Airbnb asked Canada for a bailout. Canada slapped Airbnb with a tax.

It’s about to get a lot more expensive to stay at short-term rentals in Canada as Ottawa announced a new tax on Airbnb and other short-term accommodation platforms.

“In order to ensure that the GST/HST applies consistently and effectively with respect to supplies of short-term accommodation in Canada facilitated by platforms, the Government proposes to apply the GST/HST on all supplies of short-term accommodation in Canada facilitated through a digital platform,” according to the federal government’s fiscal update released on Monday by Finance Minister Chrystia Freeland[1]Fall Economic Statement 2020 Supporting Canadians and Fighting COVID-19

Platforms themselves will now be required to collect and remit those taxes in cases where property owners fail to do so.

“In these circumstances, the accommodation platform operator would be deemed to be the supplier of the short-term accommodation,” the update reads. “This approach recognizes their necessary and fundamental role in making these supplies, and limits administrative and compliance costs for the parties involved.”

One reason that short-term rentals have been cheaper than hotels is because hotels had to collect and pay sales tax while Airbnb didn’t.

Provinces or British Columbia, Quebec and Saskatchewan already apply a sales tax on Airbnb accommodation.

The tax will be 15% for short-term accommodation situated in Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland and Labrador, and 13 % in Ontario.

The federal sales tax will be 5% in other provinces and territories.

The tax will also apply to any service fees charged by the Airbnb and other short-term rental platforms.

The tax will come as a major blow to Airbnb, who had asked for the government to bail out the platform’s hosts in April[2]

The Parliamentary Secretary for Housing Adam Vaughan dismissed that request with one word: “No”[3]

References   [ + ]

1. Fall Economic Statement 2020 Supporting Canadians and Fighting COVID-19