Stay Compliant: Unpacking Airbnb Canada Rules and Requirements

From listing descriptions to legal requirements, there’s a lot to consider when setting up a vacation rental in Canada. Add to that paying taxes and becoming a Canadian Airbnb host can quickly snowball into a daunting undertaking.

To help prevent you from feeling snowed under, here are the most important considerations for operating vacation rentals in Canada. If you’re thinking about skipping this article and figuring it out as you go along, keep in mind that not adhering to these regulations can result in significant fines or loss of rental income.

Tax Considerations for Airbnbs in Canada

Understanding how your vacation rentals will be taxed is a taxing affair. There are several circumstances that can impact your tax responsibilities. As such, it’s always best to consult with a tax practitioner who’s familiar with how Airbnbs in Canada work. You can also consult the Canada Revenue Agency for help.

The following information is only aimed at getting you familiar. It’s by no means a replacement for a qualified tax professional:

• Each of the provinces and territories in Canada as well as the federal government will impose an income tax. Usually, the provincial income tax doesn’t get deducted from the federal income tax and is an extra expense.
• Most of the time, the deadline for income tax returns in Canada is April 30 of the next year. Canada uses a self-assessment system, meaning it’s the host’s responsibility to file and pay taxes due on time. Hosts will usually have to complete Form T776 to declare any income earned from property rentals.
• If you miss this deadline, you can incur interest and/or penalties.
• If you reside in Quebec or your vacation rental is located here, there will be extra filing requirements to keep in mind. Guests who book a property located in this province will also incur Quebec Sales Tax (QST). This lodging tax amounts to about 3.5% of the listing price for reservations that are shorter than a month.
• Guests will also pay sales tax like Goods and Services Tax (GST) and Harmonized Sales Tax (HST) when they book an Airbnb vacation rental in Canada. Depending on where the listing is located, these additional taxes can range anything from 2% to 8%. However, these taxes won’t apply if the stay is for longer than a month.
• A number of local and provincial jurisdictions also charge extra taxes on accommodation. In some cases, Airbnb might collect and remit it. Your local municipality will be able to tell you if extra taxes apply and which party is responsible for collecting and remitting it.
• Registered hosts will be responsible for collecting GST, HST, and QST tax. This means they’ll need to keep these amounts in mind when setting their nightly rate. For unregistered listings, this tax collection obligation will fall on Airbnb.
• As Airbnb might have a responsibility to report the income that Canadian hosts have earned to the relevant tax authorities, it’s key to ensure that your annual income tax return matches Airbnb’s information. If the numbers don’t add up, tax authorities could question you.
• If you offer extra services like meals, security, or cleaning, it can be regarded that you’re, in fact, running an Airbnb business. In this case, it will be classified as income from a business (in other words, self-employment income), instead of a passive income that’s generated from a property. This can have an impact on your taxes as property and business income are allocated differently.
• You’ll also be able to deduct certain expenses that allow you to generate a rental income from your tax. These include expenses such as insurance, property taxes, and utilities. Though, if you rent out only a room, you’ll have to divide generic expenses like utilities in a way that’s fair.

General Legal Considerations for Airbnbs in Canada

Just like with other countries, it’s key that you first determine if you’re allowed to rent out your property on a platform like Airbnb. It’s best to consult a qualified lawyer and/or the local authority for more info about community rules and other regulations and restrictions.

Here’s general information about hosting regulations and permissions about Airbnb Canada to help ensure you’re a responsible host:

• If your Airbnb in Canada is mortgaged, you need to check in with the financial institution first. It could be that the lender restricts hosting or subletting.
• If you live in a subsidized housing community, you might require permission before you sublet the property. This is generally the case. Your housing association or housing authority will be able to give you more details.
• Hosts who won’t be listing the entire place will first need to check with their other housemates if they have any objections. It’s recommended that you create a formal written agreement in which you cover expectations and set out other finer details.

Similarly to the tax obligations, the short-term rental regulations also differ from one city to the next. What’s more, in some big cities the rules are quite strict.

For example, in Vancouver, British Columbia, vacation rentals are only permitted if it’s an entire home (or a room within this property) and it’s classified as your primary residence. A basement suite or secondary home is only allowed to be rented out on a short-term basis if it’s your principal residence and you reside there full-time.

In Toronto, Ontario, the rules are similar. Short-term renting is only allowed if the listing is the principal residence of the host. What’s more, hosts will first need to register with the city. Their listing’s registration number should be posted on their listing.

5 Tips for Running Compliant Airbnbs in Canada

It’s important to stay informed about your specific jurisdiction’s laws. While there are many helpful online resources, keep in mind that these websites usually don’t get updated in real-time meaning that they might not necessarily list the latest rules and regulations. To help you stay compliant, here are a few practical tips and best practices to include in your hosting routine:

1. Check the bylaws beforehand to make sure short-term rentals are allowed in your area.
2. Double-check if you require any permits. If so, first wait until you have the required permits before listing your space on Airbnb.
3. Research the zoning laws to understand any restrictions on how many days of occupancy you can have in any given year.
4. Know and understand occupancy limits and make sure that all occupants stay within those limits at all times.
5. Familiarize yourself with insurance requirements for hosting on Airbnb Canada. Your insurer will be able to tell you which type of home and rental property insurance is best for you.

5 of the Coolest Airbnbs in Canada to Inspire

The complexities of the process don’t have to overshadow the potential rewards as the following five examples of Airbnbs in Canada show.

1. Le MICA (Chalets Micro-Element) in Lac BeauPort, Quebec

This listing proves that loads of space isn’t necessarily a prerequisite. With the right amenities and breathtaking views of surrounding nature, a tiny house can make a big impression on your guests. What sets this tiny house apart from similar listings is how its clean lines, minimalist design, and ample use of white, help it to blend in with its natural environment. Situated near Quebec City, it’s one of the coolest Airbnb rentals and its snowy surroundings can’t take all the credit.

2. The Copper Penny House in Niagara Falls, Ontario

The Copper Penny House is all about location and is within walking distance to Niagara Falls. Aimed at families traveling with kids, it’s situated in a quiet residential area and offers more than enough space, including access to a yard and on-site laundry facilities. One of its big features is the private deck where you can soak in the peace and quiet after a day of exploring.

3. Stunning Canmore Penthouse in Canmore, Alberta

Located in the heart of the Rocky Mountains, this newly constructed penthouse radiates luxury. It comes with a fully equipped kitchen and inviting space, making it an entertainer’s dream. After a day of exploring the local hiking trails, you can unwind in the private hot tub. Alternatively, you can enjoy a splash in the shared swimming pool.

4. Modern Shipping Container Studio with Ocean Views in Halfmoon Bay, British Columbia

If unique homes are more your style, this shipping container will float your boat. The space comprises a main floor and a small mezzanine area that’s accessible by a ladder. It might be small, but it includes a functional kitchen and a queen bed. In addition to these essentials, it also makes sure to include other popular amenities like an indoor gas fireplace, a hot tub, exercise equipment, a BBQ grill, and an enclosed private courtyard to make your Canada stay more memorable.

5. Beautiful, Luxurious & Oceanfront Blue Wolf Float Home in North Vancouver, British Columbia

This unique accommodation was specifically designed for couples planning a romantic trip. Its luxurious kitchen is one of its focal points, but there’s also a BBQ if you want to soak in more of the gorgeous views of the waterfront. Then, to ensure that one of the coolest vacation rentals in British Columbia remains cool, just switch on the air conditioning. If you prefer more of a fresh breeze to cool you off, it’s a short walk to many restaurants or a short boat ride away from Vancouver’s downtown area.

Building a Profitable and Compliant Airbnb Business in Canada

Canada is a magical place. From national parks to golf courses to ocean views to city breaks, the country has loads to offer the rest of the world. Offering all the amenities, though, will be in vain if you don’t stick to the basics and respect the local regulations and tax requirements.

It’s important to remember that operating an Airbnb business in Canada involves more than just listing a property and collecting rent. In addition to delivering a memorable guest experience, hosts also have the responsibility of staying aware of any changes in the law relating to vacation rentals in Canada. Plus, as each province and city has its own set of laws for vacation rentals, what worked for your apartment in one city won’t necessarily generate the same results for an Airbnb rental in a different location.

In addition to covering all your legal and regulatory bases, why not automate the rest of your rental operations?

Vacation rental software like iGMS can help you manage the day-to-day more smoothly and efficiently. It can help you in:

• Synchronizing reservations across multiple platforms to eliminate double bookings.
• Using the unified inbox to organize your messages into a single feed to ensure prompt replies.
• Automating the process of guest review send-outs.
• Securely processing payments via integration with Stripe.
• Creating essential reports on your business results within minutes.