First, the CRA stipulates that the long-term rental period of residential housing must be more than 28 days. Short-term rentals such as Airbnb are defined as commercial use, so HST is not exempt. Back to Mr. Deng in our story, the average rental period of the tenants he received was less than 2 weeks, which did not meet the exemption requirements.
In addition to the restrictions on the lease period, you also need to pay attention to the type of services provided and the purpose of the contract. CRA stipulates that any services beyond food and accommodation are not exempt, such as the airport pick-up and drop-off provided by Mr. Deng. At this point, you may ask, why can Ms. Wang, who hosted the young international students at the beginning of the story, be exempted for providing pick-up services? All the services included in the contract issued by Ms. Wang are to ensure the life safety and academic studies of the minor Nana in Canada. When the boarder is a minor under the age of 18 and the services provided are for the purpose of protecting the life safety and academic studies of the boarder, the host family income can be exempted. On the contrary, Mr. Deng provided non-basic services other than food and accommodation to adult tenants, and the contract was of commercial nature, so it would naturally be targeted by the CRA.
Of course, if renting out your own home involves multiple services, there are also many detailed regulations for the HST generated. For example, if you provide additional services such as laundry, can the income tax be exempted? In addition, although food and accommodation are considered basic services that can be exempted, there are also considerations for how to eat. Is there a difference between providing 10 meals and 20 meals a week? Does eating out count? Does it include takeout? I will reveal the answer in the comments section.
