Billing the 3.5% Tax on Lodging
You must calculate the 3.5% tax only on the price of an overnight stay, regardless of anything that is supplied with the sleeping accommodation and regardless of whether such supplies are included in the price. For example, the value of breakfast, parking and any other property or services supplied with the sleeping-accommodation unit is excluded from the price on which the 3.5% tax is calculated.
In calculating the tax, only fractions of tax equal to or greater than $0.005 are rounded off to $0.01.
On the written record of the rental, you must indicate the 3.5% tax on lodging in one of the following ways:
- If you list the price of an overnight stay separately from the other property and services supplied, you can:
- list the price and the amount of the tax separately, or
- indicate that the price includes the 3.5% tax on lodging
- If you do not list the price of an overnight stay separately from the other property and services supplied, you must list the amount of the tax separately and identify it as the 3.5% tax on lodging.
GST and QST registrants
If you are registered for the GST and the QST, you must calculate these taxes on the total including the price of the overnight stay, the tax on lodging and the price of any property or services supplied along with the sleeping accommodation.
A hotel operator rents out a room for one night and also supplies parking. There are two ways to indicate the 3.5% tax.
| Total | = | $183.65 |
|---|---|---|
| Room | $135.00 | |
| Parking | + | $20.00 |
| 3.5% tax on lodging ($135 × 3.5%) | + | $4.73 |
| Subtotal | = | $159.73 |
| GST ($159.73 × 5%) | + | $7.99 |
| QST ($159.73 × 9.975%) | + | $15.93 |
| Total | = | $183.65 |
|---|---|---|
| Room (this amount includes the 3.5% tax on lodging) | $139.73 | |
| Parking | + | $20.00 |
| Subtotal | = | $159.73 |
| GST ($159.73 × 5%) | + | $7.99 |
| QST ($159.73 × 9.975%) | + | $15.93 |
A hotel operator sells an overnight accommodation package for two that includes a full-course dinner and breakfast. The 3.5% tax on lodging is calculated on the price of the overnight stay ($150 x 3.5% = $5.25).
| Total | = | $339.18 |
|---|---|---|
| Package (including an amount of $5.25 representing the tax on lodging calculated at 3.5%) | $295.00 | |
| GST ($295.00 × 5%) | + | $14.75 |
| QST ($295.00 × 9.975%) | + | $29.43 |
A room is rented in a bed and breakfast establishment for one night. The 3.5% tax on lodging is calculated on the price of the overnight stay ($85 x 3.5% = $2.98).
| Total | = | $112.65 |
|---|---|---|
| Room and breakfast | $95.00 | |
| 3.5% tax on lodging | + | $2.98 |
| Subtotal | = | $97.98 |
| GST ($97.98 × 5%) | + | $4.90 |
| QST ($97.98 × 9.975%) | + | $9.77 |
GST and QST non-registrants
Even if you are not registered for the GST and the QST (because you are a small supplier), you must still collect the tax on lodging. In such cases, simply add the tax to the amount of the rental.
A room is rented in a bed and breakfast establishment for one night. The 3.5% tax on lodging is calculated on the price of the overnight stay ($60.00 x 3.5% = $2.10).
| Total | = | $67.10 |
|---|---|---|
| Room and breakfast | $65.00 | |
| 3.5% tax on lodging | + | $2.10 |
You are not required to bill the 3.5% tax if you supply an accommodation unit free of charge.