Short-term Rental Accommodation Tax (effective April 1st, 2024) Winnipeg, MB.
Apr 1, 2024
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The City of Winnipeg has implemented significant changes for short-term rental operators, effective April 1, 2024. Here's a summary of the key points:
Accommodation Tax:
City of Winnipeg added a new 6% Accommodation Tax for all short term rental operators starting April 1st, 2024.
Bookings completed prior to April 1, 2024 are not subject to this accommodation tax.
Licensing Requirements:
Effective April 1st, 2024 all short term rental operators need a City of Winnipeg business license to provide short-term rentals for compensation.
Licenses must be renewed annually. Operators require a separate license for each individual short-term rental.
Definition of Short-Term Rental:
City of Winnipeg defines short term rental as: “temporary accommodations — such as a house, condominium, or apartment — rented for payment by a property owner or primary tenant for a continuous period of less than 30 nights. These properties are typically rented through online platforms such as Airbnb or Vrbo. They also include bed-and-breakfasts offered within the owner’s residence”
Ownership Restrictions:
City of Winnipeg added a restriction on short-term rentals:
Owners of new short-term rentals purchased after February 23rd, 2023 are limited to owning one short term rental and can only rent out their primary residence.
Existing short-term rentals owned on or before February 23rd, 2023 are limited to four short-term rentals (One primary residence, up to three non-primary residences, provided they owned them on or before February 23, 2023)
In any case, the owner of short term rental needs to be a permanent residents of the City of Winnipeg. If an existing short-term rental is owned by someone who does not live in Winnipeg, or by a corporation not owned by Winnipeg residents, it will not be permitted.
Reporting requirements for Accommodation Tax:
Operators must submit a quarterly accommodation tax return within 20 days following the quarter end. A report must be filed for each reporting period, regardless of whether or not the property was rented out during that quarter. The return must include:
The total revenue by month, including cleaning fees and excluding service fees
The applicable accommodation tax
For more detailed information, please refer to the City of Winnipeg's official website:
Denial of Expenses for Non-Compliant Short-Term Rentals
The 2023 Federal Fall Economic Statement introduces important changes concerning short-term rental properties in Canada. Under these proposed rules, expenses related to short-term rental income, could be denied if:
The property is located in a province or municipality that prohibit short-term rentals, or
The short-term rental operator is not compliant with the local licensing, permitting, or registration requirements.
These rules are proposed to take effect from January 1, 2024. If a short-term rental becomes compliant partway through the year, only the expenses related to non-compliant periods will be disallowed, with deductions prorated accordingly.
The proposed legislation under section 67.7 of the ITA defines a short-term rental as a residential property rented out for less than 90 consecutive days. This broad definition covers various property types, including houses, apartments, condominiums, cottages, mobile homes, trailers, or any other similar properties used.
This change emphasizes the importance of ensuring compliance with provincial and municipal regulations for those engaged in short-term rental activities. To safeguard valuable tax deductions, owners must verify that they are fully compliant with all relevant licensing or permitting requirements.
If you are operating a short-term rental, it's crucial to understand the local laws governing your property to avoid losing tax deductions for your rental expenses.
For more information feel free to refer to the following resources:
This blog has been prepared to provide general guidance and should not be considered specific advice. It may not address individual situations, and the information contained should not be used as a basis for action or inaction without seeking professional advice tailored to your circumstances. For personalized assistance, please contact Jenkyns Smith CPA's LLP.
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