed.

So, now what?  The problem with AirBnB is, they have no way of showing our added tax, and have suggested that I collect the additional tax in person when my guests arrive.   What????  You must be kidding. That didn't sound like something i'd like to do, so i've opted to increase my daily price, and will extract the HST on my own.  This is also not great, because now my price is less appealing.  Lose-lose for me.   On the upside, any HST spent on items such as cleaning supplies, bed sheets, towels, etc., can become "income tax credits" that help lower the HST that has to be remitted.    The quarterly return will include all sources of HST together.   

Another huge warning here!  (and this is from the realtor in me)... if you claim the hst on "capital expenses", there could be a huge tax implication when you go sell your home!   Please speak to your accountant about what constitutes a "capital expense"  (generally, things that improve the property, like renovations).  

Follow this link for more information on the HR block site...   

https://www.hrblock.ca/wp-content/uploads/2017/02/Airbnb_GST-HST-EN-V3_FINAL.pdf


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