First of all, 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 uses, so they are not exempt from the HST. Going back to Mr. Deng in our story, the average rental period of the tenants he receives is less than 2 weeks, which does not meet the exemption requirements.
In addition to restrictions on the lease period, you also need to pay attention to the types of services provided and the purpose of the contract. CRA stipulates that any services beyond food and accommodation are not exempt, such as the round-trip airport transfer provided by Mr. Deng. At this point, you may want to ask, why is Ms. Wang, who receives young international students at the beginning of the story, able to provide pick-up and drop-off services and is exempted? All services included in the contract issued by Ms. Wang are to ensure the life safety and studies of minor Nana in Canada. When the host is a minor under the age of 18 and the services provided are for the purpose of protecting the host’s life safety and studies, the host family’s income can be exempted. On the contrary, Mr. Deng provided non-basic services other than food and accommodation for adult tenants. The contract was of a commercial nature, and he would naturally be targeted by the CRA.
Of course, if renting a home involves multiple services, there are many detailed regulations on the HST generated. For example, if an additional service such as laundry is provided, is the income tax exempt? In addition, although food and accommodation are considered basic services that can be exempted, there are also considerations in how you eat. Is there a difference between providing 10 meals per week versus 20 meals per week? Does eating out count? Does it include takeout? I will reveal the answer in the comment section.
