OTTAWA — Yesterday was tax-deadline day and the Hotel Association of Canada (HAC) called on the federal government to take real action to address tax avoidance in the digital space. Despite the rapid growth of out of country digital platforms such as Airbnb, HAC says the government hasn’t taken steps to collect the taxes they should.
“As Canadians across the country file their returns on tax day, it’s important that we look at who isn’t paying taxes,” says Susie Grynol, president of the Hotel Association of Canada. “Online-rental platforms operating in Canada, such as Airbnb, do not currently collect or remit GST/HST, pay no corporate income taxes on their Canadian activity and make it far too easy for those renting rooms on their platforms to do the same.”
She says online-rental platforms have an unfair advantage over other accommodation businesses, such as hotels, which pay taxes and play by the rules. The real loss is felt by Canadians who end up paying more in taxes to cover the cost of Canada’s social programs.
“It’s not acceptable that the federal government has not taken any meaningful action to modernize Canada’s tax laws to deal with the digital economy,” says Grynol. “Further, it is equally unacceptable that Airbnb has not taken a more responsible approach to ensure tax compliance for their commercial hosts.”
A statement by HAC says over the last two years, the commercial side of Airbnb’s business — those renting multi-unit entire homes — grew by 108 per cent. These entire-home rentals generated 83 per cent of Airbnb’s revenues. “Clearly these hosts are running a business through Airbnb, yet the federal government doesn’t require, nor does Airbnb provide, any tax information slips so that revenues can be tracked and tax calculated,” the release reads.
In the U.S., there’s a federal requirement to complete a 1099-K form in order to support tax compliance. In the European Union, value-added taxes are applied and collected at the platform level on the total fee for the booking. Grynol says these measures should be adopted in Canada in order to close current loopholes.
“Other jurisdictions around the world have modernized their tax laws and Canada should follow suit,” she says. “It’s unacceptable that the federal government allows online platforms to avoid tax, while good corporate citizens continue to support jobs, drive economic growth and fund governments.”