RST Information Notice, May 2005
About this Notice
As announced on May 11, 2005, the Ontario Government has proposed legislation to extend the Retail Sales Tax (RST) exemption available on the Destination Marketing Fee (DMF) charged on transient accommodation, from May 19, 2005 to June 30, 2006. The legislation must be passed by the Legislature and receive Royal Assent to become law.
Background
Transient accommodation is lodging for less than a month in hotels, motels, tourist homes, lodging houses, and similar establishments. In Ontario, a number of these establishments charge a DMF to fund promotional campaigns to boost their municipality's tourism trade. RST applies at a rate of five per cent to the total fair value of the transient accommodation, including the DMF, whether it is included or shown separately from the accommodation charges on the customer's invoice.
As outlined in RST Information Notice, dated December 2004, a temporary exemption was introduced in the 2004 Ontario Budget to exempt from RST, DMFs billed on or after May 19, 2004 and before May 19, 2005. This recent announcement extends the exemption on DMF charges to June 30, 2006.
Conditions for Temporary Exemption
DMFs billed after May 18, 2004 and on or before June 30, 2006 would be exempt from RST, provided all of the following conditions are satisfied:
- the fee is forwarded by the vendor to a non-profit agency to be used for the exclusive purpose of promoting tourism in Ontario or the municipality in which the accommodation is located
- the fee is shown as a separate item on the purchaser's invoice or receipt
- the fee does not exceed three per cent of the fair value of the accommodation
- the fee must be labelled on the purchaser's invoice or receipt as "Destination Marketing Fee".
Exclusions
The temporary exemption from RST for the DMF applies only to transient accommodation and does not extend to food, beverage or other types of travelrelated charges (e.g., admissions).
Combination Packages
Where a customer purchases a combination package that includes accommodation and meals for one price, the DMF will be exempt from RST only if the DMF portion (related to the transient accommodation) is listed separately on the customer's invoice or receipt and the DMF qualifies for the exemption from RST, as outlined above.
For More Information
For more information, please contact the nearest Ontario Ministry of Revenue Tax Office listed under Taxes - Provincial (Retail) Sales Tax in the blue pages of your telephone directory, or visit our website at ontario.ca/revenue.
© Queen's Printer for Ontario, 2005
ISBN 0-7794-8069-4
