New Province of B.C. Rental Taxes Starting October 1st, 2018.
The Province of B.C. where we live and where our short term rental condo is located on October 1, 2018 implemented an 8% Provincial Sales Tax (PST) and 3% Victoria Municipality and Regional District Tax (MRDT) on short term rentals for periods less than 27 days. These taxes are already collected from travellers for rooms booked in hotels, bed and breakfasts, hostels and other accommodation in B.C. As well we will have to collect the Federal Government’s 5% Goods and Service Tax (GST). This makes a total of 11% taxes on top of the rental amount plus the embedded 5% GST for a total of 16% taxes.. We have included the GST in our base price as the booking sites have no way to collect this so it does not show up as an additional charge on your booking as we absorb this cost. We do remit the GST amounts to the Federal Government.
The attempt is to level the playing field so all people using short term rental accommodation in B.C. pay the same taxes as those staying in hotels, motels, etc. In the past this only applied to hosts with 4 or more rental units but now the government has removed that exemption and the taxes will be charged on all rental accommodations including our Pandora short term rental condo downtown. The provincial government expects the taxes to generate $16 million per year.
As this does not apply to rentals that are 27 days or more, we will not be required to collect the taxes on our two Pearl House mid term rental suites and our long term unfurnished rentals.
Our Collection Policy
Rosemary and I will be complying with this legislation by the B.C. government as we have no legal options to not collect the taxes. This tax will be added to the fees charged for our short term rental accommodation only. The provincial government already has an agreement with Airbnb (one of our booking sites) to collect the tax at source. This means we do not expect to collect the taxes nor remit them ourselves, but rather, Airbnb will collect the taxes and remit them directly to the provincial government. At the time of writing this, the VRBO/HomeAway site which is our other online booking site has not notified us whether they will collect this tax or not. Nevertheless, we will have to collect this in the booking amounts as an additional fee and will remit them to the provincial government until VRBO arranges to handle it directly. If you book on our own website we will collect the PST and MRDT taxes.
We are really sorry this is happening as it adds another cost for travellers. Despite this tax most of our clients will agree that they get great value and superior accommodation as compared to the local hotels.
A Word of Caution
Some short term rental people may neither register for the taxes nor collect the taxes. Please note this is illegal and eventually these operators will be found and fined and eventually put out of business if they do not comply.
Rosemary and I do not operate that way at all. We do everything legally, and operate a short term rental that’s permitted both according to the building bylaws and the area zoning. Annually we purchase an expensive business license with the City of Victoria, submit all taxes, report all income on our rentals and pay the appropriate additional income taxes.
We will do our best to mitigate additional charges to our guests and will continue to provide 5-star accommodation and service to all our guests.
What You Can Do To Offset Taxes - Book Directly On Our Site
VRBO and Airbnb (and most of the other online booking sites) charge both the guests and us a 4-10% service fee. We do not charge booking service fees to people who book directly on our site. So if this is a return visit or you know someone coming to Victoria who needs either our short term rental or one of our mid term rentals then kindly point them to our website to do their booking.
Thank you for your understanding.
Gary and Rosemary
September 18, 2018