New taxes for Toronto hotel guests

As of Sunday, hotel guests in Toronto will be required to pay 4% tax.

The tax, known as MAT, will also be applied to short-term rentals as of June if a new by-law is enacted. MAT will be applied to all guests staying in hotels, motels and hostels as of April 1.

The city expects to bring in $16 million as a result of the new tax, with funds being used boost its programs and services, such as road repair, transit and police, as well as helping not-for-profit organization Tourism Toronto.

Guests will have to pay the tax when staying in rooms used for rental accomodation for four hours or more, and for stays up to 30 days. The tax is set to be collected via invoice when the guest pays for their room.

Other services such as meeting room rentals, food and beverage, room services, internet and phone charges are excluded from the tax if they are highlighted separately on the bill.

As part of the changes, hotels will no longer be required to pay a destination marketing fee to Tourism Toronto.

However, hotel operators in the city are fighting back against the decision, pointing out the commercial taxes they already pay.

Additionally, the city plans to place the tax on short-term rentals, such as Airbnbs, however must wait until a new by-law regarding short-term rental licensing and registration comes into effect.  The by-law is currently pending after an amendment appeal was put forward-whether the tax is applied will depend on its outcome.

If it is given the green light, the tax on short-term rentals will also apply to individual short-term rental operators and short-term rental companies. The tax will be collected through the platform used to host the rental.