Accommodation

• This Guide provides tax information to help vendors of accommodations understand how Retail Sales Tax (RST) applies to their businesses. Note that this Guide replaces the previous version dated August 2006.
• For general RST information that applies to all businesses, such as registration for vendor permits, general exemptions, and how to charge and collect tax, see Small Business Pointer 901 – The Basics of Retail Sales Tax.

Transient Accommodation

Transient accommodation is subject to RST at the rate of 5 per cent.

The length of a "month" depends on the number of days in the month when the lodging begins. For example, a person who arrives in April and lodges for more than 30 consecutive days has stayed for one month or more for RST purposes, since April has 30 days.

Taxable Accommodations

Accommodation Arranged by Third Party

Some companies, such as airlines, arrange transient accommodation for their employees or others. There are two ways this accommodation may be arranged:

1. A lodging establishment may set aside specific rooms for the company’s use for continuous periods of one month or more. The rooms are available for the company’s use whether or not the rooms are occupied during the period. RST does not apply to the charges made to the company for these rooms, provided each period is for a month or more.
   
2. A lodging establishment may agree to make a certain number of rooms available for the company’s use. Specific rooms are not set aside for that purpose but are randomly assigned from the rooms available in the lodging establishment when an individual arrives. If a room is occupied for a continuous period of less than one month, RST is payable on the accommodation charges even if the company is billed by the lodging establishment on a monthly basis and the total stays exceeds one month.

American Plan

If a vendor offers meals and accommodation for one price under an American or modified American plan, 5 per cent RST must be added to the total charge. For a stay of a month or more, tax does not apply to the value of accommodation but does apply at 8 per cent to the value of meals.

Camps

Some camps offer counseling, instruction, and recreation together with accommodation and meals. For a stay of less than a month, Retail Sales Tax (RST) applies at the rate of 5 per cent multiplied by 60 per cent of the total charge for meals and accommodation. For a stay of a month or more, RST of 8 per cent applies only to meals.

Camps Operated by Registered Charities

• Camps run by religious, charitable, and benevolent organizations must charge RST in the same way as commercial camps. If the camps are run by these organizations for disadvantaged persons, such as persons with disabilities and persons who are underprivileged, the organizations are not required to charge RST on meals or on transient accommodation.

Tents

• Accommodation or lodging in tents is not considered transient accommodation. Where a camp operator provides lodging in tents together with meals, 8 per cent RST is payable only on the meals. If the charges for the meals are not identified separately, RST at 8 per cent may apply to the total charge.

All-Inclusive Vacation Packages

Vendors providing all-inclusive vacation packages or tours, such as canoeing, kayaking or other adventure type tours, should separate taxable components from non-taxable components when invoicing their customers. Tax rates applicable to items in the package may include:

• accommodation – 5 per cent
• meals – 8 per cent
• alcohol – 10 per cent
• admissions – 10 per cent

Master Circulation Sheet

Vendors may use a master calculation sheet to calculate RST on all-inclusive packages. The master calculation sheet method would be set up as follows, showing each of the package plans and prices:

1. For each package and price on the master sheet, the vendor must::

• list the components of the package (i.e. accommodation, boat, motor, etc.)
• show the amount charged for each component (as part of the package price), and
• calculate the appropriate RST owing on each component based on the appropriate tax rate.

2. When a customer picks a particular vacation package, the customer’s invoice would show the package price and only the total RST owing on the package taken from the master sheet.
   
3. The master calculation sheet must be retained in the vendor’s records.
   
4. The master calculation sheet must be made available for view by any customer who might 4. request a detailed breakdown of how RST was charged on a package.
   
5. Regardless of whether the package prices are in US or Canadian dollars, the vendor must ensure RST owing is shown in Canadian dollars (and is based on Canadian prices).

Gratuity Charges

Vendors in the accommodation industry that add a mandatory service or gratuity charge to their bill must charge Retail Sales Tax (RST) at the rate of 5 per cent on the total charge (room and gratuity) even if gratuity is shown separately.

Non-Taxable Accommodation

Time-Sharing Arrangements

Time-sharing arrangements refer to the right to use resort or hotel accommodation for a stated time period annually. Contracts may be for the lifetime of the owner or for a specified number of years. These arrangements are not considered transient accommodation and are not subject to RST.

"No Show" Charges

No RST is payable on "no show" charges which may be charged to customers who have guaranteed reservations, but do not show up. This amount is generally based on the charge for the category of the room guaranteed.

Exempt Accommodation

Tax-exempt accommodation includes:

• accommodation for students in educational institutions, patients in hospitals or nursing homes, residents in homes for the aged, and employees of such institutions
• accommodation where the charge for lodging is $10 or less per day or $70 or less per week
• continuous accommodation for one month or more
• tent or trailer sites at campsites or trailer parks
• use of rooms without sleeping accommodation in lodging establishments, such as dining halls, meeting rooms, and entertainment halls.

Establishments are not required to charge RST if there are fewer than four rooms, suites, apartments, cottages, or cabins set aside for lodgers or tenants. This would include bed and breakfast establishments.

Purchases by Vendors

Equipment

Vendors may purchase recreational equipment tax-exempt for sale or rent to customers. To obtain the exemption, they must provide their supplier with a valid Purchase Exemption Certificate. For more information, see RST Guide 204 - Purchase Exemption Certificates.

Vendors must pay RST on items purchased for their own use, such as boats for personal use or to be provided with an operator. For more information, see RST Guide 502 - Rentals.

Disposable/Complimentary Items and Services

RST must be paid by the vendor on disposable and complimentary items that are provided and/or used free of charge to guests. The following are examples of such disposable and complimentary items:

• bar soaps or liquid soaps
• facial tissue and toilet tissue
• paper laundry bags, shoe shiners, irons and ironing boards
• sewing kits, matches and disposable combs
• shower caps and paper bath mats
• toilet seat strips, sanitary covers for glasses and sani bags.

Calculating RST

Retail Sales Tax (RST) is payable by the vendor on the cost of meals, alcoholic beverages or transient accommodation provided free of charge to anyone (e.g. customers, entertainers or family members).

RST may be calculated on actual costs if records are kept to support the figures used, or costs may be estimated as:

• 8 per cent multiplied by 60 per cent of the regular selling price for meals that cost more than $4
• 12 per cent multiplied by 50 per cent of the regular selling price for alcoholic beverages
• 5 per cent multiplied by 40 per cent of the regular rate for transient accommodation

Telecommunication Services

For RST purposes, hotels, motels, apartments, and condos are not considered to be resellers of telecommunication services. If customers are billed for telephone calls made or for pay television, etc., these businesses are not required to charge RST provided the telecommunication services are shown separately on the billing to the customer. RST is to be paid by these businesses on telecommunication services they purchase from carriers or resellers and on equipment purchased to provide these services.

Sales by Vendors

The following are examples of other taxable and non-taxable goods and services that may be provided by vendors:

Goods & Services Taxable at 8 per cent

• bait (live or artificial)
• boats, motors, repair parts and repair labour for same
• boat rentals without an operator
• maps
• meals (including coffee, tea, milk or juice) on the full amount of the charge if it is more than $4.00
• motor oil
• outboard motor rental
• snack foods, candy, confections
• rental of recreational equipment

Goods & Services Taxable at Special Rates

Gas and oil (premixed by vendor):

• 22:1 to 50:1 (gas to oil mix) is taxable @ 4 cents/gallon or 1 cent/litre
• 16:1 to 20:1 (gas to oil mix) is taxable @ 7 cents/gallon or 1½ cents/litre

Non-taxable Goods and Services

• boat launching
• boats rented with an operator
• camp and/or trailer site
• freezer service
• gas and oil (premixed by manufacturer)
• gasoline (without oil)
• licences
• services of a guide
• wharfage

More Information

Telephone

• 1 866 ONT-TAXS (1 866 668-8297)
• Teletypewriter (TTY) 1 800 263-7776

Written Interpretation

To obtain a written interpretation on a specific situation not addressed in this publication, please send your request in writing to:

Ministry of Revenue
Tax Advisory Services Branch
Retail Sales Tax Section
33 King Street West, 3rd Floor
Oshawa ON L1H 8H5

Disclaimer and References

The information contained in this publication is provided only as a guideline and is not intended to replace the legislation.

Legislative References

• Retail Sales Tax Act, Section 1
• Regulation 1012 under the Act, Section 1 and 5
• Regulation 1013 under the Act, Section 1

© Queen's Printer for Ontario, 2009