tax alert

Update: BC PST and MRDT on short-term accommodation

Changes effective October 1, 2018

Effective October 1, 2018, there are changes in BC to the application of BC Provincial Sales Tax (PST) and Municipal and Regional District Tax (MRDT) to short-term accommodation. These changes are aimed at discouraging property owners from renting for shorter periods—and consequently driving up stock in the long-term accommodation market while driving rental prices down. 

If you provide accommodation in BC, you must be registered to collect PST and MRDT, if applicable, unless you

  • sell only exempt accommodation (e.g. typically long-term rental accommodation), or  
  • only list your accommodation on an online accommodation platform that itself is registered to collect PST and MRDT.

An “online accommodation platform” is an online marketplace that caters to the short-term accommodation industry, and facilitates transactions for accommodation located in BC, such as AirBnB and VRBO. Online systems that do not collect payment on behalf of the person offering the accommodation do not meet the criteria to be an “online accommodation platform” for the purposes of PST and MRDT, such as Craigslist or Kijiji.

Certain exemptions that will apply and certain exemptions that will be eliminated effective October 1, 2018

  • There is an exemption for accommodation providers who do not list on an online accommodation platform if their related gross revenue is less than $2,500 in the previous 12 months, and gross revenue in the next 12 months is also estimated to be less than $2,500.
  • There is an exemption for accommodation provided for a continuous period of 27 days or more (previously the exemption stated “more than one month”).
  • Previously there was an exemption if the charge for the accommodation was less than $30 per day ($210 per week). This exemption is now eliminated for properties listed on an online accommodation platform.
  • The previous exemption that was available to a person who offered fewer than four units of accommodation has been eliminated. This means that, unless a person provides only exempt accommodation (27 days or greater) or only lists their accommodation on an online accommodation platform that is registered to collect PST and MRDT, they will be required to register

There are some important transitional measures to be aware of. If a person provided accommodation (e.g. has a binding agreement with a customer):

Transitional rules

  • prior to October 1, 2018, that has been paid in full
    • the old rules will apply regardless of the dates of stay.
  • that straddles the transition date,
    • the old rules apply.
  • on or after October 1, 2018,
    • the new rules apply.

The province of BC has issued a Bulletin PST 120 which discusses the above changes in greater detail.

Please contact one of our firm’s sales tax specialists if you have any questions about the application of these rules.