REGULATORY FRAMEWORK
The Issue
There has been a proliferation in the short-term rental (STR) market with varying impacts on long-term rental availability in different communities. The rise in popularity of the short-term-rental industry has contributed to a loss of long-term rental housing stock, the rise in rental rates, negative impact of neighbourhoods, property damage and crime, as well as contributing to a housing shortage. Many communities, especially resort communities, have been blindsided by this sudden rise in popularity of property sharing platforms like Airbnb and VRBO, and are now witnessing the disappearance of long-term rental housing stock.
Many communities are slowly starting to implement short-term rental regulations and new bylaws. However, changes to bylaws and regulations need enforceability to monitor or enforce the newly instated regulations.
Many communities are slowly starting to implement short-term rental regulations and new bylaws. However, changes to bylaws and regulations need enforceability to monitor or enforce the newly instated regulations.
bcha poSITION
It is the BCHA’s position to ensure strict STR regulations are maintained in communities where they are already established and to encourage other communities, through various lobbying efforts, to adopt the same regulations in turn.
The BCHA recommends that:
The BCHA recommends that:
- Communities impose tight regulations on short-term rentals to mitigate the loss of long-term housing stock and, to prevent seasonal workers from being deprived of housing. Many communities around British Columbia have adopted a wait-and-see position to see what other neighbours in their districts are doing.
- Communities emanate the successful implementation of strict STR criteria and regulations like other towns and cities, which will ensure that the province will have a balanced rental market that protects the long-term rental housing stock as well as making allowances for other lodging options.
- A strategic evaluation is done by our partners at McGill University, with a best practise recommendation to UBCM, and the Minster of Municipal Affairs for policy revision and enforcement best practises. 2022 will see the research culminates in a report which will provide UBCM, the Minister of Municipal Affairs and BC Housing much needed research, data and policy best practise to support regulators reform.
WHERE IT'S WORKING
Through the efforts of the BCHA, new bylaws to allow and regulate short-term rentals in Kelowna are now in effect and anyone operating a short-term rental must apply for and be issued a business licence by July 1, 2019. Under the new rules, a homeowner or primary resident can legally rent their principal residence for periods of 29 days or less. Select tourist areas will continue to allow short-term rentals outside of an operator’s principal residence. The BCHA will continue to work with other municipalities to implement similar bylaws.
TAXATION
The Issue
The Auditor General of Canada released the 2019 Spring Reports, including a report on Taxation of E-Commerce. According to the report, the Canadian sales tax system did not keep pace with the rapidly evolving digital marketplace, with estimated losses of $169 million in sales tax revenues on foreign digital products and services.
Digital platforms like Netflix, Airbnb, and Uber operate in Canada earning millions of dollars from Canadian consumers without any contributions to the federal treasury. Commercial operators, those renting multiple units or entire homes on platforms like Airbnb, operate like hotels without the same responsibilities to taxation, such as hotels do. All digital platforms need to comply with Canadian tax laws if they operate in Canada even without a substantial physical presence in the country.
On October 1, 2018, the provincial government reached a taxation agreement with Airbnb, requiring the company to collect 8% provincial sales tax (PST) and up-to-3% municipal and regional district tax (MRDT) on short-term accommodations provided in British Columbia through its platform. http://www.hotelassociation.ca/taxfairness/
Digital platforms like Netflix, Airbnb, and Uber operate in Canada earning millions of dollars from Canadian consumers without any contributions to the federal treasury. Commercial operators, those renting multiple units or entire homes on platforms like Airbnb, operate like hotels without the same responsibilities to taxation, such as hotels do. All digital platforms need to comply with Canadian tax laws if they operate in Canada even without a substantial physical presence in the country.
On October 1, 2018, the provincial government reached a taxation agreement with Airbnb, requiring the company to collect 8% provincial sales tax (PST) and up-to-3% municipal and regional district tax (MRDT) on short-term accommodations provided in British Columbia through its platform. http://www.hotelassociation.ca/taxfairness/
BCHA POSITION
The BCHA is calling on the federal government to modernize its tax laws and take action to address tax avoidance in the digital economy and ensure all corporations that operate in Canada through a digital presence pay corporate income tax on Canadian earnings. This Fair Tax was achieved as of July 1, 2022, implementation at the federal level will begin. Provincially, all STR OTA platforms need to be added to the provincial MRDT and PST collection to support affordable housing.
The BCHA recommends amending the Excise Tax Act to:
The Federal Government should amend the Income Tax Act to require short-term rental platform companies to issue an annual information slip on gross earnings to hosts and implement an information and enforcement program through the Canada Revenue Agency to encourage voluntary compliance for the short-term rental industry.
The BCHA will continue to work with the Hotel Association of Canada on lobbying efforts to change the taxation laws in Canada.
The BCHA will also work with the provincial government to ensure that, like Airbnb, VRBO and Home and Away are also subject to the same PST and MRDT requirements, and that these corporations also remit PST and MRDT.
The BCHA recommends amending the Excise Tax Act to:
- Require short-term rental platform companies operating in Canada to charge GST/HST to hosts and guests on all fees, and
- Eliminate the use of the small-supplier threshold for short-term rental accommodations.
- Illuminate ghost hotels and large commercial STR operators posing as small businesses, commercial tax, insurance and policy must be developed.
The Federal Government should amend the Income Tax Act to require short-term rental platform companies to issue an annual information slip on gross earnings to hosts and implement an information and enforcement program through the Canada Revenue Agency to encourage voluntary compliance for the short-term rental industry.
The BCHA will continue to work with the Hotel Association of Canada on lobbying efforts to change the taxation laws in Canada.
The BCHA will also work with the provincial government to ensure that, like Airbnb, VRBO and Home and Away are also subject to the same PST and MRDT requirements, and that these corporations also remit PST and MRDT.
