Short term rentals – HST implications Posted on Jul 07, 2022

From July 1, 2022, you must collect GST/HST on stays less than one month in duration. That is because
these stays are defined as commercial activity by the Excise Tax Act.
You can qualify for exemption from collection of GST/HST on short term rentals, if you are a small
supplier – total of ALL your commercial activities are less than $30,000 in GROSS sales. Sometimes it is
worthwhile to register voluntarily as it will allow you to claim back the GST/HST on expenses. But once
registered, can’t de-register and then must collect GST/HST, even being a small supplier.
If you convert commercial activity to residential – start renting for long term duration or start using the
home as principal property – change in use occurs. Then need to self assess the GST/HST on the value of
the property at the time of change in use and remit it to the government. Ouch!
If you sell a short-term rental property, need to collect GST/HST on the sale. While it is common to
collect HST on sale of AirB&B properties in some areas (close to resorts etc), it may be less common in
other areas.
Way out of it?
1. Sell to someone who is a GST registrant (then his home purchase will be HST exempt)
2. CRA evaluates commercial vs residential activity using a “time-based calculation”. Hence, to avoid the
property as being regarded as commercial use, you can maintain a long-term rental period on average,
based on time – based calculation.