and Revenue Administration
Information Circular TL-1R3
||January 22, 2010
||Alberta Treasury Board and Finance,
Tax and Revenue Administration
|For more information:
/ January 2010
TOURISM LEVY ACT INFORMATION CIRCULAR:
TOURISM LEVY ACT
NOTE: This information circular is intended to explain legislation and provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this information circular and governing legislation, the legislation takes precedence.
This information circular provides an overview of the Tourism
Levy Act and its regulations. The topics discussed are:
- For the current tourism levy rate or previous hotel room tax rate, see Alberta Current and Historic Tax Rates.
- The tourism levy applies to the purchase price of accommodation, excluding the cost of meals and other services, paid for after March 31, 2005. The
levy is collected at the time of purchase.
- The tourism levy is collected on
all accommodation provided for consideration in a hotel, motel,
apartment building, hostel, lodging house, boarding house, bed
and breakfast, club or similar establishment in Alberta. The levy
applies whenever four or more bedrooms are available for
rent separately at the same time at the same location.
For more information see the “More than Three Bedrooms Available
for Rent” Rule.
- The tourism levy also applies to lodging acquired with a prepaid vacation
package. A “prepaid vacation package” is any transaction in which
an operator agrees to sell or otherwise provide accommodation
without a fee simple interest in real property to a
purchaser at a future date or dates. This form of accommodation
includes time-share unit rentals and vacation points.
- The tourism levy is also charged
on deposits made to secure accommodation, even if the accommodation
is later cancelled and the deposit forfeited. Where an operator
returns the deposit to the purchaser, no levy is payable. The
process for an operator to obtain a refund of the tourism levy
already submitted is explained in Information Circular TL-2, Responsibilities
of Operators Providing Accommodation.
- The tourism levy may apply even
if money is not paid for the accommodation (see “Calculation of
the Tourism Levy”).
- The “more than three bedrooms available
for rent” rule most often applies to bed and breakfast, cabin,
hostel, and prepaid vacation package operations.
- The tourism levy must be collected
whenever four or more bedrooms are available for rent
separately at the same time at the same location. Whether
or not the rooms are, in fact, rented is not the determining factor,
but whether they are available for rent.
- A bed and breakfast or similar establishment
with three bedrooms available for rent separately is not subject
to the tourism levy. However, if one or more additional bedrooms
become available for rent, then all of the bedrooms are subject
to the Tourism Levy. For example, if:
- three bedrooms are available
for rent on Monday – the tourism levy would not apply to any
of the bedrooms.
- on Tuesday and Wednesday a fourth
bedroom is made available for rent (for example, the operator
makes his/her own bedroom available), then the tourism levy
applies to all rooms rented on Tuesday and Wednesday, whether
or not the fourth bedroom is actually rented to someone.
- Cabins may also be subject to the
tourism levy. If four or more bedrooms are available for rent
separately at the same location, for instance, in an establishment
where there are two cabins and each cabin contains two bedrooms
available for rent separately, then the tourism levy applies.
- An establishment that rents individual
beds in a bedroom or dormitory and has four or more bedrooms or
dormitories available for rent separately must charge the tourism
levy on the rental of each bed. The number of individual beds
for rent in each bedroom or dormitory is not relevant in determining
whether or not an establishment is subject to the tourism levy.
- If an establishment will be required
to collect the tourism levy when a fourth bedroom becomes available
for rent, the operator must register with Tax and Revenue Administration
(TRA) (see the “Registration” section in Information
Circular TL-2, Responsibilities of Operators Providing Accommodation).
Purchased and Used by the Government of Canada
- The tourism levy does not apply
- occupied by the same individual
continuously for a period of 28 days or more.
- in an establishment (location
where lodging is provided) with fewer than four bedrooms available
for rent separately (see the “More than Three
Bedrooms Available for Rent” Rule section).
- that is a room or rooms without
beds, used for displaying merchandise, holding meetings, receptions,
- in a social care facility, nursing
home, or hospital.
- provided by a registered charity
as defined in the Income Tax Act (Canada) . However,
lodging in an establishment owned, or operated, by a registered
charity in connection with a course of instruction is subject
to the tourism levy.
- provided to an employee by an
employer, where the employer is not in the business of selling
lodging in an establishment owned or managed by, or on behalf
of, the employer.
- purchased and used by the Government
of Canada (see “Lodging Purchased and Used by
the Government of Canada”).
- purchased and used by diplomatic
representatives or the armed forces of foreign nations.
- provided on an Indian reserve
and purchased and used by an Indian or Indian band presenting
a valid identification card at the time of purchase (see “Lodging
on an Indian Reserve”).
- Where the accommodation is purchased
on behalf of, and used by, the Government of Canada, the purchaser
must provide certification that the Government of Canada is the
purchaser. The Government of Canada includes all federal departments,
certain agencies and crown corporations.
- An operator should obtain from the
purchaser an exemption certificate in the following form:
“This is to certify
that the accommodation ordered/purchased is being purchased
by (name of department, agency or crown corporation)
which is part of the Government of Canada or a tax-free Government
of Canada agency, and is therefore not subject to the Alberta
- The exemption certificate must specifically
refer to the purchase order, contract, or invoice relating to
the accommodation obtained and must be kept by the operator
for possible later audit. Any accommodation sold to a Government
of Canada entity without an exemption certificate being obtained
is subject to the tourism levy.
Provided on an Indian Reserve
- An Indian or Indian band is exempt
from paying the tourism levy if:
- the accommodation is provided
on an Indian reserve,
- the Indian or Indian band presents
a valid identification card at the time of purchase, and
- the accommodation is for the
use of the Indian or Indian band.
- An identification card can be
either a ministerial identification card issued
for the purposes of Alberta's Fuel or Tobacco Tax
Act or Regulations or a card issued under the Indian Act (Canada) showing the cardholder is an Indian.
Any accommodation purchased by an Indian or Indian band without
an identification card is subject to the tourism levy.
- Information about the name of the
Indian or Indian band purchasing the accommodation, the type of
identification card used, and the card number must be kept
by the operator for possible later audit.
- Lodging provided to an employee by an employer, or to an independent contractor by a person who is engaging the contractor’s services, in work camps is exempt from the levy if the following criteria are met:
- the employer or the person who is engaging the services of the independent contractor is not in the business of selling lodging,
- the establishment is owned by, or managed on behalf of, the employer or the person who is engaging the services of the independent contractor, and
- the establishment is a work camp.
- To be exempt from the levy, the facility must provide lodging to employees or independent contractors all, or substantially all, of the time. Generally, this means that, at any time, lodging is provided to employees or independent contractors at least 90 per cent of the time, or in at least 90 per cent of the rooms.
- From time to time, a work camp might sell lodging to hikers, backpackers, or other travellers in the area. The tourism levy applies to the lodging provided to individuals other than the employees or independent contractors.
- A work camp qualifies for exemption from the levy even if managed on behalf of multiple employers or persons engaging the services of independent contractors, providing that the camp meets all the above requirements.
Collected, Exemption Later Established
- The operator can omit the levy
only if the operator knows of an exemption condition at the
time the lodging is paid for and the exemption is recorded on the invoice, for
example, when the lodging is occupied by the same individual continuously
for 28 days or more. Operators are required to retain relevant documents
to support all levy-exempt revenue recorded.
- If at first the levy is charged
and the qualification for an exemption is later established, the
operator may refund the levy to the purchaser and deduct the amount
on the next return. The operator should retain the documentation
to support the deduction.
- The tourism levy is calculated on the purchase price paid for accommodation in Alberta, before application of the Goods and Services Tax (GST).
- If the price charged for lodging
includes meals or other services, the purchase price is that price
reasonably attributable to the lodging alone.
- Where the consideration received
for the accommodation is other than monetary consideration, is made in kind,
or the accommodation is occupied by a contractor performing services
for the operator (e.g., trades people or entertainers) the tourism
levy is to be collected on the purchase price deemed to be:
- that of similar accommodation
made available to another person by the operator on the day(s)
the person occupies the accommodation, or
- the amount, in the opinion of
the Minister of Finance, reasonably attributable to the accommodation.
- For prepaid vacation packages, the
levy is payable on the purchase price attributable to the accommodation
only at the time the payment is made for the right to use the
accommodation. The purchase price for a prepaid vacation package
includes the consideration given for any initial or ongoing maintenance
fees for the accommodation. In the case of ongoing maintenance
fees, the levy is payable when the fees are paid.