Billing the Tax on Lodging, GST and QST — Rentals Made Through a Digital Accommodation Platform

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If an accommodation unit is billed through a digital accommodation platform, special rules govern how the goods and services tax (GST), the Québec sales tax (QST) and the tax on lodging are calculated and collected.

Payment in full made to an operator of a digital accommodation platform registered for the tax on lodging

Tax on lodging

Normally, the operator of the sleeping accommodation establishment must collect, report and remit the tax on lodging. However, when an accommodation unit offered by the operator of a sleeping-accomodation establishment is rented through a digital accommodation platform operated by a person who is registered for the tax on lodging and it is this person who receives all the amounts paid by the renter as consideration for the rental, this person must collect, report and remit to us the tax on lodging.

The tax on lodging is calculated on the price of the overnight stay only, regardless of what other goods and services might be included in the total amount billed or billed separately to the client. For example, the cost of breakfast and parking is excluded when calculating the tax on lodging.

Example of how to calculate the tax on lodging when payment in full is made to the digital accommodation platform operator registered for the tax on lodging

A hotel operator sells a package including two overnight stays, breakfasts and parking. The transaction is made through a digital accommodation platform operated by a person registered for the tax on lodging. The client pays the entire amount of the package to the platform operator.

The platform operator must calculate the tax on lodging on the price of the two overnight stays.

Total price of the rental made through the platform
Amount for two overnight stays $220.00
Parking fee $30.00
Service fee paid to platform operator $10.00
Breakfast (value: $20) Included
Total $260.00
Calculating the tax on lodging
Amount for two overnight stays ($220 – $20 [value of breakfast]) $200.00
Tax rate 3.5%
Amount of the tax the platform operator collects $7.00

GST and QST

If the operator of the sleeping-accommodation establishment is registered for the GST and QST, these taxes apply on:

  • the price of all the taxable sales made by the operator of the establishment;
  • the amount of the tax on lodging to be paid by the client to the operator of the digital accommodation platform.

The operator of the sleeping-accommodation establishment remains responsible for reporting the GST and QST and remitting the amounts to us, even if the client pays the rental cost to the operator of the digital accommodation platform.

Note

The operator of the sleeping-accommodation establishment must also report and remit the GST and QST calculated on the amount including the tax on lodging, even if the tax on lodging is reported and remitted by the operator of the digital accommodation platform

Example of how to calculate the GST and QST when payment in full is made to the digital accommodation platform operator registered for the tax on lodging

A hotel operator sells a package including two overnight stays, breakfasts and parking. The transaction is made through a digital accommodation platform operated by a person registered for the tax on lodging. The client pays the entire amount of the package to the platform operator.

The hotel operator must calculate and collect the GST and QST on the cost of the taxable supplies including the tax on lodging.

Calculating the GST and QST on supplies made by the hotel operator
Amount for two overnight stays $220.00
Parking fee $30.00
Breakfast (value: $20) Included
Sub-total $250.00
Amount of the tax on lodging to be collected by the operator of the digital accommodation platform $7.00
Sub-total $257.00
Amount of the GST collected by the hotel operator (5% x $257) $12.85
Amount of the QST collected by the hotel operator (9.975% x $257) $25.64

Payment split between the operator of a digital accommodation platform operator that is registered for the tax on lodging and the operator of the sleeping-accommodation establishment

Tax on lodging

The tax on lodging must be collected, reported and remitted by the operator of either the sleeping-accomodation establishment or the digital platform that is registered for the tax and receives an amount as consideration for the rental of a sleeping-accommodation unit. If part of the payment is paid to the operator of the sleeping-accommodation establishment and part is paid to the operator of the digital accommodation platform, the tax on lodging must be calculated and collected on the amount received by each of these two parties.

Example of how to calculate the tax on lodging when payment is split between the operator of a digital accommodation platform that is registered for the tax on lodging and the operator of a sleeping-accommodation unit

A hotel operator and an operator of a digital accommodation platform each receive an amount from a client for the rental of one and the same sleeping-accommodation unit. The platform operator receives 30% of the total amount, while the hotel operator receives 70%.

Each party must calculate the tax on lodging on the portion of the total price of the overnight stay received.

Total price of the rental made through a digital platform
Amount for two overnight stays $220.00
Parking fees $30.00
Service fee paid to platform operator $10.00
Breakfast (value: $20) Included
Total $260.00
Payment breakdown
Service fee paid to platform operator $10.00
Amount paid to the platform operator (30% x $250) $75.00
Amount paid to the hotel operator (70% x $250) $175.00
Total $260.00
Calculating the tax on lodging
Amount for two overnight stays ($220 - $20 [value of the breakfast]) $200.00
Tax rate 3.5%
Tax amount $7.00
Collecting, reporting and remitting the tax on lodging
Platform operator (30% x $7) $2.10
Hotel operator (70% x $7) $4.90
Tax amount $7.00

GST and QST

Even in split-payment situations such as the one described above, the operator of the sleeping-accommodation establishment remains responsible for remitting to us the GST and QST collected on supplies made. For more information, see the Example of how to calculate the GST and QST when payment in full is made to the digital accommodation platform operator registered for the tax on lodging.

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