GST/HST Information for the Travel and Convention Industry

Notice to reader

The information on this page replaces the information in Guide RC4036 GST/HST Information for the Travel and Convention Industry, which has been discontinued.

Unless otherwise stated, all legislative references are to the Excise Tax Act or, where appropriate, the GST/HST Regulations.

The CRA uses the term "Indian" as it has legal meaning under the Indian Act.

This page uses plain language to explain the most common tax situations. It is provided for information only and does not replace the law.

Table of contents

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This page 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 explains what is and is not considered to be a tour package for GST/HST purposes. It also explains rebates for foreign conventions and non-resident exhibitors and includes information on how Canadian suppliers can pay or credit certain rebate amounts to eligible persons.

Digital economy businesses

This page does not provide detailed information for the new digital economy measures applicable to digital economy businesses including businesses that are registered or required to be registered under the simplified GST/HST registration regime of the digital economy provisions of Subdivision E of Division II of the Excise Tax Act (ETA) and to platform operators and non resident digital economy businesses that are registered or required to be registered under the normal GST/HST registration regime. You can refer to "GST/HST for digital economy businesses: Overview", or contact us at 1-833-585-1463 (from Canada and the U.S.) or 1-613-221-3154 (from elsewhere – collect calls are accepted) for more information. 

Note

If you are a charity, different rules may apply. For more information, see Guide RC4082, GST/HST Information for Charities.

GST/HST and Quebec

In Quebec, Revenu Québec generally 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, unless you are a person that is a selected listed financial institution (SLFI) for GST/HST or Quebec sales tax (QST) purposes or both. For more information, see the Revenu Québec publication IN‑203‑V, General Information Concerning the QST and the GST/HST. If you are an SLFI, go to GST/HST and QST – Financial institutions, including selected listed financial institutions.

Definitions

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

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 means 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 activitiy or to make an exempt supply.

Coupon includes a voucher, receipt, ticket or other device 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 means supplies of property and services that are not subject to the GST/HST. GST/HST registrants generally cannot claim input tax credits to recover the GST/HST paid or payable on property and services acquired to make exempt supplies.

Input tax credit (ITC) means a credit that 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 a province that has harmonized its provincial sales tax with the GST to implement the harmonized sales tax (HST). Participating provinces include New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, but do not include the Nova Scotia offshore area or the Newfoundland offshore area except to the extent that offshore activities, as defined in subsection 123(1) of the Excise Tax Act, are carried on in that area.

Person means an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or a body that is a society, a union, a club, an association, or a commission or other organization of any kind.

Property means any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, but does not include money.

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

Note

New measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these new measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST.

Service means anything other than:

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

Taxable supply means a supply that is made in the course of a commercial activity and is generally 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 may be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to provide these supplies.

What is the GST/HST?

The goods and services tax (GST) is a tax that applies to many supplies of property and services made in Canada.

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 property (for example, 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 qualifying items. For more information, see Guide RC4022, General Information for GST/HST Registrants.

GST/HST registrants who make taxable supplies (other than zero‑rated supplies) in the participating provinces collect tax at the applicable HST rate. GST/HST registrants collect tax at the 5% GST rate on taxable supplies they make in the rest of Canada (other than zero-rated supplies). Special rules apply for determining the place of supply. For more information on the HST and the place-of-supply rules, see Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province.

The HST rate can vary from one participating province to another. For the list of all applicable GST/HST rates, go to GST/HST calculator (and rates).

How does the GST/HST work?

If you are a GST/HST registrant, you generally have to charge and collect the GST/HST on taxable supplies (other than zero-rated supplies) you make in Canada. You must also file regular GST/HST returns to report that tax.

You can generally claim an ITC on your GST/HST return to recover the GST/HST paid or payable on purchases and expenses to the extent you use, consume, or supply them in your commercial activities.

For the consumer, there is no difference between zero-rated and exempt supplies of property and services because tax is not collected in either case. However, one of the differences for you, as the registrant, is that although you do not collect the GST/HST on zero-rated or exempt supplies of property and services, you can only claim ITCs for the GST/HST paid or payable on purchases acquired to make zero-rated supplies of property and services.

Taxable and exempt supplies

Taxable

Other than zero-rated

Charge the GST/HST (unless the supply is zero-rated)

Claim your ITCs

Zero-rated

Don't charge the GST/HST

Claim your ITCs

 

 

Exempt

You do not charge the GST/HST

You cannot claim ITCs

When you fill out your GST/HST return, deduct your ITCs from the GST/HST you charged your customers. The result is your net tax.

If the total amount of tax you charged is more than the amount of your ITCs, send the CRA the difference. If the total amount of tax you charged is less than the amount of your ITCs, you can claim a refund.

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 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 supplies of property and services (other than zero-rated supplies). However, in some situations, Indians, Indian bands and band-empowered entities are relieved of paying the GST/HST on taxable supplies. In addition, some groups and organizations, such as certain provincial and territorial governments, do not always pay the GST/HST on their purchases. For more information, go to GST/HST for businesses.

Note

We recognize that many Indigenous peoples in Canada prefer not to be described as Indians. However, the term Indian is used because it has a legal meaning in the Indian Act.

Taxable supplies

Most property and services supplied in or imported into Canada are subject to the GST/HST.

Taxable supplies (other than zero-rated)

The following are examples of taxable, other than zero-rated, supplies (for the list of all applicable GST/HST rates, go to GST/HST calculator (and rates):

Zero-rated supplies

Some supplies are zero-rated under the GST/HST – that is, GST/HST applies at a rate of 0%. This means that you do not charge GST/HST on these supplies, but you may be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to provide these supplies. The following are examples of supplies taxable at 0% (zero-rated):

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

Exempt supplies

Some supplies are exempt from the GST/HST – that is, no GST/HST applies to them. This means that you do not charge the GST/HST on these supplies of property and services, and you are generally not entitled to claim ITCs on property and services acquired to provide these supplies. Generally, you cannot register for the GST/HST if your business provides only exempt supplies; one exception is if you are a listed financial institution resident in Canada.

The following are examples of exempt supplies:

Should you register?

You have to register for the GST/HST if both of the following apply:

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 the total amount of all revenues (before expenses) from your worldwide taxable supplies from all your businesses and those of your associates, is $30,000 or less ($50,000 for public service bodies) over the last four consecutive calendar quarters and in any one calendar quarter.

In determining the total amount of revenues from taxable supplies (including zero-rated supplies) of property and services made inside and outside Canada by you and your associates, do not include revenues from supplies of financial services, sales of capital property, and goodwill from the sale of a business. For examples of supplies that need to be included in this calculation, see Taxable supplies.

Exceptions

Taxi operators, commercial ride-sharing drivers and non-residents (other than a person registered under Subdivision e of Division II) who enter Canada to sell admissions to a place of amusement, a seminar, an activity, or an event have to register for the GST/HST, even if they are small suppliers.

Voluntary registration

Although you generally do not have to register if you are a small supplier, 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 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, go to GST/HST for businesses 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 made in the course of 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, remit the difference to the CRA with your return. If the tax you charged your customers is less than the tax paid or payable, you can claim a refund on your return.

For more information, go to GST/HST for businesses 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, boarding house, lodging house or other similar premises (collectively referred to as a hotel).

However, you do not have to charge the GST/HST if you rent a residential unit for $20 or less per day of occupancy, regardless of the rental period. A residential unit includes a house, an apartment and a suite or room in a hotel that is occupied by an individual as a place of residence or lodging under a lease, license or similar arrangement.

In addition, you do not have to charge the GST/HST if you rent a residential complex or a residential unit in a residential complex for occupancy as a place of residence or lodging by the same individual for a continuous period of one month or more.

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 individual or individuals continuous use or possession of the same room for at least one month.

Are long term stays at my hotel taxable?

A long term stay (a stay for continuous occupancy by the same individual for one month or longer) in a hotel is generally taxable because, in most cases, a hotel is not a residential complex.

However, under limited circumstances, a hotel could be a residential complex for GST/HST purposes and long term stays would not be taxable.

A hotel is considered to be a residential complex if more than 10% of all of the residential units in the hotel are, or are expected to be, rented for continuous possession or use of 60 days or more.

Calculation methods to determine status as a residential complex

If your hotel 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 hotel 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 hotel 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, for example, a seasonal operation.

Example

You operate a 60-room hotel. During a one-year period both situations apply:

  • you consistently rent 25 of the rooms for periods of less than 60 days (Type A rentals). Each of these 25 rooms is rented for a total of 300 nights during the year at a rate of $70 per night
  • you consistently rent the other 35 rooms for periods of 60 days or more (Type B rentals). Each of these 35 rooms is rented for a total of 200 nights during the year at a rate of $45 per night

To find out if your hotel exceeds the 10% threshold and qualifies as a residential complex, use the revenue method or the room supply method, as follows:

Revenue method

If you decide to use the revenue method, use one of the two following calculations:

This calculation is the daily revenue from Type B rentals (60 days or more) divided by the daily revenue from all rentals:

Daily revenue calculation
Revenue Calculation Total
Daily revenue from Type B rentals: $45 × 35 rooms $1,575
Daily revenue from all rentals: $1,575 + ($70 × 25 rooms) $3,325
Percentage of Type B rental revenue: $1,575 ÷ $3,325 47%

This calculation is the total revenue from Type B rentals divided by the total revenue from all rentals (in this case, for a period of one year):

Total revenue calculation
Revenue Calculation Total
Revenue from Type B rentals: ($45 × 35 rooms × 200 nights) $315,000
Revenue from other rentals: ($70 × 25 rooms × 300 nights) $525,000
Total revenue from all rentals $525,000 + $315,000 $840,000
Percentage of Type B rental revenue $315,000 ÷ $840,000 38%

Room supply method

If you decide to use the room supply method, use one of the two following calculations:

This calculation is the number of Type B rooms (60 days or more) divided by the total number of all rooms:

Number of rooms available for rent calculation
Rooms Calculation Total
Number of Type B rooms Not applicable 35
Total number of all rooms 25 rooms  + 35 rooms 60
Percentage of Type B rooms 35 ÷ 60 58%

This calculation is the total number of nights rented for Type B rooms divided by the total number of all nights rented (in this case, for a period of one year):

Number of room nights sold calculation
Nights Calculation Total
Nights rented for Type B rooms: 35 rooms × 200 nights 7,000
Total of all nights rented: 7,000 + (25 rooms  × 300 nights) 14,500
Percentage of Type B nights rented: 7,000 ÷ 14,500 48%

In this example, the hotel qualifies as a residential complex. In this case, no matter which calculation you choose, the result is more than 10%.

This means both of the following:

  • you do not charge the GST/HST on a room that you rent for use as a place of residence or lodging by the same individual for a continuous period of one month or more
  • you have to charge the GST/HST on any room that you rent for a period of less than one month
Note

Any room rented for $20 or less per day of occupancy remains exempt.

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:

Parking

Generally, parking is taxable. However, parking is exempt if it is supplied for a period of at least one month to a guest in a residential complex and either of the following applies:

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 are zero-rated:

Note

A point-of-sale rebate of the 8% provincial part of the HST payable on qualifying prepared food and beverages is available in Ontario. For more information, see GST/HST Info Sheet GI-064, Harmonized Sales Tax for Ontario – Point-of-Sale Rebate on Prepared Food and Beverages.

Banquet and catering services

The GST/HST applies to most supplies of 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

Do not collect the GST/HST when a customer gives you a deposit towards a taxable purchase. 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. If the customer is a GST/HST registrant, the customer can claim an ITC for the GST/HST paid on the forfeited deposit.

Calculate the GST/HST on the forfeited deposit as follows:

Example

In April 2022, 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) in the line 105 calculation of your GST/HST return when you file electronically for the reporting period in which the amount was forfeited (or on line 103 if you file a paper return).

If the forfeited deposit was for convention space in a participating province, you would have to include an amount in the line 105 calculation of your GST/HST return when you file electronically for the reporting period in which the amount was forfeited (or on line 103 if you file a paper return) calculated using the applicable tax fraction for the participating province:

  • $57.52 (13/113 × $500) where the HST rate of 13% applies
  • $65.22 (15/115 x $500) where the HST rate of 15% applies

If the customer who forfeited the deposit is a GST/HST registrant, the customer may be entitled to claim an ITC for the GST/HST included in the forfeited amount when all of the other conditions for claiming an ITC are met because the customer 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 an amount by the manufacturer or another third party for accepting these coupons from customers. The value of the coupons includes the GST/HST, when used to purchase taxable supplies (other than zero-rated supplies). 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. We consider you to have collected a portion of the GST/HST equal to the tax fraction of the value of the coupon.

Report the GST/HST charged on your sales when you prepare your GST/HST return. The value of the coupon does not have to be reported separately.

Example

A customer used a $10 reimbursable coupon towards a product bought in February 2022 in Manitoba.

Price of product

$25.00

GST ($25.00 × 5%)

1.25

Subtotal

$26.25

Less reimbursable coupon value

(10.00)

Customer pays

$16.25

Report $1.25 on your GST/HST return for the GST charged on the sale.

The tax fractions are as follows:

The manufacturer who reimburses you can also claim an ITC (other than for zero-rated supplies) for the tax fraction of the coupon value. However, you, as the vendor who accepts the reimbursable coupons from the customer, cannot claim any ITCs for these coupons since you are reimbursed the tax by the manufacturer.

Non-reimbursable coupons

These are coupons that you, as the vendor, issue and accept, and for which no one reimburses you. They entitle the customer to a reduction in the price for a fixed dollar amount or a fixed percentage amount. As the issuer, you have the option to include the GST/HST in the value of the coupons when the coupons are used to purchase taxable property or services (other than zero-rated property or services).

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

Example

You operate in Halifax, Nova Scotia and you accept a non-reimbursable coupon that includes 15% HST.

Total price of item

$30.00

HST ($30.00 × 15%)

4.50

Subtotal

$34.50

Less coupon value

(10.00)

Customer pays

$24.50

Report $4.50 as HST charged for the sale on your GST/HST return. You can claim an ITC of $1.30 (15/115 x $10).

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.

In this case, when you file your GST/HST return, report the GST/HST you charged on the net price, which is the price after you deduct the coupon value. You cannot claim ITCs for coupons you issue that do not include the GST/HST.

Example

You operate in Ontario, and you accept a non-reimbursable coupon that does not include the GST/HST.

Total price of item

$30.00

Less coupon value

(10.00)

Subtotal

$20.00

HST ($20.00 × 13%)

2.60

Customer pays

$22.60

Report $2.60 as HST charged for the sale on your GST/HST return.

Other coupons

Other coupons (whether reimbursable or not) that are not for a fixed dollar amount may do any of the following:

These coupons reduce the selling price of an item before the GST/HST is added. Therefore, deduct the value of the coupons from the selling price before calculating the GST/HST.

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 (including gift cards and online gift certificates) is generally a voucher, receipt, or ticket that meets all of the following conditions:

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 deduct the amount of the gift certificate as if it were cash.

Example

You sell a taxable item in Alberta for $100, and the purchaser gives you a $20 gift certificate toward the purchase.

Price of item   

       $100

Plus GST ($100 × 5%)

             5

Subtotal

        $105

Less gift certificate

           (20)

Customer pays

          $85

For more information about gift certificates, see GST/HST Policy Statement P-202, Gift Certificates.

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.

Example

A hotel does not have enough parking spaces for all of its guests. It enters into an agreement with the operator of a parking lot situated nearby to allow guests to use its parking spaces. The agreement provides that the parking lot operator will invoice the hotel on a monthly basis for the use of the parking spaces. The hotel invoices the guest by including the parking charges on the guest's hotel bill. The hotel is making the supply of the parking space. It is not acting as an agent of the operator of the parking lot.

The hotel reports the total amount of GST/HST charged for the room and parking on its GST/HST return. The hotel can also claim an ITC for the GST/HST paid or payable to the parking lot operator for the parking charges.

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 applicable rate, 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, boat or motor vehicle as long as there is all of the following:

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

Continuous journey of an individual or a group of individuals means the set of all passenger transportation services provided to the individual or group for which a single ticket or voucher for all of the services is issued. A continuous journey also exists where two or more tickets or vouchers are issued for two or more legs of a single journey of the individual or group on which there is no stopover between any of the legs of the journey for which separate tickets or vouchers are issued, and all 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, provided that either:

Origin

Origin means, in respect of a continuous journey, the place where the passenger transportation service that is included in the continuous journey and that is first provided begins.

Stopover

For the purpose of determining if a supply of passenger transportation services may be zero-rated, a stopover, for a continuous journey of an individual or a group of individuals, means any place at which the individual or group embarks or disembarks a conveyance used in the provision of a passenger transportation service included in the continuous journey, for any reason other than transferring to another conveyance or to allow for servicing or refuelling of the conveyance. 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.

However, for the purpose of determining the province where a supply of passenger transportation services is made, a stopover does not include, in the case of a continuous journey of an individual or group of individuals that does not include transportation by air and the origin and termination of which are in Canada, any place outside Canada where, at the time the journey begins, the individual or group is not scheduled to be outside Canada for an uninterrupted period of at least 24 hours during the course of the journey.

Example

A registered tour operator sold a traveller a one-way rail ticket from Halifax to Moncton, and, at the same time, a one-way bus ticket from Moncton to Boston.

If the traveller is scheduled to leave on the bus within 24 hours of arriving in Moncton, both the bus and rail tickets are part of a continuous journey from Halifax to Boston even though separate tickets were issued for each mode of transportation. The tour operator keeps documentation showing that there is no stopover between any legs of the journey.

Termination for a continuous journey

The termination of a continuous journey means the place where the passenger transportation service that is included in the continuous journey and that is last provided ends.

Taxation area

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.

Exception

Municipal transit services and most domestic ferry services are exempt from the GST/HST.

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 tax rate 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:

Place of supply of passenger transportation service that is part of a continuous journey

Generally, a passenger transportation service that is part of a continuous journey is made in the province in which the continuous journey originates if the termination and all stopovers are in Canada. If the termination or a stopover is outside Canada, the passenger transportation service is made in a non-participating province.

Example 1

A person purchases a return flight from Ottawa, Ontario to Edmonton, Alberta. Both flights are made in Ontario because the continuous journey begins in Ontario and there is no termination or stopover outside Canada.

Example 2

A person purchases a return flight from Halifax, Nova Scotia to Boston, United States. Both flights are made in a non-participating province because there is a stopover outside Canada.

Passenger transportation service that is not part of a continuous journey

A passenger transportation service that is not part of a continuous journey is made in the province in which the service originates. However, if the passenger transportation service ends outside Canada, the service is made in a non-participating province.

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 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:

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.

Example 1

On behalf of several air carriers, a Canadian travel agency sells a one-way air ticket departing from Montréal, Quebec, to Tokyo, Japan. The ticket includes stops in Toronto, Ontario, and Vancouver, British Columbia, for two days each.

All of the transportation services in this journey are zero-rated because they are part of a continuous journey and there is an overseas destination. The Canadian stopovers do not cause the continuous journey to end because only one ticket was issued for all services provided.

Example 2

A person buys a return air ticket with a routing from Halifax, Nova Scotia, to Paris, France. The supply of the flight is zero-rated because the continuous journey has a stopover in France, which is outside the taxation area.

 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.

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:

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:

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:

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 the other service as follows:

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

An air carrier provides a continuous journey for a child consisting of a flight from Edmonton, Alberta, to Vancouver, British Columbia, and a second flight from Vancouver to Tokyo, Japan. Since the child will be unaccompanied on the flight from Edmonton to Vancouver, the carrier also provides a service of supervising the child on that flight. The service is zero-rated because it is provided with a zero-rated passenger transportation service. 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 property and services on board conveyances in Canada

If, while providing a passenger transportation service in Canada, you sell taxable property 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

Leg of a journey on a conveyance means a part of the journey that begins where passengers embark or disembark the conveyance or where it is stopped to allow for its servicing or refuelling and ends where it is next stopped for any of those purposes.

Example

A traveller buys an airline ticket for travel from Halifax, Nova Scotia, to Winnipeg, Manitoba, via Ottawa, Ontario. The traveller buys a glass of wine on the first leg of the journey to Ottawa, Ontario. The traveller has to pay the HST at the rate of 15% on the glass of wine because that leg of the journey begins in Nova Scotia. If the traveller buys another glass of wine on the second leg of this flight, HST at the rate of 13% also applies because that leg of the journey begins in Ontario.

Sales of goods and services on board conveyances in international travel

For GST/HST purposes, an international flight means any flight (other than a flight originating and terminating in Canada) of an aircraft that is operated by a person in the course of a business of supplying passenger transportation
services. Similarly, an international voyage means any voyage (other than a voyage originating and terminating
in Canada) of a vessel that is operated by a person in the course of a business of supplying passenger transportation
services.

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:

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 page, travel providers include travel agents, hotels, air carriers, tour operators, and cruise operators. A person that buys travel services or tour packages in the course of their business to resell is considered 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 (or you are making an exempt supply of arranging for the insurer’s issuance of an insurance policy). 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 generally 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 in any of the following situations:

Also, if you are a travel agency acting as an agent for a non-resident person, your service is zero-rated in either of the following situations:

 

Example 1

On behalf of an air carrier, a Canadian travel agency sells a passenger transportation service from Toronto, Ontario, to Paris, France. Since the transportation service is zero-rated, the commission the airline pays to the Canadian travel agency for its service is zero-rated.

Example 2

A Canadian travel agency reserves accommodation at a hotel in France for an individual. The hotel pays the travel agency a commission. Since the supply of the accommodation is made outside Canada, the commission the hotel pays to the Canadian travel agency is zero-rated.

Which rate of tax applies – GST or HST?

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

For a travel agency's taxable (other than zero-rated) services supplied 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:

Place-of-supply rules apply to determine whether a supply that is made in Canada is made in a participating province or a non-participating province.

Place-of-supply rules for travel agencies' services

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.

The general place of supply rules for services are subject to specific place of supply rules for certain services such as for
supplies of services in relation to certain types of property, as described later in this section. A supply of a service is generally made in a province where the supplier obtains a single home or business address of the recipient in the ordinary course of its business and that address is situated in that province. Where the supplier does not obtain any home or business address of the recipient in the ordinary course of its business, but obtains another single address in Canada of the recipient, that address will be used in determining the place of supply.

Where, in the ordinary course of its business, the supplier does not obtain an address in Canada of the recipient, the supply of services is made in a participating province if the services that are performed in Canada are performed primarily (more than 50%) in the participating provinces. The supply is made in the participating province in which the greatest proportion of the service is performed.

In the case where the greatest proportions of the service are performed equally in two or more participating provinces and it therefore cannot be determined in which participating province the greatest proportion of the service is performed, the HST will apply at the rate that is highest among those participating provinces.

If the services are performed primarily in the non-participating provinces or are performed equally in participating and non-participating provinces, the supply of services is made in a non-participating province and will be subject to the GST at 5%.

A supply of a service in relation to real property that is situated in Canada and is situated primarily in the participating provinces is made in the participating province in which the greatest proportion of the real property that is situated in the participating provinces is situated.

If this rule does not result in the determination of a single participating province because the greatest proportions of the real property are equally situated in two or more participating provinces, the supply of the service is made in the participating province among those provinces that has the highest rate for the provincial part of the HST. If two or more of the participating provinces in this case have the same rate for the provincial part of the HST, HST will be required to be charged by the supplier using that particular rate.

A supply of a service in relation to real property that is situated in Canada and otherwise than primarily (50% or less) in participating provinces is made in a non-participating province.

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 chain's hotels in London, Ontario. The agency charges 13% 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 Ontario.

For more information on determining the place of supply under the general rules when multiple addresses are
obtained or with respect to services in relation to real property or for other specific place of supply rules,
see Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province.

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.

Example

A travel agency in Manitoba, acting as agent for an air carrier, sells two domestic airline tickets for $1,400 ($700 each) for travel from Winnipeg, Manitoba, to Calgary, Alberta. The agency collects the total purchase price for the tickets plus the GST from the purchaser (customer) for the air carrier.

The agency forwards this amount, minus its commission and the GST on that commission, to the air carrier. The agency's commission is 8.25% of the selling price of the ticket, not including the GST.

Sample invoice by travel agency

Airline tickets (2 × $700)

$1,400.00

GST ($1,400 × 5%)

70.00

Amount paid by customer

$1,470.00

Commission:

$1,400 × 8.25% = $115.50

GST:

($115.50 × 5%) = 5.78

Subtotal:

$121.28
 
(121.28)

Amount due to air carrier:

$1,348.72

The travel agency includes the $5.78 GST it charged the air carrier on its commission in the line 105 calculation of its electronically filed GST/HST return (or on line 103 if it files a paper return).

The air carrier includes the $70 GST that the customer paid on the airline ticket in the line 105 calculation of its electronically filed GST/HST return (or on line 103 if it files a paper return). It can also claim $5.78 as an ITC for the GST it paid on the travel agency's commission in the line 108 calculation of its GST/HST return.

Tour packages

What is a tour package?

As in any transaction, it is important to properly characterize what is being supplied 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, not all combinations of two or more services, or of property and services, are considered to be tour packages. A 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 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.

Example 1

A registrant in Calgary, Alberta, sold a package to Japanese tourists. The package includes a meal in a restaurant, a ticket to a sports event, and the services of an interpreter. The property and services were sold together for an all-inclusive price. Although this package may not fit the common perception of a tour package, it is a tour package for GST/HST purposes.

Example 2

A business in Vancouver, British Columbia, sold an all-inclusive package to international students. This package included instruction in English as a second language, books, accommodation, three meals per day, and recreational activities. This supply is an exempt service of instructing individuals in English as a second language. It is not a tour package.

What qualifies as short term or camping accommodation?

Short term accommodation means the rental of a residential unit or residential complex in Canada as a place of residence or lodging for an individual who will occupy it continuously for a period of less than one month and for which the GST/HST is payable. It includes any type of overnight shelter (except those noted on the next page) supplied as part of a tour package that also includes food and the services of a guide.

For example, overnight or week long accommodation in any of the following would usually be considered short term accommodation:

Short term accommodation does not include any of the following:

Camping accommodation means a campsite at a campground or recreational trailer park in Canada that is rented continuously as a place of lodging for periods of less than one month to the same individual. It includes water, electricity, and waste disposal services, if provided with the campsite and accessed by an outlet or hook up at the campsite.

What qualifies as a service?

A service means anything other than property, money, and anything that is supplied to an employer by an employee in the course of employment. Some examples include:

The following do not qualify as services because they are property:

What is an all inclusive price?

All inclusive price generally means a single price for all property and services sold together in a package. However, in the tourism industry, sometimes prices for certain property or services that are included in a tour package are listed on an invoice for information purposes. The CRA accepts that such packages are sold for an all inclusive price.

Examples of tour packages

Example 1

A package includes round trip air transportation, hotel accommodation in Canada, guided sightseeing tours, and meals. The package was sold for an all inclusive price.

This package is a tour package for GST/HST purposes since at least one property (short term accommodation in Canada) and services (both the air transportation and the sightseeing tours are services) are provided for an all inclusive price.

Example 2

A package includes accommodation at a bed and breakfast in Canada, bus transportation to and from an outlet shopping center in a neighbouring city, and attendance at a festival. The package was sold for an all inclusive price.

This package is a tour package for GST/HST purposes since at least one property (short term accommodation in Canada) and a service (intercity bus transportation) are provided for an all inclusive price.

Example 3

A buyer asks that an advertised package be altered to add theatre tickets and a car rental. The advertised package included hotel accommodation in Canada and round trip air transportation. The altered package was sold for an all inclusive price.

This package is a tour package for GST/HST purposes since at least one property (short term accommodation in Canada) and a service (air transportation) are provided for an all inclusive price.

Example 4

A tour operator offers customized packages to buyers. 

The tour operator offers short term accommodation in Canada, meals, air transportation, and admission ticket options. The buyers build their own package by choosing one of each option. The package was sold for an all inclusive price.

This package is a tour package for GST/HST purposes since at least one property (short term accommodation in Canada) and a service (air transportation) are provided for an all inclusive price.

Examples of packages that are not tour packages for GST/HST purposes

Example 1

A package includes short term accommodation in Canada, meals, and admission to a heritage site sold for an all inclusive price.

This package is not a tour package for GST/HST purposes. Although the package includes property (short term accommodation in Canada, meals and the admission), it does not include a service.

Example 2

A hotel in Canada provides short term accommodation and a shuttle to and from a nearby casino. The shuttle is included in the room price.

This is not a tour package for GST/HST purposes because the shuttle is part of the accommodation. Therefore, this package does not include a service.

Example 3

A stay at an all inclusive resort in Canada includes accommodation at the resort, meals at the resort, access to the resort swimming pool, access to the resort tennis court, and a spa service at the resort spa.

This is not a tour package for GST/HST purposes because in the case of an all inclusive resort, items such as the meals, complimentary access to the swimming pool and tennis court, and complimentary service at the resort spa are amenities that are part of the accommodation. Therefore, this package does not include a service.

An amenity is an item that plays a minor role or subordinate role, or if no part of the consideration can reasonably be attributed to it. Some examples are:

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. For each element, you have to determine in which province the supply is made.

Domestic tour packages

Same tax rate

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 generally claim an ITC for the GST/HST paid or payable on property and services you bought and included in the tour package.

Example

A registrant tour operator assembles round-trip airfare, hotel accommodation, and a bus excursion into a domestic tour package. All of these elements, if supplied separately and not as part of a tour package would have been taxed at 5% (GST). The tour operator adds a 20% mark-up to the cost (not including the GST) of the elements in the package.

Tour operator's purchases

3 double hotel rooms in Saskatoon

$600.00

6 airline tickets

2,100.00

6 bus tickets – excursion

200.00

Subtotal 

$2,900.00

GST ($2,900 × 5%)

145.00

Tour operator pays

$3,045.00

Tour operator's charges

Cost after claiming ITC of $145

$2,900.00

20% mark-up ($2,900 × 20%)

580.00

Subtotal

$3,480.00

GST ($3,480 × 5%)

174.00

Customer pays

$3,654.00

The tour operator reports $174.00 as GST collected in the line 105 calculation of its electronically filed GST/HST return (or on line 103 if it files a paper return). It can claim the $145 of GST it incurred to assemble the tour package as an ITC in the line 108 calculation of its GST/HST return.

Combined tax rates

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.

Example

A registered tour operator sold a 10-day package that included a return flight from Edmonton, Alberta to Halifax, Nova Scotia, and hotel accommodation in Halifax. The GST would have applied to the air transportation part of the package if the operator had supplied the air transportation separately because the flight originates in a non-participating province. The HST would have applied at the rate of 15% to the hotel accommodation if the operator had supplied it separately because the accommodation is supplied in the participating province of Nova Scotia. The tour operator has a 20% profit margin.

Travel services prorated so that you can determine the total tax payable on the tour
Component Cost Profit margin (20%) Selling price
Round-trip airfare $600 $120 $720
Hotel $900 $180 $1,080
Total $1,500 $300  $1,800

The GST taxable portion of the tour package is 40% of the total cost to the tour operator ($600 ÷ $1,500 = 40%). Therefore, the GST applies to 40% of the tour package selling price. The HST taxable portion of the tour package is 60% of the total cost to the tour operator ($900 ÷ $1,500 = 60%). Therefore, the HST applies to 60% of the tour package selling price.

Therefore, the tax to be paid on the selling price of the tour package is as follows:

Total selling price

$1,800.00

GST ($1,800 × 40% × 5%)

36.00

HST ($1,800 × 60% × 15%)

162.00

Customer pays

$1,998.00

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, other than zero-rated supplies (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.

Example

A registered tour operator sold a package that included a flight from Winnipeg, Manitoba, to Orlando, Florida, hotel accommodation in Orlando, and a sightseeing excursion in Orlando. The airfare element represents the taxable portion of the package on which the GST is charged.

The non-taxable portion includes the hotel accommodation and the sightseeing excursion in Orlando as they would have been supplied outside Canada if they had been supplied separately and not part of the tour package.

Tour operator's purchases

Round-trip flight from Winnipeg to Orlando
(taxable at 5%)

$550.00

Accommodation and sightseeing
(non-taxable)

300.00

Subtotal

$850.00

GST paid to suppliers ($550 × 5%)

27.50

Tour operator pays

$877.50

Tour operator's charges

Cost after claiming ITC of $27.50

$850.00

20% mark-up ($850 × 20%)

170.00

Subtotal

$1,020.00

Taxable part:
Cost of taxable services ÷ total cost
$550 ÷ $850 = 65%
Subtotal: $1,020 × 65% = $663.00

GST on tour ($663 × 5%)

$33.15

Customer pays 

$1,053.15

If some elements in the taxable portions of a tour package would have been taxed at 5% if supplied separately and not as part of the package, and some would have been taxed at different HST rates, you have to determine the percentage of the taxable portions subject to each rate of tax. 

Usually, a tour operator continues to use the same percentages for each tax rate to determine the amount of tax to charge (even if a discount is offered) whenever it sells the tour package.

If the tour operator sells the tour package to another registrant tour operator, the other operator has to charge the GST/HST using the same percentage for each tax rate when it resells the tour package. The other tour operator applies these percentages to its selling price for the tour package to determine how much tax it charges. If the tour operator changes the tour package by adding or deleting elements, it is likely a new tour package and the tour operator has to recalculate the percentages. For more information, refer to GST/HST Memorandum 27.1, Calculating the GST/HST on Tour Packages.

Change in tour package

If there is a significant change in the cost of acquiring the elements included in the package, you may have to recalculate the taxable portions and the non-taxable portions before calculating the GST/HST to be charged on the tour package. For more information, refer to GST/HST Memorandum 27.1, Calculating the GST/HST on Tour Packages.

You have to keep records to show how you calculated the taxable portions of tour packages and the percentages. It is your responsibility to make sure any travel agency acting on your behalf collects the correct amount of GST/HST from your customer.

Foreign tour packages

Tour operators do not charge the GST/HST on exclusively foreign tour packages. For example, a tour operator does not charge a traveller the GST/HST on a tour package that includes hotel accommodation and bus excursions in Scotland. The accommodation and excursions in Scotland are not subject to tax because they are supplied outside Canada.

Also, if airfare from Canada to Scotland is included with the accommodation and excursion in Scotland, the airfare is zero-rated and the tour operators do not charge tax.

Conventions

A convention is a formal meeting or assembly that is not open to the general public.

A convention does not include a meeting or assembly if the main purpose of which is any of the following:

Note

A convention may be either a domestic or a foreign convention. For more information, see:

Example 1

A society of professionals holds its annual general meeting at a hotel in Canada and also delivers information sessions to the attendees. The event is only open to members of the society.

This is a convention because the formal meeting and the assemblies are not open to the general public and none of the exclusions in the definition of convention apply.

Example 2

An environmental association holds a trade show at a convention centre in Canada. Exhibitors set up booths to promote the sale of their products and services. The event is open to the general public.

This is not a convention because the trade show does not meet the definition of convention.

Example 3

An amateur athletic association holds try-out sessions at a gymnasium in Canada to determine whether athletes qualify to participate in an international competition. The event is only open to the participating athletes.

This is not a convention because the main purpose of the sessions is to conduct contests.

The following are definitions of terms we use for conventions:

Convention facility means any real property that is rented by the sponsor or organizer of a convention for use exclusively as the site for the convention.

Exclusively, for the purposes of related convention supplies, means property or services used all or substantially all (90% or more) in connection with a convention.

Exhibitor means a person who rents exhibition space exclusively for use as a site for the promotion at a convention of the property or services provided by the exhibitor or its business.

Organizer of a convention means a person who acquires the convention facility or related convention supplies and organizes the event for the sponsor.

Notes

When a sponsor organizes its own convention or when the convention is organized by an in-house organizer, the sponsor is still a sponsor for GST/HST purposes and not an organizer.

A professional organizer, when acting as an agent of a sponsor, is not an organizer for the purposes of the Convention rebate.

Sponsor of a convention means the person who convenes the convention and supplies admissions to it.

What is a related convention supply?

Related convention supplies generally means property or services that were acquired, imported, or bought into a participating province by a person exclusively for consumption, use, or supply by the person in connection with a convention. They do not include any property or services that are provided for a separate charge, except if they are acquired exclusively to be consumed or used by an exhibitor in promoting its business, services, or property at the convention.

The following property and services are examples of possible related convention supplies.

Accommodation

Audio-visual

Business equipment

Convention materials

Convention show services

Destination management services

Food, beverages, and catering services (rebate limited to 50% of the GST/HST paid)

Note

Food, beverages, and catering services, including any gratuities charged, are not related convention supplies when supplied to exhibitors.

Memorabilia

Moving and storage services

On-site services

Printed matter

Professional services

Simultaneous interpretation equipment

Speakers and educational seminars

Telecommunications

Translators and interpreters

Transportation services

The following property and services are not related convention supplies:

Domestic conventions

A domestic convention is a convention held in Canada that is not a foreign convention.

Is GST/HST registration required?

Sponsors

If you are a resident sponsor of a domestic convention, you may be able to, or you may have to, register for the GST/HST.

If you are a non-resident sponsor of a domestic convention and are not already registered for the GST/HST, you have to register for the GST/HST before you make supplies of admissions to the convention.

For more information, see Should you register?

Organizers

If you are a resident or non-resident organizer of a domestic convention, you may be able to, or you may have to register for the GST/HST. For more information, see Should you register?

Exhibitors

If you are an exhibitor at a domestic convention and you are resident in Canada, you may be able to, or you may have to, register for the GST/HST. For more information, see Should you register?

If you are a non-registered, non-resident exhibitor who is in Canada only to promote your products or services at a convention, you do not have to register for and charge the GST/HST on any orders taken from attendees during the convention. However, if you bring products to the convention to sell to attendees, you may be considered to be carrying on business in Canada and may have to register. For more information, see Guide RC4027, Doing Business in Canada – GST/HST Information for Non-Residents.

Note

A rebate may be available to non-resident, non-registered exhibitors for the GST/HST paid on related convention supplies (other than food or beverages) and on the lease of space at the convention site. For more information, see Rebate for non-resident exhibitors.

Charging tax for domestic conventions

This section gives information on how the GST/HST applies to the following supplies for domestic conventions:

Convention facilities

If you are the operator of a convention facility in Canada and a GST/HST registrant, you have to charge the GST/HST when you lease out space. This applies whether you are leasing to a resident or a non-resident of Canada.

Admissions

If you are a registrant, you have to charge the GST/HST on the admissions you sell to the attendees of a domestic convention.

Exception 

If you are a sponsor of a domestic convention and you sell an admission to a non-resident attendee, you only have to charge the GST/HST on part of the admission.

To calculate the part of the admission that is not subject to the GST/HST, first add up the costs of acquiring the convention facility and related convention supplies (for food, beverages, or items provided under a contract for catering, include only 50% of the cost in your calculation).

Divide this result by your total convention costs. The result is the percentage of the admission that is not subject to the GST/HST when sold to a non-resident. The remainder is subject to the GST/HST when sold to a non-resident.

Example

You are a sponsor of a domestic convention to be held in Halifax, Nova Scotia, in December 2022 and you are registered for the GST/HST. You start selling admissions to the convention in July 2022 and charge $100 for each admission. You expect both resident and non-resident attendees.

You have to charge the HST because the convention is in a participating province.

You have to charge tax on the admissions as follows:

  • On admissions you sell to residents, charge the HST on the full admission.
  • On admissions you sell to non-residents, charge the HST on part of the admission.

For the admissions sold to non-residents, you need to calculate what part of the admission is subject to the HST. Start by calculating what part of the admission is not subject to the HST.

Your total convention expenses were $300,000, of which $210,000 was for acquiring the convention facility and related convention supplies.

You calculate the percentage of the admission that is not taxable as follows:

$210,000 ÷ $300,000 = 70%

Therefore, 70% of the admission you charge to non-resident attendees is not subject to the HST. This means that 30% (100% – 70%) of the admission you sell to non-residents is subject to the HST.

You will only charge non-residents the HST on $30 of the admission (30% of the $100 admission charge).

Canadian residents

Non-residents

Admission

$100.00
 

Admission

$100.00
 

HST ($100 × 15%)

15.00
 

HST ($30 × 15%)

4.50
 

Total

$115.00
 

Total

$104.50
 

Exception

If you are a sponsor of a domestic convention and you sell an admission to an Indian band or a band-empowered entity which plans to send its employees, band officials or members of the band to the convention, the convention provider does not charge the GST/HST on those admissions, where all the remaining conditions in Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians, are met.

While Indian individuals are entitled to acquire a right to attend a convention held on a reserve relieved of tax, they are required to pay the tax on a right to attend a convention held off a reserve.

If a convention organized by a registrant takes place on the lands of a First Nations who has imposed a First Nations Goods and Services Tax (FNGST), everyone, including First Nations and their members, pays the FNGST when acquiring the right to attend the convention. For more information, go to First Nations Goods and Services Tax.

Example

You are a sponsor of a domestic convention to be held in downtown Toronto, Ontario, where there are no Indian reserves, and you are registered for the GST/HST. You have to charge the HST because the convention is in a participating province.

The administration officer of an Indian band calls and wants to acquire a number of admissions for employees of the band. She says that she will fax from the band office to you a copy of the certificate attesting that the acquisition is for band management activities.

You do not have to charge the HST on those admissions.

Related convention supplies

If you are a registrant, you have to charge the GST/HST on related convention supplies.

Exception

If you are the sponsor of a domestic convention, do not charge the GST/HST on related convention supplies you provide to non-resident exhibitors at the convention if you also lease exhibition space to the exhibitor.

For more information, see What is a related convention supply?

Exhibition space

If you are a registrant, you have to charge the GST/HST when you lease exhibition space to exhibitors at the convention.

Exception

If you are the sponsor of a domestic convention, do not charge the GST/HST on the lease of exhibition space to non-resident exhibitors at the convention who will use the space exclusively as a site to promote their business, services, or property.

Foreign conventions

A foreign convention is a convention held in Canada where both of the following applies:

To determine the percentage of admissions reasonably expected to be provided to non-resident attendees, you could use the percentage of non-resident attendees under any of the following methods:

You can also use any other reasonable method.

If a convention is a foreign convention because it is reasonably expected that at least 75% of the total of the admissions will be supplied to non-residents, and it is later discovered that less than 75% of the admissions were supplied to non-residents, the convention would still be considered a foreign convention.

Is GST/HST registration required?

Sponsors

If you are a sponsor of a foreign convention, you cannot register for the GST/HST if your only commercial activity in Canada is making sales of admissions or related convention supplies or leasing exhibition space at a foreign convention.

However, if you sell books, posters, education material, or other items at the foreign convention, you may be able to, or you may have to register for the GST/HST. For more information, see Should you register? For information on carrying on business in Canada and GST/HST registration for non-residents, see Guide RC4027, Doing Business in Canada – GST/HST Information for Non-Residents.

Are you already registered for the GST/HST?

If you are the sponsor of a foreign convention and you are already registered for the GST/HST, your activities related to the foreign convention are not part of your commercial activities.

This means that you do not charge the GST/HST on supplies related to the foreign convention (such as supplies of admissions, related convention supplies, and exhibition space). You also cannot claim ITC for the GST/HST you pay on purchases related to the foreign convention. However, you may be able to apply for a rebate. For more information, see Rebate for foreign conventions.

Organizers

If you are an organizer of a foreign convention, you may be able to, or you may have to register for the GST/HST. For more information, see Should you register?

Exhibitors

If you are an exhibitor at a foreign convention and you are resident in Canada, you may be able to, or you may have to register for the GST/HST. For more information, see Should you register?

If you are a non-registered, non-resident exhibitor who is in Canada only to promote your products or services at a foreign convention, you do not have to register for and charge the GST/HST on any orders taken from attendees during the convention. However, if you bring products to the convention to sell to attendees, you may be considered to be carrying on business in Canada and you may have to register. For more information, see Guide RC4027, Doing Business in Canada – GST/HST Information for Non‑Residents.

Note

A rebate may be available to non-resident non-registered exhibitors for the GST/HST paid on related convention supplies (other than food or beverages) and on the lease of space at the convention site. For more information, see Rebate for non-resident exhibitors.

Charging tax for foreign conventions

This section provides information on how the GST/HST applies to the following supplies for foreign conventions:

Convention facilities

If you are a GST/HST registrant, you have to charge the GST/HST when you lease out space in Canada. This applies whether you are leasing to a resident or a non-resident of Canada.

Admissions

If you are a sponsor of a foreign convention, do not charge the GST/HST on admissions you sell to the attendees of a foreign convention, even if you are registered for the GST/HST.

Related convention supplies

If you are a registrant, you have to charge the GST/HST on related convention supplies.

Exception

If you are the sponsor of a foreign convention, do not charge the GST/HST on related convention supplies you provide to exhibitors at the convention.

For more information, see What is a related convention supply?

Exhibition space

If you are a registrant, you have to charge the GST/HST when you lease exhibition space to exhibitors at the convention. 

Exception 

If you are a sponsor of a foreign convention, do not charge the GST/HST on the lease of exhibition space to exhibitors at the convention who will use the space exclusively as a site to promote their business, services, or property.

Rebate for foreign conventions

Who can claim a rebate?

A rebate may be available for either:

Note

A rebate may also be available to non-resident exhibitors. For more information, see Rebate for non-resident exhibitors.

What expenses are eligible for the rebate?

A sponsor and a non-registered organizer of a foreign convention can claim a rebate for each of the following:

For more information, see What is a related convention supply?

Can I pay or credit a rebate amount?

A sponsor or non-registered organizer of a foreign convention can apply for the rebate by sending the CRA a filled out Form GST386, Rebate Application for Conventions, or, if you are the supplier of the convention facility or related convention supplies, you may be able to pay or credit a rebate amount to the sponsor or organizer.

Only the following suppliers can pay or credit a rebate amount:

In any other case, the sponsor or organizer of the convention has to fill out Form GST386 and send it to the CRA to apply for its rebate.

Note

If you pay or credit a rebate amount on the supplies, the sponsor or non-registered organizer cannot apply to the CRA for a rebate of that amount.

Documentary evidence 

When you pay or credit a rebate amount, the sponsor or non-registered organizer must provide you with documentation showing it is entitled to the rebate. This could include a convention agenda, itinerary or event program, complete hotel folios, copies of invoices, and receipts or other documents that confirm that the event was a foreign convention.

Joint liability

If we determine that the sponsor or non-registered organizer was not entitled to a rebate, or that the amount paid or credited was more than the amount of the rebate the non-resident was entitled to, and you knew or ought to have known this, you and the non-resident are jointly liable to pay us any amount owing. Otherwise, only the non-resident is liable to pay us any amount owing.

How to pay or credit a rebate amount

If you choose to pay or credit a rebate amount, you still have to charge the full amount of the tax due on the convention facility or related convention supplies. You have to show the full amount of the tax payable by the sponsor or non-registered organizer on the invoice and also show the rebate amount you paid or credited.

Note

The rebate amount you can pay or credit is the same as the amount that the sponsor or non-registered organizer would have received if it had paid the tax and filed a rebate claim with the CRA.

Include the full amount of the GST/HST collected or collectible from the sponsor or organizer in the line 105 calculation of your electronically filed GST/HST return (or on line 103 if you file a paper return). Then include the amount that you paid or credited in your line 108 calculation (or on line 107 if you file a paper return).

You can include the amount on any GST/HST return that is filed within one year of whichever of the following dates is later:

You also have to file Form GST106, Information on Claims Paid or Credited for Foreign Conventions, by the due date of the electronically filed GST/HST return for the period in which you claim the deduction in your line 108 calculation (or on line 107 if you file a paper return). For more information, see Form GST106.

Example

You are the organizer of a foreign convention held in Toronto, Ontario, and you are registered for the GST/HST. You invoice the non-resident sponsor of the convention for the following services:

  • meals and catering
  • meeting rooms and convention material
  • exhibit decorations
 
Item  Charge  HST  HST rebate   
Meals and cateringFootnote 1 $10,000 $1,300 $650
Meeting rooms 5,000 650 650
Convention materials 10,000 1,300 1,300
Exhibit decorations 5,000 650 650
Total $30,000 $3,900 $3,250

Net amount payable by sponsor

Invoice total

$30,000.00

Total HST

3,900.00

Subtotal

$33,900.00

Less rebate amount credited

(3,250.00)

Net amount sponsor pays

$30,650.00
Note

Your invoices have to show that you credited a rebate amount to the sponsor.

As the organizer, you include the $3,900 HST as the GST/HST collected or collectible in the line 105 calculation of your electronically filed GST/HST return (or on line 103 if you file a paper return). You include the $3,250 amount you credited as a deduction in the line 108 calculation of your return (or on line 107 if you file a paper return).

You can claim the deduction on any GST/HST return that is filed within one year of whichever of the following dates is later:

  • the day any tax related to the rebate became payable
  • the day the amount was paid or credited.

You also have to file Form GST106 Information on Claims Paid or Credited for Foreign Conventions, by the due date of your GST/HST return for the period in which you claim the deduction in your line 108 calculation (or on line 107 if you file a paper return).

For more information, see GST/HST Info Sheet GI-031, Foreign Convention and Tour Incentive Program – Registrant Organizers and Convention Facility Operators: Paying and Crediting the Rebate Amount for Foreign Conventions.

Rebate for non-resident exhibitors

Non-registered, non-resident exhibitors who rented or leased exhibition space exclusively to promote their business or products can claim a rebate for the GST/HST paid on the following supplies, if rented or purchased from a GST/HST registrant that is not the sponsor:

Suppliers cannot pay or credit the rebate amount to non-resident exhibitors. Non-resident exhibitors have to send the CRA a completed Form GST386, Rebate Application for Conventions, within one year after the last day of the convention to claim their rebate.

Note

Non-resident exhibitors have to pay the GST/HST on exhibition space and related convention supplies rented or purchased from a registrant that is not the sponsor.

Non-resident exhibitors do not pay the GST/HST on exhibition space or related convention supplies rented or purchased from the sponsor of the convention (whether foreign or domestic). A non-resident exhibitor that has paid tax in error on these items can ask a sponsor for a refund or credit of the amount. If the sponsor does not provide a refund or credit, the exhibitor can claim a rebate for tax paid in error. For more information, see Guide RC4033, General Application for GST/HST Rebates.

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