GST/HST Information for the Travel and Convention Industry

RC4036(E) Rev. 11

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Table of contents

• What's new
• Is this guide for you?
• Definitions
• What is GST/HST?
• How does GST/HST work?
  • Who charges GST/HST?
  • Who pays GST/HST?
• Taxable property and services
• Exempt property and services
• Should you register?
  • Voluntary registration
  • Reporting GST/HST
• Accommodation and hospitality supplies
  • Accommodation
  • Accommodation-related supplies
  • Parking
  • Food and beverages
  • Banquet and catering services
  • Gratuities
• Deposits
• Coupons, gift certificates, and discounts
  • Reimbursable coupons
  • Non-reimbursable coupons
  • Other coupons
  • Gift certificates
  • Discounts
  • Third-party transactions
• Passenger transportation services
  • Terms used in this section
  • Domestic passenger transportation services
  • Which rate of tax applies – GST or HST?
  • International passenger transportation services
  • Other services provided with a transportation service
  • Sales of taxable goods and services on board conveyances in Canada
  • Sales of goods and services on board conveyances in international travel
• Travel agencies
  • What is a travel provider?
  • When do I charge tax on commissions?
  • Collecting and reporting the GST/HST
• Tour packages
  • What is a tour package?
  • How does the GST/HST apply to tour packages?
• Non-resident rebate for eligible tour packages
  • What is an eligible tour package for this rebate?
  • Rebate for non-resident tour operators
  • Rebate for non-resident businesses, organizations, and consumers
  • How to claim a rebate for an eligible tour package
  • Paying or crediting the rebate amount
  • Joint liability
  • Are you completing and filing a rebate application for a non-resident?
• Conventions
• What is a related convention supply?
• Domestic conventions
  • Is GST/HST registration required?
  • Charging tax for domestic conventions
• Foreign conventions
  • Is GST/HST registration required?
  • Charging tax for foreign conventions
  • Rebate for foreign conventions
• Rebate for non-resident exhibitors
• For more information

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What's new

We list the major changes below, including changes that have been announced but were not law at the time of printing this guide. If they become law as proposed, they will be effective as of the dates indicated. For more information on these and other changes, see the areas outlined in colour in this guide.

Is this guide for you?

This guide gives information on how to charge the goods and services tax/harmonized sales tax (GST/HST) on accommodation, tour packages, passenger transportation services, conventions, meeting facilities, and related convention supplies. It also explains the rebates that may be available to non‑residents for eligible tour packages, for short‑term and camping accommodation resold in tour packages, and for foreign conventions and non‑resident exhibitors. It also includes information on how Canadian suppliers can pay or credit certain rebate amounts to non‑residents.

GST/HST and Quebec

In Quebec, Revenu Québec administers the GST/HST. If the physical location of your business is in Quebec, you have to file your returns with Revenu Québec using its forms. For more information, see the Revenu Québec publication IN‑203‑V, General Information Concerning the QST and the GST/HST, available at www.revenu.gouv.qc.ca, or call 1‑800‑567‑4692.

Definitions

Commercial activity – means any business or adventure or concern in the nature of trade carried on by a person, but does not include:

• the making of exempt supplies; or
• any business or adventure or concern in the nature of trade carried on without a reasonable expectation of profit by an individual, a personal trust, or a partnership where all the members are individuals.

Commercial activity also includes a supply of real property, other than an exempt supply, made by any person, whether or not there is a reasonable expectation of profit, and anything done in the course of making the supply or in connection with the making of the supply.

Consumer – refers to a particular individual who acquires or imports property or services for personal consumption, use, or enjoyment or the personal consumption, use, or enjoyment by another individual at the particular individual's expense. It does not include individuals who acquire or import property or services for their commercial activities or to make an exempt supply.

Coupon – is a document or other device, such as a voucher, receipt, or ticket that can be redeemed for a product or service or can be used to buy a product or service, but does not include a gift certificate or a barter unit.

Exempt supplies – are supplies of property and services that are not subject to the GST/HST. GST/HST registrants cannot claim input tax credits to recover the GST/HST paid or payable on expenses related to making such supplies.

Input tax credit (ITC) – means a credit GST/HST registrants can claim to recover the GST/HST paid or payable for property or services they acquired, imported into Canada, or brought into a participating province for use, consumption, or supply in the course of their commercial activities.

Participating province –means the province of British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia, or Ontario.

Person – means an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or any organization such as a society, a union, a club, an association, or a commission.

Property – includes goods, real property, or intangible personal property such as trademarks, rights to use a patent, and admissions to a place of amusement, but does not include money.

Registrant – means a person that is registered or has to be registered for the GST/HST.

Supply – means the provision of property or a service in any way, including sale, transfer, barter, exchange, licence, rental, lease, gift, and disposition.

Taxable supplies – are supplies of property and services that are made in the course of a commercial activity and are subject to the GST/HST (including zero-rated supplies).

Zero-rated supplies – are supplies of property and services that are taxable at the rate of 0%. This means there is no GST/HST charged on these supplies, but GST/HST registrants can claim ITCs for the GST/HST paid or payable on purchases and expenses made to provide them.

What is the GST/HST?

The goods and services tax (GST) is a tax that applies to most supplies of goods and services made in Canada. The GST also applies to many supplies of real property. For example, it applies to many sales and leases of land and buildings, interests in such property, and intangible property such as trademarks, rights to use a patent, and digitized products downloaded from the Internet and paid for individually.

The participating provinces harmonized their provincial sales tax with the GST to implement the harmonized sales tax (HST) in those provinces. Generally, the HST applies to the same base of goods and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on certain designated items.

GST/HST Rates

	Before July 1, 2010	On or after July 1, 2010
Ontario	GST at 5%	HST at 13%
British Columbia	GST at 5%	HST at 12%
Nova Scotia	HST at 13%	HST at 15%
New Brunswick	HST at 13%	HST at 13%
Newfoundland and Labrador	HST at 13%	HST at 13%
Territories and other provinces in Canada	GST at 5%	GST at 5%

For more information, go to GST/HST page or see Guide RC4022, General Information for GST/HST Registrants.

How does the GST/HST work?

If you are a GST/HST registrant, you have to charge and collect the GST/HST on taxable supplies you make in Canada and file regular GST/HST returns to report the tax.

You can claim an input tax credit (ITC) on your GST/HST return to recover the GST/HST paid or payable on purchases and expenses you use, consume, or supply in your commercial activities. Generally, commercial activities are those undertaken to provide taxable (including zero-rated) property and services.

For example, if you buy taxable goods to resell in your store, you can recover the GST/HST paid or payable on those goods by claiming an ITC. You cannot claim an ITC to recover the GST/HST paid or payable on purchases related to your supplies of exempt property and services, or that are for personal use.

The difference between zero-rated and exempt property and services is that, although you do not collect the GST/HST on zero-rated or exempt property and services, you can only claim ITCs for the GST/HST paid or payable on purchases used to provide zero-rated property and services.

For more information, see Guide RC4022, General Information for GST/HST Registrants. If you are a non-resident, see Guide RC4027, Doing Business in Canada – GST/HST Information for Non-Residents.

Who charges the GST/HST?

Generally, GST/HST registrants have to charge and collect the GST/HST on all taxable (other than zero-rated) supplies of property and services they provide to their customers.

Who pays the GST/HST?

Almost everyone has to pay the GST/HST on purchases of taxable (other than zero-rated) supplies of property and services. However, Indians and some groups and organizations, such as certain provincial and territorial governments, do not always pay the GST/HST on their purchases. For more information, visit our GST/HST page or call 1-800-959-5525.

Taxable property and services

Most property and services (including those that are zero-rated) supplied in or imported into Canada are subject to the GST/HST.

Property and services taxable at 5%, 12%, 13%, or 15%

Examples of property and services for which you charge the GST/HST include:

• hotel and other short-term accommodation in Canada;
• convention space and meeting rooms;
• services provided by travel agents (with some exceptions);
• domestic tour packages;
• most domestic passenger transportation by bus, train, ship, or aircraft;
• trans–border air travel to the continental United States and the islands of St. Pierre and Miquelon;
• international day trips by road or rail;
• car rentals in Canada;
• a service of ticket cancellation for domestic travel services;
• taxi and limousine rides;
• restaurant meals; and
• admissions to theatres, museums, and other places of entertainment.

Zero-rated property and services

Examples of property and services taxable at 0% (zero-rated supplies) include :

• basic groceries such as milk, bread, and vegetables;
• prescription drugs and drug-dispensing services;
• international air travel, except to the continental United States and the islands of St. Pierre and Miquelon;
• international passenger transportation by road and rail, except day trips; and
• most property and services supplied in Canada when exported under certain circumstances.

For more information, see GST/HST Memoranda Series Chapter 4, Zero-Rated Supplies.

Exempt property and services

A small number of property and services are exempt from the GST/HST. This means that you do not charge the GST/HST on your supplies of property and services, and you do not claim input tax credits.

Examples of exempt property and services include:

• most long-term residential accommodation (of one month or more) and residential condominium fees;
• accommodation rented for $20 or less for each day of occupancy;
• travel insurance provided by an insurance company;
• a travel agency's service to an insurance company of selling its travel insurance;
• ferry services (other than zero-rated) and the use of toll highways and toll bridges;
• municipal transit services; and
• child care services (daycare services provided usually for less than 24 hours a day) provided primarily for children 14 years of age and under. This does not include the supervision of a child provided in conjunction with a taxable passenger transportation service for the child.

Should you register?

You have to register for the GST/HST if:

• you provide taxable supplies in Canada; and
• you are not a small supplier.

Note
If you are a sponsor of a foreign convention, special rules apply. For more information, see Foreign conventions.

Generally, you are a small supplier if your total gross worldwide taxable revenues, including such revenues of your associates, are CAN$30,000 or less (CAN$50,000 for public service bodies) over any four consecutive calendar quarters or in any one calendar quarter.

When determining your revenues, include worldwide revenues from supplies of property and services that were subject to the GST/HST (including zero-rated supplies), or that would have been subject to the GST/HST if you had supplied them in Canada.

However, do not include supplies of goodwill, financial services, or sales of capital property. For examples of supplies that would have to be included in this calculation, see Taxable property and services.

Voluntary registration

Although you generally do not have to register if you are a small supplier (see above), you may be able to register voluntarily. If you register, you must charge the GST/HST on your taxable supplies of property and services and report that amount on your GST/HST return. You can also claim input tax credits (ITCs) for the GST/HST paid or payable on purchases related to these supplies. You have to stay registered for at least one year before you can ask to cancel your registration.

If you choose not to register, you cannot charge the GST/HST, and you cannot claim ITCs.

For more information, visit our GST/HST page or see Guide RC4022, General Information for GST/HST Registrants, or Guide RC4027, Doing Business in Canada – GST/HST Information for Non-Residents.

Reporting the GST/HST

If you are a GST/HST registrant, you have to file a GST/HST return for each reporting period (either monthly, quarterly, or annually) to report the total amount of the GST/HST you charged your customers during the reporting period. The GST/HST you report has to include amounts you billed or invoiced, even if the amounts have not yet been paid.

As a registrant, you can also claim ITCs on your return to recover the GST/HST paid or payable on purchases and expenses you use in your commercial activities.

When you fill out your return, you can deduct your ITCs from the GST/HST charged. If the tax you charged your customers is more than the tax paid or payable on your purchases, send us the difference. If the tax you charged your customers is less than the tax paid or payable, you can claim a refund.

For more information, visit GST/HST or see Guide RC4022.

Accommodation and hospitality supplies

Accommodation

Generally, you have to charge the GST/HST when you rent out a suite or room in a hotel, motel, inn, or boarding house or provide similar accommodation. However, you do not have to charge the GST/HST if situation 1 or 2 applies.

Situation 1

The rental of a residential unit (for example, a hotel room, suite, or apartment) is exempt if it is rented for $20 or less per day of occupancy, regardless of the rental period.

Situation 2

The rental of a residential unit is exempt if the unit:

• qualifies as a residential complex, or is a residential unit (for example, a hotel room, suite, or apartment) in a residential complex; and
• is rented as a place of residence or lodging by the same individual for a continuous period of one month or more.

Note
When monthly room rentals are exempt from the GST/HST, how often the room charge is billed (for example, daily, weekly, or monthly) does not change the exempt status, as long as the arrangement gives the tenant or customer continuous use or possession of the same room for at least one month.

Is my establishment a residential complex?

We consider your establishment to be a residential complex if more than 10% of all of the residential units (hotel rooms, suites, apartments) in your establishment are rented for continuous possession or use of 60 days or more.

Part of a building may qualify as a residential complex while another part does not. If you use specific rooms in part of a building (Part A) consistently for rental periods of 60 days or more, we consider Part A to be a residential complex.

This means that rentals of rooms in Part A are exempt from the GST/HST when rented to individuals for continuous periods of one month or more, regardless of the rental periods of rooms in the other part (Part B) of the building.

Unless Part B also qualifies as a residential complex, rentals of the rooms or suites in Part B are generally taxable. However, if any room in Part B were rented at a rate of $20 or less per day, it would be exempt.

Calculation methods to determine status as a residential complex

If your establishment has rentals for less than 60 days and rentals for 60 days or more, use either the revenue method or the room supply method to determine if your establishment, or part of it, qualifies as a residential complex.

You can choose the method that is appropriate for your specific circumstances. Both methods are described in the example below.

The time period you can use to determine whether your establishment qualifies as a residential complex is flexible. However, the period must be reasonable for the particular rentals in question and you must use it consistently. We consider a one-year period appropriate. However, the period could differ depending on the nature of your operation.

If you make these calculations over a reasonable period of time, minor fluctuations likely won't affect the status of your establishment. However, if your actual operations differ from your expectations, or if your operations change, you will have to redo your calculations.

Accommodation-related supplies

The GST/HST applies to other supplies made to customers during their stay, regardless of the length of the stay or cost of the accommodation. These include:

• room service;
• pay-per-view movies;
• telephone, photocopies, and faxes; and
• laundry and dry cleaning.

Parking

Generally, parking is subject to the GST/HST. However, parking is exempt if it is supplied for a period of at least one month to a guest in a residential complex and:

• the parking space is part of the residential complex (regardless of who supplies the parking space); or
• the parking space is not part of the residential complex but is supplied by the accommodation provider and the use of the space is incidental to the use and enjoyment of the accommodation as a place of residence for individuals.

Food and beverages

You charge the GST/HST on food and beverages sold in dining rooms, coffee shops, bars, lounges, and convention facilities and on food and beverages sold through room service.

However, the following supplies of food and beverages are zero-rated:

• food and beverages not suitable for immediate consumption (for example, a bag of coffee beans, pre-packaged frozen dinners); or
• food consisting of sweetened baked goods such as pies and cakes, muffins, tarts, doughnuts, cookies, and similar sweetened goods, not sold for consumption at the outlet and that:
  • is pre-packaged for sale to consumers in quantities of six or more single servings; or
  • is not pre-packaged for sale to consumers, and a consumer purchases six or more single servings at a time.

Banquet and catering services

The GST/HST applies to food and beverages catered in banquet and meeting rooms, or at on-site locations. This means that you charge and collect the GST/HST on such things as prepared platters, hot meals, and beverages. Wine-corking and any other supplies made to cater a banquet or meeting function are also taxable at the applicable GST/HST rate.

Gratuities

Gratuities that customers voluntarily give to employees are not taxable for GST/HST purposes. However, if you include a gratuity as part of the charge for a taxable service on an invoice to your customer, the GST/HST applies to the service charge.

Example
Your sales invoice for a banquet dinner is $1,000 plus a 15% gratuity (service charge) of $150. You charge the GST/HST on the total invoice of $1,150.

Deposits

You do not collect the GST/HST when a customer gives you a deposit toward a taxable purchase (other than zero-rated). Collect the GST/HST on the deposit when you apply it to the purchase price.

If the customer does not make the purchase and loses the deposit, the forfeited deposit is subject to the GST/HST. You calculate the GST/HST as follows:

• GST equal to 5/105 of the forfeited amount;
• HST equal to 12/112 of the forfeited amount (for British Columbia [BC]);
• HST equal to 13/113 of the forfeited amount (for participating provinces other than BC and Nova Scotia); or
• HST equal to 15/115 of the forfeited amount (for Nova Scotia).

Example
In January 2010, an organization gave you a deposit of $500 to reserve convention space in Calgary, Alberta. Later, the organization cancelled the contract and forfeited the deposit. We consider you to have collected, at that time, GST equal to 5/105 of the amount of the deposit. This means that you have to include $23.81 (5/105 × $500) on line 103 of your GST/HST return for the reporting period in which the amount was forfeited.

If the forfeited deposit in the example above was for space in a participating province, we would consider you to have collected, at that time, HST equal to:

• 12/112 of the amount of the deposit for supplies in BC;
• 13/113 of the amount of the deposit for supplies in a participating province other than BC and Nova Scotia; or
• 15/115 of the amount of the deposit for supplies in Nova Scotia.

This means that you would have to include the amount on line 103 of your GST/HST return for the reporting period in which the amount was forfeited:

• $53.57 (12/112 × $500 for BC);
• $57.52 (13/113 × $500 for a participating province other than BC and Nova Scotia); or
• $65.22 (15/115 x $500 for Nova Scotia).

If the customer who forfeited the deposit was a GST/HST registrant, he or she may be entitled to claim an input tax credit (ITC) for the GST/HST included in the forfeited amount when all of the other conditions for claiming an ITC are met because he or she is considered to have paid that tax.

Coupons, gift certificates, and discounts

Reimbursable coupons

Reimbursable coupons are usually called manufacturers coupons. They entitle the customer to a reduction of a fixed dollar amount on the purchase price. Vendors can expect to be reimbursed by the manufacturer or another third party for accepting these coupons from customers. For example, a chain of hotels (franchisor) may reimburse a franchisee that redeems coupons that entitle a guest to a reduction of a fixed dollar amount for a night's stay at one of the chain's hotels.

When you, as a vendor, accept a reimbursable coupon from a customer, you treat the coupon the same as cash. If the purchase is subject to tax, you charge the GST/HST on the full price of the item and then deduct the value of the coupon.

When you prepare your GST/HST return, report the GST charged on your sales. Using the example, you report $1.25 for the sale. The value of the coupon does not have to be reported separately.

If you reimburse a vendor for redeeming your reimbursable coupons, you can claim an input tax credit (ITC) for the tax fraction of the coupon value (see below).

If you use a reimbursable coupon to make taxable (other than zero-rated) purchases for your business, you have to reduce the amount of any ITCs you claim on your purchases by the tax fraction of the face value of the coupon.

The tax fractions are as follows:

• 5/105 for the GST;
• 12/112 for the HST where the rate of 12% applies;
• 13/113 for the HST where the rate of 13% applies; and
• 15/115 for the HST where the rate of 15% applies.

Note
If you are claiming an ITC for a reimbursable coupon that you accepted after June 30, 2006, but before 2008, use the following rates for calculating the tax fraction:

• 6/106 for the GST; or
• 14/114 for the HST.

Non-reimbursable coupons

These are coupons that you, as the vendor, issue and accept, and for which no one reimburses you. They entitle a customer to a reduction for a fixed dollar amount or percentage amount in the price of a taxable (other than zero-rated) supply. These coupons are sometimes called vendor coupons. As the issuer, you can either include a reduction of the GST/HST in the face value of these coupons or reduce the purchase price of the good or service.

If you choose to include the GST/HST in the value of the coupons, you treat them the same way as reimbursable coupons, as explained on this page. This means that you charge and remit the GST/HST on the full price of the good or service and you can claim an ITC calculated on the tax fraction of the coupon value.

If you choose not to include the GST/HST in the value of your coupons, deduct the coupon value from the selling price before calculating the GST/HST.

You cannot claim ITCs for coupons you issue that do not include the GST/HST.

Other coupons

Any coupon that does not come within the definition of a reimbursable or a non-reimbursable coupon is treated as reducing the selling price (the GST/HST is calculated on the selling price net of the coupon value).

Example
Two customers present a two-for-one coupon for their restaurant meals. They pay $9.95 for one meal and get the second meal free. You charge the GST/HST on $9.95.

Gift certificates

A gift certificate is generally a voucher, receipt, or ticket:

• that has a stated monetary value;
• that can be redeemed as a partial or full payment against the purchase price of a good or service from a specific supplier (the supplier treats the redeemed certificate as if it were cash);
• for which the person buying the certificate gives money or other consideration to the vendor selling the certificate;
• that has no intrinsic value; and
• that does not require the person redeeming the gift certificate to do anything other than present the certificate.

You do not collect the GST/HST on the sale of a gift certificate. When a customer gives you a gift certificate towards a purchase, calculate the GST/HST on the price of the item and treat the gift certificate as if it were cash.

Discounts

Do not charge the GST/HST on property and services you offer free of charge. Generally, if you offer a discount, the GST/HST applies on the price after the discount. For example, if a room rate is regularly $99 and you offer a weekend special rate of $79, charge the GST/HST on $79 for that special rate.

Third-party transactions

A hotel may enter into an agreement with other businesses, such as restaurants or parking lots, where the other business agrees to provide property or services to the hotel's guests but the amount payable by the guest is included on the bill issued by the hotel. Depending on the terms of the agreement, the hotel may be purchasing the property or services and selling them to their guests or acting as an agent in making a transaction on behalf of the other business.

Whether a hotel is acting as an agent is a question of fact and depends on the terms of the agreement between the parties involved. For more information, see GST/HST Info Sheet GI-012, Agents, or call 1-800-959-5525.

Passenger transportation services

This section gives information on how the GST/HST applies to domestic and international passenger transportation services. Before explaining whether a passenger transportation service is subject to the 5% GST or the HST at the rate of 12%, 13% or 15%, several terms need to be defined.

Terms used in this section

Passenger transportation service

A passenger transportation service is any mode of transportation available to the public, such as transportation by bus, taxi, train, aircraft, or boat, as long as there is:

• a mode of conveyance;
• an operator of the conveyance independent of the traveller; and
• an itinerary.

Generally, an itinerary describes all elements of a journey, including origin, termination, stopovers, dates and times of arrivals and departures, and all modes of conveyance throughout the journey.

Ski lifts, horseback rides, hot-air-balloon rides, and hang gliding are not considered passenger transportation services. Vehicle rentals that the traveller operates and controls, such as automobiles, motor homes, motorcycles, bicycles, snowmobiles, all-terrain vehicles, and other recreational vehicles, are also not considered to be passenger transportation services.

Continuous journey

Generally, a continuous journey of an individual (or group of individuals) means the set of all passenger transportation services provided to the individual or group as part of the same journey. However, certain conditions must be met before a journey is a continuous journey.

To find out if a journey is a continuous journey, first consider whether all of the passenger transportation services in the journey are provided on one ticket or on two or more tickets.

One ticket

If you provide one or more passenger transportation services for which you issue one ticket or voucher, all of the passenger transportation services on that ticket or voucher are part of one continuous journey.

Note
Stopovers do not affect a journey's status as a continuous journey when all transportation services in the journey are provided on one ticket or voucher.

Two or more tickets

If you provide more than one passenger transportation service and you issue separate tickets or vouchers for the different legs of the journey, all of the legs may be part of one continuous journey if all of the following conditions are met:

• All of the tickets or vouchers are issued by the same supplier or by two or more suppliers through one agent acting on behalf of all the suppliers.
• All tickets are supplied at the same time and the supplier or agent keeps documentation to show that there is no stopover between any legs of the journey.
• If all tickets or vouchers are issued at different times, the supplier or agent keeps documentation showing that there is no stopover between any legs of the journey.

Origin

Origin means, for a continuous journey, the place where the first passenger transportation service that is included in the continuous journey begins.

Stopover

A stopover, for a continuous journey, is any place where a traveller, or a group of travellers, boards or exits an aircraft, bus, train, boat, or other mode of passenger transportation for any reason other than to transfer to another conveyance, or for the conveyance to be serviced or refuelled.

A stop of more than 24 hours between two legs of a journey is generally considered a stopover when two or more tickets are issued for the legs of the journey. However, if the supplier or agent can prove that the stop is for servicing or refuelling the conveyance, or for the traveller to transfer to another conveyance, the stop is not considered a stopover. The legs will still be a part of the continuous journey, and the continuous journey status will be unaffected.

A stop between two legs of a journey that is 24 hours or less is not considered a stopover and will not affect whether the legs are part of a continuous journey.

Termination for a continuous journey

The termination, for a continuous journey, is the place where the last passenger transportation service that is included in the continuous journey ends.

Taxation area

A taxation area means Canada, the United States (except Hawaii), and the islands of St. Pierre and Miquelon.

Domestic passenger transportation services

Generally, the GST/HST applies to all passenger transportation services provided in Canada. This includes transportation by bus between two Canadian cities.

However, a domestic passenger transportation service may be zero-rated if it is part of a continuous journey that has an international element. For more information, see Sales of domestic passenger transportation services to travel providers and International passenger transportation services.

Which rate of tax applies – GST or HST?

The tax that applies depends on the province in which you supply the domestic passenger transportation service.

If the passenger transportation service is supplied:

• in a participating province, the supply is subject to the HST; or
• in the rest of Canada, the supply is subject to the GST.

Sales of domestic passenger transportation services to travel providers

A domestic passenger transportation service supplied to a travel provider, such as a non-resident tour operator, is zero-rated if both of the following conditions are met:

• the travel provider resells the domestic transportation service to an individual as part of a continuous journey under which all transportation services are zero-rated; and
• the individual uses the transportation as part of a continuous journey under which all transportation services are zero-rated.

The supplier must get proof from the travel provider that the transportation service was resold as part of a continuous journey under which all transportation services were zero-rated. Acceptable proof includes a passenger list, a tour itinerary, and a certificate of zero-rated entitlement.

The passenger list must contain the names and addresses of the travellers. However, the supplier can agree that the travel provider can keep the passenger list and provide it on request.

The following certificate of zero-rated entitlement is an example of the information required.

To:_________________________________________________________________

(name and address of registered supplier of transportation service)

We hereby certify that the following passenger transportation services that we have purchased from you, namely:

___________________________________________________________________

(detailed description of the required services the supplier will provide)

will be included in one or more continuous journeys or tour packages, and will qualify for zero-rated status under the Excise Tax Act. We will pay the GST/HST at the applicable rate in respect of any transportation service found to be taxable at the applicable rate during an audit of

___________________________________________________________________

(name of registered supplier)

Dated at________________________this___________day of,__________20___

___________________________________________________________________

Signature of authorized officer of recipient

___________________________________________________________________

Name of recipient or authorized representative

___________________________________________________________________

Title of authorized representative

The supplier must determine whether all criteria to zero-rate the transportation services in the continuous journey are met, or whether the GST/HST at the applicable rate has to be charged. If the supplier determines that a domestic passenger transportation service does not meet the zero-rating criteria, the travel provider has to pay the applicable GST/HST to the supplier.

Sometimes the sale of the domestic passenger transportation service happens before the travel provider assembles and sells the continuous journey or tour package containing the transportation services to individual travellers. In this case, the supplier can accept an interim certificate or other declaration of intent from the travel provider. The travel provider must follow up on the interim document with proof that all criteria for zero-rated status have been met.

If later it is determined that the domestic passenger transportation service does not meet the zero-rating criteria, as previously thought, the supplier has to charge and collect the GST/HST on that supply. If the supplier has already filed its return for the reporting period in which it made that supply, it has to ask that the previously filed return be amended to include the GST/HST on that supply. Interest will apply on any amount due as a result of the amendment. To ask for an amendment to a return, write to your tax services office with the details.

If you have charged tax on a domestic passenger transportation service that meets the zero-rating criteria, you can refund the amount charged as tax to the client if all the refund criteria are met.

International passenger transportation services

In many cases, passenger transportation services can be zero-rated if they are part of a continuous journey that meets certain conditions. These conditions are different depending on whether air travel is included in the continuous journey.

Continuous journey that includes air travel

A domestic passenger transportation service is zero-rated if it is provided to an individual (or group of individuals) as part of a continuous journey that includes air travel and any one of the following applies:

• the origin of the continuous journey is outside Canada but inside the taxation area. For example, if the origin of a continuous journey is in the continental United States, all passenger transportation services in that journey are zero-rated because the origin is outside Canada but inside the taxation area;
• the origin or termination of the continuous journey or any stopover during the continuous journey is outside the taxation area;
• the origin, termination, and all stopovers during the continuous journey are outside Canada; or
• all places where the individual or group embarks or disembarks an aircraft are outside Canada and the origin or termination of the continuous journey, or any stopover during that journey, is outside Canada.

For a continuous journey that includes air travel, as long as there is an overseas origin, termination, or stopover, all domestic passenger transportation services included in the continuous journey are zero-rated.

Continuous journey that does not include air travel

Generally, the GST/HST applies to trans–border day trips (without air travel) when both the origin and termination are in Canada and the traveller is not scheduled to be outside Canada for more than 24 hours. Usually these trips are referred to as round trips.

A trans–border day trip originating in a non-participating province is generally subject to the GST. Such a trip originating in a participating province is generally subject to the HST. Examples of taxable trans–border day trips taxable at the applicable rate include:

• a bus tour beginning and ending in Canada, which starts in New Brunswick and has a stop in the state of Maine (subject to the HST);
• a one-day, round-trip bus excursion from Alberta to the state of Montana (subject to the GST); and
• a one-day fall bus round-trip excursion from Montréal, Quebec, to the state of New Hampshire (subject to the GST).

However, if a passenger transportation service (other than one that is included in most trans–border day trips) is provided to an individual (or group of individuals) as part of a continuous journey that does not include air travel, that domestic passenger transportation service will be zero-rated if one of the following applies:

• the origin or termination of the continuous journey is outside Canada; or
• there is a stopover outside Canada.

Note
A stopover in Canada will not affect the zero-rated status of transportation services if all of those services are provided on a single ticket or voucher.

This includes transportation by bus or train between Canada and the United States. However, it does not apply when the transportation is included in a trans–border day trip, mentioned earlier in this section.

Other services provided with a transportation service

The following services, if provided by the same supplier of the passenger transportation service, will have the same tax status as that transportation service:

• a service of issuing, delivering, amending, replacing, or cancelling a ticket, voucher, or reservation for a taxable transportation service you supplied in Canada;
• a service of supervising an unaccompanied child; and
• a service of transporting an individual's baggage.

This means that if you provide one of these other services listed above with a transportation service that you also provide, the GST/HST will apply to that other service as follows:

• if the transportation service is subject to the GST, that other service is subject to the GST;
• if the transportation service is subject to the HST, that other service is subject to the HST; or
• if the transportation service is zero-rated, that other service is also zero-rated.

If the passenger transportation services in a continuous journey are zero-rated, a service of supervising an unaccompanied child will also be zero-rated if it is provided during one or more legs of the child's continuous journey.

Example
The supervision of a child on a flight from Edmonton, Alberta, to Vancouver, British Columbia, is zero-rated because it is provided with a zero-rated passenger transportation service. It forms part of the child's continuous journey from Edmonton to Tokyo, Japan. The service is zero-rated even if the carrier does not supervise the child during the leg of the journey from Vancouver to Tokyo.

If the service mentioned above is not supplied with a passenger transportation service, it has to be separately considered to determine which tax rate applies.

Sales of taxable goods and services on board conveyances in Canada

If, while providing a passenger transportation service in Canada, you sell taxable goods and services on board a conveyance during a leg of a journey, the supply is made in the province in which that leg of the journey begins. Therefore, if that leg begins in a non-participating province, the supply is subject to the GST. If that leg begins in a participating province, the supply is subject to the HST at the rate in effect in that province.

Note
For these purposes, a leg of a journey is considered to be the part of the journey between stops for passenger embarking or disembarking, or for fuelling or servicing the conveyance.

Example
A traveller buys an airline ticket for travel from Corner Brook, Newfoundland and Labrador, to Winnipeg, Manitoba, via Saint John, New Brunswick. The traveller buys a glass of wine on the first leg of the journey to Saint John, New Brunswick. The traveller has to pay the 13% HST on the glass of wine because that leg of the journey begins in Newfoundland and Labrador. If the traveller buys another glass of wine on the second leg of this flight, HST also applies because that leg of the journey begins in New Brunswick.

Sales of goods and services on board conveyances in international travel

For GST/HST purposes, an international flight is a flight of a commercially operated aircraft originating or terminating outside Canada. Similarly, an international voyage is a voyage of a commercially operated vessel originating or terminating outside Canada.

If you supply goods or services to the individual on the aircraft or vessel on an international flight or voyage, the supply is considered to be made outside Canada and is not subject to the GST/HST if:

• in the case of goods, physical possession of the goods is transferred to the individual on board the aircraft or vessel; and
• in the case of services, the services are wholly performed on the aircraft or vessel.

Travel agencies

Travel agencies usually act as agents for selling property and services on behalf of other businesses, such as airlines and hotels, and receive a commission for their services.

Travel agencies may also be suppliers of property and services. For example, if you are a travel agency that buys a block of airline flights and hotel rooms for resale, you are not acting as an agent. You are the supplier of those flights and rooms. If the flights and rooms are taxable (other than zero-rated), you have to charge and report the GST/HST on those sales.

What is a travel provider?

For the purposes of this guide, travel providers are travel agents, hotels, air carriers, tour operators, and cruise operators. If you buy travel products or tour packages to resell, we consider you to be a travel provider.

When do I charge tax on commissions?

If you are acting as an agent, the GST/HST applies to your commissions, unless the services you provide are zero-rated. However, if you are an independent travel agent registered for the GST/HST and you provide services to a travel agency, your services to the travel agency are subject to the GST/HST even if, on behalf of the travel agency, you make zero-rated supplies.

When are my services zero-rated?

Your service is zero-rated when you act as an agent for a person providing passenger transportation services by:

• selling a zero-rated passenger transportation service for them;
• selling a service of transporting an individual's baggage for them in connection with a zero-rated passenger transportation service;
• selling a service of supervising an unaccompanied child for them in connection with a zero-rated passenger transportation service; or
• issuing, delivering, amending, replacing, or cancelling a ticket or reservation for a zero-rated passenger transportation service on their behalf.

Also, if you are a travel agency acting as an agent for a non-resident person, your service is zero-rated when:

• the service relates to a sale made outside Canada by or to the non-resident; or
• the service relates to a zero-rated sale of exported goods or services to the non-resident.

Which rate of tax applies – GST or HST?

If the travel agency's service is performed in whole or in part in Canada, the service is considered to have been made in Canada and is subject to the GST/HST at the applicable rate.

For a travel agency's services in Canada, the tax that applies will depend on whether the agency's services are supplied in a participating or a non-participating province.

If the service is supplied:

• in a participating province, the supply is subject to the HST; or
• in the rest of Canada, the supply is subject to the GST.

Example
A travel agency in Yarmouth, Nova Scotia, acts as an agent on behalf of a hotel chain in Canada and receives commissions for booking accommodations at one of the hotel chains' hotels in Vancouver, British Columbia (BC). The agency charges 12% HST on the commission payable because the supply of the service is in relation to real property that is situated in the participating province of BC.

Collecting and reporting the GST/HST

If a travel agency is the supplier of travel products, the travel agency has to charge, collect, and report the GST/HST on the travel products (unless they are zero-rated).

When a travel agency is not the supplier of the travel products, but instead acts as an agent for another person who is the supplier, the travel agency only has to charge, collect, and report the GST/HST on the commission it charges (unless the supplies are zero-rated). The supplier of the travel products is responsible for charging, collecting, and reporting the GST/HST on the supply of the travel products (unless they are zero-rated). Although the supplier of the products is responsible for charging and accounting for the GST/HST, the travel agency may invoice and collect the tax from the purchaser and pass it on to the supplier.

Tour packages

What is a tour package?

As in any transaction, it is important to properly characterize what is being supplied in order to determine how the GST/HST applies to that transaction. For example, when a registrant combines two or more services or property and services together, the registrant must determine whether it is making one supply or multiple supplies and must characterize that supply or those supplies accordingly.

A tour package is a combination of two or more services or of property and services that includes transportation services, accommodation, a right to use a campground or trailer park, or guide or interpreter services when the property and services are supplied together for an all-inclusive price. A tour package is a single supply for GST/HST purposes. Generally, a tour package is a combination of various components to create something new.

However, all combinations of two or more services, or of property and services, are not necessarily tour packages. Every combination that includes elements such as transportation services or accommodation may not be a tour package for GST/HST purposes. The nature and purpose of the package being sold has to be considered in order to determine whether it is a tour package or something else. For example, if the overall purpose of a package is to provide a specialized service (such as wellness packages, educational or counselling packages, children's overnight camps, sports tournaments, or concert tours), it is not considered to be a tour package for GST/HST purposes.

As illustrated in the following examples, the meaning of tour package could result in a combination of two or more services, or of property and services, being considered a tour package for GST/HST purposes even though the package may not fit the common perception of a tour package. However, the reverse is also possible. That is, something that may appear to be a tour package may not be a tour package for GST/HST purposes.

How does the GST/HST apply to tour packages?

To determine the amount of the GST/HST you have to charge when you sell a tour package, you begin by identifying the tax rate(s) that would have applied to each element of that tour package if you had sold each element separately and not as part of a tour package. To do this, for each element, you have to determine in which province the supply is made.

Domestic tour packages

Same rate of tax

When you sell an entirely Canadian tour and all of the parts of the tour package would have been taxable at the same rate if these elements had been supplied separately and not as part of a tour package, you charge that rate on the total selling price of the tour package. You can claim an input tax credit (ITC) for the GST/HST paid or payable on property and services you bought and included in the tour package.

Combined rates of tax

When you sell an entirely Canadian tour package and elements of the package would have been taxable at different rates if they had been supplied separately and not as part of a tour package, you have to consider each element separately to determine the total tax payable on the tour package. To do this, for each element, you have to consider the place of supply rules to determine in which province the supply is made.

Tour packages combining supplies that are taxable, exempt, and made outside of Canada

When you sell a tour package that includes elements that are taxable at different rates, exempt, or are supplied outside of Canada, you have to determine the tax status of each element separately (as if you were selling each element separately and not as part of a tour package). The cost of the taxable elements of the tour package then has to be prorated as a percentage of the total cost of the tour package so that you can determine the total tax payable on the selling price of the tour package.

The taxable portions of a tour package are the portions of the tour package that would be subject to the GST/HST at 5%, 12%, 13%, or 15% (taxable elements) if you had supplied the element separately. To calculate the taxable portions, determine in which province each element is supplied. Then, add up the elements that are subject to the same tax rate and divide each result by the total cost of property and services included in the package.

The non-taxable portion of a tour package includes elements that, if supplied separately from the tour package, would be zero-rated, supplied outside Canada, or exempt.

For more information

Contact us if, after reading this guide, you would like to get forms or publications, or you need more help.

To get forms or publications, go to our Forms and Publications page or call 1-800-959-2221.

For more information, visit our GST/HST page or call 1-800-959-5525.

Teletypewriter (TTY) users

TTY users can call 1-800-665-0354 for bilingual assistance during regular business hours.

Direct deposit

Direct deposit is a safe, convenient, dependable, and time-saving method of receiving your GST/HST refunds and rebates. If you are expecting refunds or rebates when you file your GST/HST returns or rebate applications, you can send us a completed Form GST469, Direct Deposit Request or call 1-800-959-2221.

GST/HST rulings and interpretations

You can request a ruling or interpretation on how the GST/HST applies to a specific transaction for your operations. This service is provided free of charge. For more information, see GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, available at our GST/HST rulings and interpretations page or call 1-800-959-8287.

My Business Account

Access your business accounts online through My Business Account. With the wide range of services offered, you can:

• view your account balances and transactions;
• transfer payments;
• get additional remittance vouchers;
• calculate a future balance;
• calculate your instalment payments;
• make online requests for financial transactions;
• authorize your employees and representatives to have immediate online access;
• file a GST/HST return electronically;
• view the status of a return;
• view certain correspondence (for example, notices and letters); and
• view your banking information.

To use My Business Account, you need a user ID and password. To register for these secure online services or to check for new services, go to My Business Account.

My Payment

My Payment is a payment option that allows individuals and businesses to make payments online, using the Canada Revenue Agency's Web site, from an account at a participating Canadian financial institution. For more information on this self-service option, go to My Payment.

Our service complaint process

If you are not satisfied with the service you have received, contact the Canada Revenue Agency (CRA) employee you have been dealing with (or call the phone number you have been given). If you still disagree with the way your concerns are being addressed, ask to discuss your matter with the employee's supervisor.

If the matter is still not resolved, you have the right to file a service complaint by completing Form RC193, Service Related Complaint. If you are still not satisfied with the way the CRA has handled your complaint, you can contact the Taxpayers' Ombudsman.

For more information, go to Complaints or see Booklet RC4420, Information on CRA-Service Complaints.

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If you have any comments or suggestions that could help us improve our publications, we would like to hear from you.

Please send your comments to:

Taxpayer Services Directorate
Canada Revenue Agency
750 Heron Road
Ottawa ON K1A 0L5