Municipal Accommodation Tax (MAT)

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image of hand opening a hotel door

Background

On Thursday November 23, 2017, the Province of Ontario issued the Transient Accommodation Regulation 435/17, which came into force December 1, 2017 and provides the necessary provisions for municipalities across Ontario to implement a Municipal Accommodation Tax (MAT)

On October 29th, 2018, Huntsville Town Council passed By-Law 2018-131, approving the implementation of a four percent (4%) mandatory MAT applicable on all short-term accommodations under 30 days.

The MAT will come into effect on April 1st, 2019, and applies to all accommodation sold for a continuous period of less than 30 days in a hotel, motel, lodge, inn, and bed and breakfast.

Use of Revenue Generated Through the Program

The tax will generate funding to promote and develop tourism within Huntsville. 70% of the net revenues will be directed towards a newly established Non-Share Capital Corporation who's sole focus will be the enhancement and promotion of Tourism in Huntsville. This organization will direct funds towards tourism promotion and development with a focus on attracting more visitors to the Town through sports and cultural events, new product developments, and enhanced attractions and outdoor activities.

The other 30% of the net revenues will be retained by the Town of Huntsville, earmarked for projects and initiatives that promote and support tourism and economic development efforts that benefit residents and visitors.

About the Legislation

The Municipal Accommodation Tax is a new revenue tool that the provincial government has given Ontario municipalities to further promote tourism as an economic driver.

On May 17, 2017, the Province enacted Bill 127, Stronger, Healthier Ontario Act, 2017, providing municipalities the authority to levy a transient accommodation tax (hotel tax). The Transient Accommodation Regulation 435/17 came into force on December 1, 2017, outlining provisions for municipalities across Ontario to implement a Municipal Accommodation Tax (MAT).

The Regulation applies if a municipality imposes a tax in respect of the purchase of transient accommodation in the municipality under section Municipal Act 400.1 of the Act.

Background

On Thursday November 23, 2017, the Province of Ontario issued the Transient Accommodation Regulation 435/17, which came into force December 1, 2017 and provides the necessary provisions for municipalities across Ontario to implement a Municipal Accommodation Tax (MAT)

On October 29th, 2018, Huntsville Town Council passed By-Law 2018-131, approving the implementation of a four percent (4%) mandatory MAT applicable on all short-term accommodations under 30 days.

The MAT will come into effect on April 1st, 2019, and applies to all accommodation sold for a continuous period of less than 30 days in a hotel, motel, lodge, inn, and bed and breakfast.

Use of Revenue Generated Through the Program

The tax will generate funding to promote and develop tourism within Huntsville. 70% of the net revenues will be directed towards a newly established Non-Share Capital Corporation who's sole focus will be the enhancement and promotion of Tourism in Huntsville. This organization will direct funds towards tourism promotion and development with a focus on attracting more visitors to the Town through sports and cultural events, new product developments, and enhanced attractions and outdoor activities.

The other 30% of the net revenues will be retained by the Town of Huntsville, earmarked for projects and initiatives that promote and support tourism and economic development efforts that benefit residents and visitors.

About the Legislation

The Municipal Accommodation Tax is a new revenue tool that the provincial government has given Ontario municipalities to further promote tourism as an economic driver.

On May 17, 2017, the Province enacted Bill 127, Stronger, Healthier Ontario Act, 2017, providing municipalities the authority to levy a transient accommodation tax (hotel tax). The Transient Accommodation Regulation 435/17 came into force on December 1, 2017, outlining provisions for municipalities across Ontario to implement a Municipal Accommodation Tax (MAT).

The Regulation applies if a municipality imposes a tax in respect of the purchase of transient accommodation in the municipality under section Municipal Act 400.1 of the Act.

Q&A

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    You were very kind to respond so quickly and substantively to my question. My original query was based on a review of other city MAT policies and I saw that Niagara Falls was using a $2.00 per room charge rather than a 4 or other % levy. I couldn’t see anywhere in the MAT Regulations where there was a choice or flexibility in approach. Perhaps I should contact NF staff directly. Thanks again for getting back to me on the earlier request.

    Michael asked 4 months ago

    Thanks, at this time changing the rate from 4% to something else most likely would not be considered until the end of the pilot project which is a little over 2 years away.

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    Where did the figure of 4% come from? Is there flexibility in setting the tax, e.g. by applying a lower rate <4% or by applying a fixed dollar amount per room? Thank you. Michael Welsh

    Michael asked 4 months ago

    When the program was being developed the Town consulted with local hoteliers on what the % rate should. Based on their input and on what other Municipalities were setting their rate at we both agreed with 4%. The legislation set by the Province of Ontario around the establishment of a Municipal Accommodation Tax in a community requires the Municipality to establish a tax rate (%), we cannot set a fixed dollar amount/room.

    Thank you for your inquiry

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    Who authorized Huntsville Municipal Accommodation Tax Association to collect the new tax? Why Town of Huntsville elected this corporation to collect the tax instead of doing this itself? Was there a public tender for this contract to collect taxes?

    Serguei Kornienko asked 8 months ago

    Thank you for your question, Huntsville Municipal Accommodation Tax Association does not collect the new tax, 70% of the money the Town receives through the program is allocated to the Association. 

    As per Provincial Regulation the Town has to give at least 50% of all revenue received to a Tourism Marketing Association. Allocating them 70% of the revenue was authorized by Huntsville Town Council. A tender was not completed, staff, Council and stakeholders felt the creation of a non-share capital corporation with representation from multiple community stakeholders on the board would be the most effective way to guide how that portion of the revenue was spent.

    The collection of the actual tax is conducted by the Ontario Restaurant Hotel and Motel Association on behalf of the Town of Huntsville and was authorized by the Huntsville Town Council. There was a public tender issued to do this and they were the only respondents.

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    Is this 'tax' different than a Destination Marketing Program (DMP) or fee (DMF) that hotels can also implement? Are hotels permitted to charge both a DMF (up to 3%) as well as the MAT (4%)?

    KLDR asked 9 months ago

    The Destination Marketing Program was a voluntary fee that Hotels could choose to charge their guests, the Municipal Accommodation Tax program requires by a Municipal By-Law that all hotels charge a 4% fee and remit that back to the Municipality. If a Hotel were to charge an additional fee outside of this, it would be at their own discretion but could not be identified on the receipt as a Municipal Accommodation Tax.

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    Is increased taxation an economically sound vehicle to grow tourism? It would appear to be taking money from local people, who a) are allowing more people (particularly those who might not be as affluent) to visit Muskoka, b) would in turn certainly spend it on the local economy, in return for government projects with unknown tourism outcomes. Ultimately is this simply an excuse to get more spending money?

    Sean Boolsen asked 10 months ago

    Thank you for you inquiry, I believe you are referencing the recent report regarding the licensing program related to Private Short Term Accommodation Rentals in Huntsville as well as there inclusion in the Municipal Accommodation Tax program? Could you please confirm and I will be able to address you question appropriately.

    Thank you 

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    Why would it be that not one dime of this tax goes to anything other than tourism? It is almost unheard of that a government tax does not go to general revenues for obvious reasons as it allows these tax administrators (ie. the tourism operators) to cherry pick where their tax dollars go

    WHILLAP asked 11 months ago

    Thank you for your inquiry, in the documents section of this page, there is a report titled Municipal Accommodation Tax - Financial Policy, which outlines how the Town plans to spend their portion of the revenue, it is not solely focused on Tourism. 

    When developing this program with our stakeholders we did feel it was important that the money collected through Tourism receipts should be redirected towards increasing and developing Tourism, marketing, programming and infrastructure in the community which will also benefit residents. 

    Thanks

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    How will it be enforced for businesses? I'm curious how you will tax cottage rentals and more such as Air BnB area rentals.

    KMorrison asked about 1 year ago

    Sections 8 - 13 in the Municipal Accommodation Tax By-Law outlines the enforcement options the Municipality has, the by law is included in the documents section related to this project for you review.

    Town staff are currently working to include all short term vacation rental platforms in the MAT program and have had preliminary discussion with platforms such as Air BnB.

    Thank you

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    Hello. How will this be inforced?

    KMorrison asked about 1 year ago

    Could you please clarify, enforced on businesses or guests?

    Thank You

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    just another tax to avoid when travelling; Someone lost sight about visitors keeping locals employed by their local spending

    silver glen asked over 1 year ago

    Thank you for your comment respecting the implementation of the Municipal Accommodation Tax in Huntsville.

    In our discussions with our Hotelier Partners they to acknowledge that business could be lost though the implementation of this program; however we collaboratively agreed that the potential positive impacts of this program through increased marketing and programming efforts would ultimately bring more revenue to the community and local businesses.


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    Are small seasonal Bed and Breakfasts that are operating as small businesses earning under $30,000 per year so therefore not currently charging any tax subject to this 4% accommodation tax?

    Janet asked over 1 year ago

    Yes, B&B's that are operating as small businesses regardless of revenue are expected to charge this Tax. We understand during the initial implementation phase that some operators may have been missed due to the scale of their business and we will be following up with them.

    As the program progresses we will also be looking to include short term vacation rentals

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    Hi How will you be handling AIRBNB ? A google search shows that Huntsville have a large number of AIRBNB so this should generate significant funds

    redwood asked over 1 year ago

    The Town will be working with all short term vacation rental platforms with the goal of including them all in the MAT program. 

    This will be conducted during our 2nd phase of the program which will be taking place throughout 2019 and into 2020.

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    Should this tax be applied to accommodations that were booked several months in advance and before the approval on October 29th, 2018 with the MAT coming into effect on April 1, 2019?

    Kyle asked over 1 year ago

    If your accommodation was booked and paid for prior to April 1, 2019, the tax will not be applicable. 

    If it was booked before April 1, 2019 but paid for on April 1, 2019, or later, the tax is applicable.


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    Is this tax per room or per person.

    Susan asked over 1 year ago

    Thanks for the inquiry,

    The Tax is per room and not per person. Additionally items such as parking, Wi-F,i or meals are not subject to the Municipal Accommodation Tax

    Thank you