The Meaning of 'Hotel', 'Motel', 'Inn', 'Boarding House', 'Lodging House' and 'Other Similar Premises', as used in the definition of 'Residential Complex' and 'Residential Unit'

From: Canada Revenue Agency

Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.

GST/HST policy statement P-099

Date of Issue

December 16, 1993

Subject

The meaning of "hotel", "motel", "inn", "boarding house", "lodging house" and "other similar premises", as used in the definition of "residential complex" and "residential unit" (INTERNAL)

Legislative Reference(s)

Subsection 123(1), definition of "residential complex" and "residential unit" of the Excise Tax Act

National Coding System File Number(s)

11870-5

Effective Date

January 1, 1991

Text

This policy statement will discuss the meaning of "hotel", "motel", "inn", "boarding house", "lodging house" and "other similar premises", in the definition of "residential complex".

The definition of "residential complex" excludes a building, or part thereof, that is a hotel, motel, inn, boarding house, lodging house or other similar premise that provides all or substantially all of its accommodation for periods of less than 60 days. This policy will provide guidelines which make it possible to determine whether the building should be considered an establishment that may be excluded from the definition of residential complex if all or substantially all of its accomodation is for periods of less than 60 days. (These establishments also appear in the definition of residential unit.)

The determination of whether an establishment is a hotel, motel, inn, boarding house, lodging house or other similar premise, should be based on considerations involving all the following guidelines, but not all the guidelines necessarily apply to a given establishment since they may depend on the type of establishment and location of the establishment in question. Where applicable, the conditions described in these guidelines should generally be present throughout the year.

  • the establishment normally provides temporary accommodation rather than a permanent place of residence;
  • where required by municipal and/or provincial regulations, the establishment is licensed for business for the purpose of providing a temporary place to stay;
  • the establishment is available for rental to the public on a temporary [transient] basis

[For this purpose, the public is considered to be either the community as a whole or a defined class of the public, such as students or senior citizens. Excluded from this concept of the public is a limited group of persons, where such group is limited by some unique characteristics not found in the public at large, such as employees or shareholders of a particular company.]

  • where appropriate, there is a common registration area;
  • the rooms or suites in the establishment are furnished by the supplier;
  • depending on the nature of the establishment, housekeeping services and other facilities are available such as restaurants, meeting rooms, stores, etc.;

It is generally a requirement in all cases that there be a clear intention to operate the facility as a hotel/lodging or similar establishment. (Note that the requisite intent may not be present where one runs a hotel or similar operation because one is forced into it by circumstances on a temporary basis. See Sample Rulings, Example 3, below.)

Where the applicable guidelines and requirement are not present throughout the year in respect of the establishment in question, the establishment may not be a hotel, motel, etc., but rather a residential complex, regardless of the periods of accommodation provided. For example, a person who continually each year rents cottages in the summer on a daily basis in a hotel type operation and long-term during the winter as a rental type operation may in fact be renting residential accommodation in a residential complex throughout the year.

SAMPLE RULINGS

Example 1

Statement of Facts

An older building is operated by a Students Association and provides accommodation to students who attend various colleges and universities in the area. The students may stay on a long-term or a short-term basis, depending on their course requirements. However, the majority of students stay for the academic year. The accommodation

  • is available only to students;
  • does not offer other facilities or services (the students share housekeeping duties); and
  • has no common registration area (reservations are handled by the office staff in the course of their regular office duties).

There is no municipal or provincial regulations relating to the operation of the establishment in respect of its short-term accommodation.

Rulings Requested

Is this establishment a "hotel" or similar premise, as set out in the definition of "residential complex"?

Rulings Given

This establishment is not a "hotel" or similar premise, for the purposes of the Excise Tax Act. (The establishment is not licensed by a regulatory authority, has no common registration area and offers no facilities or services (such as restaurants, meeting rooms, and is not intended to be operated as a hotel/lodging facility.)

 

Example 2

Statement of Facts

Mr. John Doe is semi-retired and runs a small tourist resort in a popular vacation area in Ontario. The resort consists of four cottages, which are available for rental to the general public for short-term stays (i.e. less than 30 days) during the summer period (the first of May to the end of September). These cottages are closed in the off-season. The resort provides such services as laundry and housekeeping. The resort is licensed by the provincial tourism department to run the business of providing temporary accommodation.

Mr. Doe lives in the fifth cottage, which is used as his year-round residence. A small room in Mr. Doe's cottage/home serves as a registration area and office.

Rulings Provided

Do the four cottages qualify as a hotel, etc., as set out in the definition of "residential complex"?

Rulings Given

Each cottage qualifies as a "hotel" or similar premise for purposes of the definition of "residential complex". (Note that the guidelines and requirement must be applied to each cottage, as the definition of "residential complex" refers to a "building".)

 

Example 3

Statement of Facts

A real estate developer built a condominium complex containing residential condominium units. Due to an unexpected slowdown in the economy, the condominiums are not selling and the developer finds himself short of funds necessary to pay his financing costs. To provide cash flow which will enable him to meet his debts, the developer decides to furnish the units and make them available for short-term rental (i.e. less than 30 days) to the general public. In addition, he will provide services to tenants, such as housekeeping, laundry, facilitating business meetings, etc. He requires a license from the provincial tourism department to run such an establishment. He fully intends that this hotel-like operation be short-term only; he wants to sell the condominium units at his earliest opportunity.

Rulings Requested

During the period the condominium complex is run as a hotel, is the building considered a hotel within the definition of "residential complex"?

Rulings Given

The building would not be considered a hotel provided the developer does not intend to operate the complex as a hotel on a long term basis. Despite the fact that the operation has the requisite attributes of a hotel (i.e. short-term transient accommodation available to the general public, licensed by a regulatory authority, additional services provided, furnished by the supplier), the developer's goal is to sell the condominium units as residences. Thus, where the developer lacks the intent to run a hotel, the condominium complex still qualifies as a residential complex (assuming all the conditions in the definition of "residential complex" are met).

Note that although the complex may be considered a residential complex, the self-supply rules would not apply upon the rental of a unit unless occupancy of a unit is given to a person as a place of residence. (Occupation used as lodging does not trigger the self-supply rules.) Accordingly, the subsequent sale of the units may still be taxable even though they were previously occupied.

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