If you run a tourism business in Canada, be it a lakeside resort, a boutique hotel, a guided adventure tour, or a local food and wine experience, then understanding GST/HST rules for tourism businesses in Canada is not optional. From seasonal booking surges to international guests and bundled service packages, the complexity can be overwhelming. That’s why understanding the latest GST/HST rules for tourism businesses in Canada is critical to staying compliant and profitable year-round. But ignoring the details can lead to costly mistakes, especially when the Canada Revenue Agency (CRA) gets involved.
A lot of tourism operators run into trouble not because they’re trying to avoid tax, but because the GST/HST rules are incredibly nuanced. Add in platform-specific quirks from sites like Airbnb or Shopify, and it becomes clear why so many business owners seek professional guidance.
This guide explains it all in plain language, from when you need to register, to what you should charge, and what you can legally claim back. Whether you’re launching your first season or tightening your systems before your next CRA filing, this article breaks down the essentials. This guide explains the most important GST/HST rules for tourism businesses in Canada to help you stay compliant and avoid unexpected tax issues.
GST/HST Rules for Tourism Businesses in Canada: Charging Tax on Lodging, Tours, and Packages
Once your business exceeds $30,000 in gross revenue over four consecutive quarters, you are no longer classified as a “small supplier” under CRA rules, and GST/HST registration becomes mandatory. Even one good summer can tip you over the edge, so it’s critical to monitor your rolling revenue, CRA doesn’t wait until year-end.
Once registered, the rates you charge depend on your province and the service location. Generally:
- Short-term lodging (under 30 days): taxable at 5% GST or the applicable HST rate
- Tour packages: fully taxable, even if they include individually tax-exempt components like park admission
- Restaurant meals: taxable, and may also attract PST in certain provinces
If your business offers package deals, remember that these are typically treated as bundled taxable supplies unless specifically itemized otherwise. Misclassifying them can trigger retroactive tax assessments, which we’ll discuss more in the example section below.
For those in hospitality, our blog on Bookkeeping for Restaurants and Bars in Canada explains how tax issues frequently intersect with food and beverage services.
Serving Non-Resident Tourists: Do You Still Charge GST/HST?
Many Canadian tourism operators mistakenly assume that foreign tourists are tax-exempt. But in most cases, you still need to charge GST/HST even if the customer is a non-resident.
The general rule is this: unless your service qualifies as a zero-rated “export,” it remains taxable. That means short-term accommodation, local tours, and bundled experiences sold to international visitors still fall under GST/HST rules. You may only apply a 0% GST rate (zero-rating) if you meet specific CRA criteria, like cross-border consulting services or digital B2B exports.
If you think your product is zero-rated, make sure you can prove the customer’s non-residency and document how the service qualifies under the Excise Tax Act. Otherwise, your safest bet is to charge the tax and remit accordingly. You can review the CRA’s official guidelines on non-resident GST/HST and zero-rated services for full criteria.
Gift Cards, Vouchers, and Deposits: Tax Timing Rules
In tourism, gift certificates and deposits can be vital to off-season cash flow. But the GST/HST rules for these are often misunderstood.
Here’s how it works:
- Gift cards/vouchers: Not taxed at the time of sale. Tax is only applied when the card is redeemed, based on the service provided.
- Deposits/prepayments: You don’t charge GST on the deposit itself. Tax applies when the service is delivered or invoiced, whichever comes first.
Double-charging GST on deposits and final invoices is a common error, and so is failing to charge at all. Make sure your systems are configured properly to apply tax at the correct point in the transaction. Knowing how these rules apply is a critical part of understanding GST/HST rules for tourism businesses in Canada, especially during off-season planning.
Our article on How to Prepare Your Bookkeeping for the Holiday Season includes tips on managing gift cards, deposits, and other seasonal transaction types.
Input Tax Credits: What You Can and Can’t Claim
Once registered, you’re eligible to claim Input Tax Credits (ITCs) for the GST/HST paid on business-related expenses. This can significantly reduce your net tax bill, especially during busy seasons.
You can usually claim ITCs on:
- Guest room furnishings, linens, and cleaning supplies
- Booking platforms, web hosting, and digital ads
- Office supplies and third-party contractor invoices
However, there are caveats:
- Mixed-use expenses (like a vehicle or cell phone) must be prorated for business use
- Meals and entertainment are generally only 50% claimable, and only if directly tied to business
- Capital purchases may need to be amortized over time
The golden rule is documentation. Keep receipts, label business vs. personal use, and track spending in real time using a system that fits your operation. If you’re not sure how to stay organized or what’s required, our guide on Maintaining Proper Documentation for Your Business walks through exactly what to keep and why it matters.
Seasonal Businesses: Don’t Skip Off-Season Filings
Many seasonal businesses operate only a few months a year. But your GST/HST registration doesn’t automatically pause just because you’re closed for the winter.
You are still required to:
- File zero-dollar returns even when there’s no revenue
- Remit collected taxes on time
- Maintain your registration unless formally canceled
Late filing, even with no tax owing, can trigger penalties and interest. If you’re shutting down temporarily, you can request a suspension, but it’s often simpler to keep your account active and avoid re-registering later.
For help wrapping up your seasonal bookkeeping properly, see our full Year-End Checklist for Small Businesses, which includes reminders for GST/HST filing and reporting.
Real Example: When Bundled Services Go Wrong
Imagine you run an adventure tour business in Whistler offering a “Glacier Explorer” package for $450. It includes shuttle service, park admission, and a guided hike.
You assume park admission is tax-exempt, so you undercharge GST. But since the CRA sees the offering as a single bundled supply, they reclassify the full package as taxable during an audit. Without separate line items or documentation, the CRA may assess the full $450 as subject to GST.
The lesson? If you offer packages, you need to determine whether you’re offering multiple supplies (each taxed individually) or a bundled supply (taxed as a whole). When in doubt, get clarification before an audit forces the issue. This kind of misclassification is one of the most common pitfalls in GST/HST rules for tourism businesses in Canada.
Place of Supply Rules: Charging the Right Tax Rate
The applicable tax rate isn’t determined just by where your business is located, but by where the service is delivered.
For example:
- If you’re in BC but sell an Ontario wine tour online, you must charge 13% HST, not 5% GST
- If you host guests at your BC lodge, you’ll charge 5% GST, 8% PST, and possibly the MRDT (Municipal and Regional District Tax)
Tax rules differ by province, and most booking or accounting platforms require manual configuration for each rate. If you’re unsure whether your settings are correct, review your tax setup or speak with your bookkeeper. For a step-by-step guide, our post Ultimate Guide: How to Set Up Provincial GST/HST Rates in Booking and Accounting Software walks you through configuring GST/HST and PST in platforms like QuickBooks, Shopify, Hostaway, LMPM, Airbnb, and VRBO and others.
Online Platforms: Who Collects the Tax?
If you use booking platforms like Airbnb, Shopify, FareHarbor, or Checkfront, you need to know who is responsible for collecting and remitting tax.
Here’s the breakdown:
- Airbnb: Collects and remits GST/PST for hosts in BC and similar taxes elsewhere
- Shopify: Only collects what you configure it to collect
- FareHarbor/Checkfront: You must set tax rules manually
You are still legally responsible for tax collection on direct bookings, even if third-party platforms handle others. Verify your platform’s documentation and your own reporting before each filing period. Small details in invoicing, filing, and platform setup can make or break compliance with GST/HST rules for tourism businesses in Canada.
Free Download: GST/HST Compliance Checklist for Tourism Operators
To make this easier, we created a downloadable checklist just for tourism operators.
It covers:
- GST/HST registration steps
- Services you need to charge for (and at what rate)
- Rules for non-residents
- Input tax credit eligibility
- Exemptions and bundled pricing
- Key deadlines for seasonal operators
Tourism Taxes Don’t Have to Be Complicated
When you’re deep in peak season, dealing with taxes might feel like a low priority. But understanding GST/HST rules for tourism businesses in Canada from the start can save you major headaches down the line.
From registering on time to knowing what to charge, how to file, and what you can claim, the rules are manageable once you have a clear plan. And when you’re not sure, it’s always smart to lean on someone who knows how to work with the CRA.
Mastering GST/HST rules for tourism businesses in Canada gives you confidence during audits and helps you protect your revenue. At Valley Business Centre – Bookkeeping & Payroll, we specialize in helping tourism operators across Canada stay compliant, stress-free, and financially prepared. With over 30 years of experience, we help hospitality businesses streamline their tax processes and avoid costly mistakes.
Let us take the complexity out of GST/HST, so you can focus on delivering unforgettable experiences to your guests.
