The Canadian Bar Association
Tax

Gov't starting to tax shared economy at consumer level

The Quebec government’s recent agreement with Airbnb that allows the online hospitality service to collect and remit the tax on lodging on behalf of hosts represents the first time a province has directly taxed the shared economy at the consumer level, Canadian tax lawyer David J. Rotfleisch tells The Lawyer’s Daily.

As the article notes, starting Oct. 1, Airbnb — the online community marketplace that provides access to lodging listings in 191 countries — will automatically collect and remit the 3.5 per cent tax on lodging bookings made in Quebec.

Airbnb figures show that there are 22,300 active Airbnb hosts in Quebec, with nearly one million guest arrivals. Total collected taxes in 2016 would have represented $3.7 million for the province, according to Airbnb.

Rotfleisch, founding tax lawyer at Rotfleisch & Samulovitch Professional Corporation, tells The Lawyer's Daily that both the federal and provincial governments are starting to tax the shared economy at the consumer level. The federal government, he says, recently amended rules on HST to apply to ride-sharing apps such as Uber and Lyft.

How to levy tax on the shared economy has been a source of conversation for some time, Rotfleisch explains.

“There was no simple way to do it. The basic rule is if you bill less than $30,000, you’re not subject to HST,” says Rotfleisch.

“If you do this part time you’re not going to hit that threshold. By moving it one level up to the host company it becomes very easy to get the tax from a collections and enforcement point of view.”

Quebec’s agreement with Airbnb provides “clear indications” that governments are thinking outside the box and finding new ways to generate the tax that is owing to them, says Rotfleisch.

“All levels of government are recognizing that the shared economy is becoming a more significant part of our economy,” he says.

“And they want to get their fair share of it.”

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