Municipal Accommodation Tax

• For owners: frequently asked questions
• For visitors: frequently asked questions
• Municipal Accommodation Tax Return Form
• Municipal Accommodation Tax Return Claim
• *NEW Management of Municipal Accommodation Tax (MAT) Funds

Frequently asked questions (FAQ)
For accommodation providers

What types of accommodations are exempted from this tax?

• Accommodations that are rented by the month;

• Lodgings provided to students by a university, college or post-secondary while student is registered and attending the institution;
• Every hospital referred to in the list of hospitals and their grades and classification maintained by the minister of Health and Long-Term Care under the Public Hospitals Act and every private hospital operated under the authority of a licence under the Private Hospitals Act;
• Every long-term care home as defined in subsection 2(1) of the Long-Term Care Homes Act, 2007, retirement home and hospices;

• Every treatment centre that receives provincial aid under the Ministry of Community and Social Services Act;
• Every house of refuge, or lodging for the reformation offenders;
• Every charitable, non-profit philanthropic corporation organized as shelters for the relief of the poor or for emergency;
• Every accommodation used in case of an emergency such as for the evacuees;
• Every tent or trailer sites supplied by a campground, tourist camp or trailer park;
• Every accommodation supplied by employers to their employees in premises operated by the employer; and;
• Every hospitality room in an establishment that does not contain a bed and is used for displaying merchandise, holding meetings, or entertaining.

A traditional Bed & Breakfast operator may apply to the Town for an exemption from the charging and remittance of the Municipal Accommodation Tax, provided that the application sufficiently meets the Town’s eligibility criteria:

1. The Bed & Breakfast establishment meets the definition of the Zoning By-law 5.1.12
2. The Bed & Breakfast establishment is occupied and operated by the property owner, and is classified in the residential property tax class
3. The accommodation purchases are invoiced by the Bed & Breakfast establishment and not by a third-party home-sharing listing entity

Bed & Breakfast operators requesting an exemption to the Municipal Accommodation Tax should contact the Town at krichard@hearst.ca for an exemption application.

Completed applications will be reviewed by the Town for approval, and a formal notification will be provided to Accommodators.  Municipal Accommodation Tax will be required to collect and remit until the exemption has been granted. Renewal requirements of the application for exemption will be communicated later in 2019.

How much is the Municipal Accommodation Tax (MAT), and how is it applied?
The Municipal Accommodation Tax will be at a rate of 2% effective January 1, 2019 and successive increases to 3% and 4% will take place on Januray 1, 2020 and 2021 respectively.  The MAT is only applicable to the room portion of the costs associated to overnight accommodations.  All other revenues generated from the accommodation services; whether sold individually or included in a room package; are excluded from the Municipal Accommodation Tax, including but not limited to, meeting room rental, food and beverage, room service, laundry service, internet access, parking, etc.

If a guest’s stay begins prior to January 1, 2019 and ends after January 1, 2019, do I charge the Municipal Accommodation Tax?
The Municipal Accommodation Tax must be charged starting January 1, 2019. The Municipal Accommodation Tax is not to be applied to any nights prior to January 1, 2019.

Is this a mandatory or voluntary tax?
Mandatory. The Municipal Accommodation Tax must be collected by the accommodation provider at the same time customers are charged for the booking.

What is the authority to charge the Municipal Accommodation Tax?
The municipality is authorized per section 400.1 of the Municipal Act, 2001 and Ontario Regulation 435/17 to establish and to collect the MAT. On June 26, 2018, Town Council approved By-law no. 48-18 which provides for mandatory collection and remittance of the Municipal Accommodation Tax.

If a guest puts a deposit to hold a room prior to January 1, 2019 for a booking January 1, 2019 or later, does MAT apply?
Yes, if final payment for room occurs on or after January 1, 2019 MAT applies to the accommodation rate, regardless of any deposits made.  If the deposit is applied to the purchase price of the accommodation provided on or after January 1, 2019, MAT will apply to the purchase price, including the deposit.

 Do I need to show the Municipal Accommodation Tax on the invoice or receipt?
Yes, every bill, receipt, invoice or similar document for the purchase of accommodation must have a separate item identified as “Municipal Accommodation Tax” showing the rate at which the Municipal Accommodation Tax is calculated (2%) applicable on January 1, 2019 and 3% on January 1, 2020 and 4% on January 1, 2021.

Is the Harmonized Sales Tax (HST) charged on the Municipal Accommodation Tax?
Yes, if the accommodation provider is registered for HST. The accommodation provider is responsible for collecting and remitting the HST on the room charge and on the Municipal Accommodation Tax.  The HST is remitted directly to the Canada Revenue Agency.                                                                                       

What revenue does the Municipal Accommodation Tax apply to if I charge a fee that includes accommodation and meals?
It is the responsibility of the accommodation provider to allocate the revenue from the accommodation charge separate from other services, amenities or charges on the invoice and collect and remit the Municipal Accommodation Tax on the accommodation portion of the fees.  If the fees are not separately listed on the invoice, the Municipal Accommodation Tax will apply to the entire invoice.

What happens if guests do not show up for their reservation?
The Municipal Accommodation Tax is to be collected and remitted if the accommodation is charged. If the guest is not charged but is required to pay a cancellation fee, the Municipal Accommodation Tax would not apply to the cancellation fee.

Are long-term contracts for room rentals with businesses that exceed 30 days exempt?
Yes. The purchaser, per the By-law, is the person or business who remits money for the room and therefore the Municipal Accommodation Tax would not apply for a contract of 30 days or more.

What if I have existing contracts with businesses with a fixed room rate?
Municipal Accommodation Tax applies to accommodations purchased on or after January 1, 2019. If payment occurs on or after January 1^st for accommodation occupied on or after January 1^st, Municipal Accommodation Tax applies even if provided through a corporate contract.

How do I remit the Municipal Accommodation Tax that I have collected?
The Town of Hearst will collect the tax and will administer the transition of the funds to the Hearst Development Corporation for the purposes of promoting and growing the tourism industry in Hearst.
The remittance process will include a monthly remittance form which is available on the Town of Hearst website and the payments will be made by cheque or in person. Submissions and payments will be due 30 days of each quarter, specifically within 30 days of March 31^st, June 30^th, September 30^th and December 31^st.
Any late remittances will be charged an interest rate of 1,25% per month.

Is there an auditing process to verify monthly submission?
Yes. The Town of Hearst may routinely select submissions for audit. The verification process may include a 3^rd party auditor assigned by the Town of Hearst.

Are future bookings that were prepaid prior to the enactment of the by-law exempt from the Municipal Accommodation Tax?
Yes. Accommodations paid for prior to January 1^st, 2019 are exempt. Reservations that were not pre-paid by this date are subject to the Municipal Accommodation Tax upon check-in and payment of the lodgings.

What happens with the funds generated through the MAT?
Funds generated through MAT are invested in sales, marketing and development activities through the Hearst Development Corporation whose mandate is to promote the Town of Hearst for visitors, meetings and conventions, important events and to the media, travel agents and the travel industry. The funds will also be invested in long-term destination development projects aimed at enhancing the visitor experience.

Municipal Accommodation Tax participants will have opportunities to become involved in different committees that will guide the planning of the action plans.

I am a private property owner who occasionally rents out accommodation to people who are only staying at my property for a few days. I don’t consider this a small business as I don’t provide accommodations that often? Do I need to collect the Municipal Accommodation Tax from my guests?
Yes. All short-term accommodations are subject to the Municipal Accommodation Tax, including those in private homes.  If you are invoicing your guests directly then a 2% Municipal Accommodation Tax must be added to their bill in 2019. It will increase to 3% on January 1, 2020 and 4% on January 1, 2021. These funds must be submitted through the collection process operated by the Town of Hearst. If however, your guests pay for your accommodations using the online home sharing service AirBnB, the service provide will collect the MAT for you beginning January 1^st, 2019 and submit it on your behalf. If using another online payment system, the service provider may collect the MAT for you and remit to you both the rental fee and the MAT. If the latter, it is your responsibility to remit the Municipal Accommodation Tax to the Town of Hearst. Please refer to the “How do I remit the Municipal Accommodation Tax that I have collected?”

How do refunds and no shows affect the amount of Municipal Accommodation Tax I remit?
If the Municipal Accommodation Tax was added to an invoice that was paid by a guest, and you subsequently issue a full or partial refund on that accommodation charge, the customer should also be refunded the applicable amount of MAT that corresponds to the refund amount.  If the refund occurs after you have remitted the MAT, you can adjust the MAT submission the following month noting the refund in your submission documentation.

If you experience no shows and your policy is to charge a portion of the room rental as a penalty, then the MAT should also be charged to the no show portion.  If however, you have a flat administrative fee that is charged for no shows no matter what the room rate, then the MAT does not need to be applied.

Do I need to prepare a quarterly report if I did not collect any MAT for that period?
Yes.  You have to indicate that no Municipal Accommodation Tax was collected in the reporting period. If all your guests were for extended stay (30 days or longer) or another qualified exemption you must still submit a report providing the details for the exception.     

Frequently asked questions (FAQ)
For visitors

Summary

On November 23, 2017, the Ontario government passed Regulation 435/17 providing municipalities the authority to levy a transient accommodation tax (hotel tax). The purpose of this legislation was to recognize the importance of promoting Ontario as a destination for tourism and to ensure the vitality of Ontario’s tourism sector while maintaining a balance between tourism and municipal sectors.  The transient accommodation tax is applicable to all accommodations under 30 days at hotels, motels and individual hosts. At its regular meeting on June 26, 2018, Hearst Town Council adopted By-law No. 48-18, authorizing the municipality to collect a municipal accommodation tax on temporary lodging as of January 1, 2019. The funds generated by this tax will be invested in sales, marketing and development activities of the tourism industry in the region.

How much is the Municipal Accommodation Tax, and how is it applied?
The Municipal Accommodation Tax is 2%, comes into effect on January 1^st, 2019 and will increase by 1% for the 2 subsequent years bringing it to 4% in 2021. It is only applicable to the room portion of the costs associated to overnight accommodations.  All other revenues generated from the accommodation services including, but not limited to, meeting room rental, food and beverage, room service, laundry services parking etc. are excluded from the Municipal Accommodation Tax.

The HST is charged to the Municipal Accommodation if the business is an HST registrant.

I plan on staying at an AirBnB during my stay in Hearst, do I need to pay the Municipal Accommodation Tax for the stays in private residences?
Yes, beginning January 1, 2019 when booking your accommodations on AirBnB you will be charged 2% of your total.  This tax rate will increase to 3% and 4% on January 1, 2020, and 2021 respectively.

Can I refuse to pay the Municipal Accommodation Tax?
No. The Municipal Accommodation Tax is mandatory and must be paid to the accommodation operator at the same time that you pay for the booking.

Prior to January 1, 2019, I prepaid for a future room booking, and no Municipal Accommodation Tax was added, will I have to pay this tax when I check-in?
No. Accommodations paid prior to January 1, 2019 are exempt. Reservations that were not pre-paid by this date are subject to the Municipal Accommodation Tax upon check-in and payment of the lodgings.

What happens with the funds generated through the Municipal Accommodation Tax?
The funds generated by the Municipal Accommodation Tax will be invested in sales, marketing and development activities of the tourism industry in the region through the Hearst Economic Development Committee in collaboration with the Hearst Tourism Committee whose mandate is to promote the Town of Hearst for visitors, meetings and conventions, important events and to the media, travel agents and the travel industry. The funds will also be invested in long-term destination development projects aimed at enhancing the visitor experience.