Owners of short-term rental properties should be aware of changes that will affect them starting Oct. 1.
Changes made to the Provincial Sales Tax Act announced in July impact how the municipal and regional district tax (MRDT) and provincial sales tax (PST) apply to short-term rentals.
Now anyone who sells short-term rentals must collect PST and MRDT (in applicable areas like Sun Peaks).
Previously property owners renting out fewer than four properties were not required to charge PST. Some were required to charge the general sales tax.
The change more than doubles the amount of tax charged to visitors. The PST is eight per cent and in Sun Peaks the MRDT is set at three per cent.
The only exemptions are if properties are not listed online and make less than $2,500 in gross revenue, for low cost accomodation less than $30 per day, or accommodation that is continues for 27 days or more.
Matt Hick, chief executive officer of vacation rental site Allura Direct, said owners should be aware of the addition.
“All short-term rentals in B.C. now must charge PST and MRDT when possible,” he said. “Everyone needs to know the requirement as of October first…this is one of the largest changes in short-term rentals ever.”
Hick said if an owner’s property is listed exclusively on a website that collects and remits tax on their behalf, and nowhere else, they will see little change.
But anyone who rents it themselves or who doesn’t list with a platform that collects on their behalf, must register for a PST number and collect the tax themselves.
He estimated around half of Allura Direct properties will be affected and around 75 per cent on larger global platforms. It’s estimated if AirBnB collected PST in 2017 it would have brought in $16 million.
Guests who have already booked their accommodation won’t notice a difference until they book for their next stay after Oct. 1.
Because of this, Hick said, the impact of the decision won’t be clear for a while.
“It’s unknown, there is a very large demand for those resorts right now…my guess is more tax and higher prices can’t be good but you won’t see any negative trends for the next 18 months because people have already booked.”
Stephanie Avery, director of finance and administration for Tourism Sun Peaks (TSP), said it’s hard to say what the long term impacts could be but there likely won’t be a huge impact.
TSP members who need to register were informed earlier this year and booking systems have been updated.
Arlene Schieven, TSP president, said she doesn’t think guests or providers will notice much difference.
“It’s just making it an even playing field,” she said. “And it’s the same difference everywhere so it’s not just an impact on Sun Peaks.”