The growth of Airbnb in Canada has made many local and international travellers spoiled for excellent short-term accommodation choices to choose from. From having a short vacation surrounded by serene nature, stopping by a vibrant local market during a business trip, or staying in a different city for the weekend, Canada welcomes all.
Due to this progression, many homeowners in Canada have taken advantage of this to earn higher extra income from short-term rentals compared to long-term rentals.
As a host in Canada, you need to understand the tax for Airbnb in Canada to operate your business legally and peacefully. This article contains the latest information on what you need to know about Airbnb Taxes Canada.
The answer is yes.
The Canada Revenue Agency (CRA) considers the income you earn from renting out your property on Airbnb as taxable. Whether you are renting a part of your house, your entire home or an apartment for short stays, you, as an Airbnb host, must report all your Airbnb earnings on your Airbnb taxes Canada return.
The CRA classifies this as a short-term rental income if the rental period is less than 90 consecutive days.
Rental income only offers guests basic amenities such as heat, electricity, parking, or laundry. While business income provides more than basic amenities, including daily cleaning, meals, and security.
It is important to recognize the type of income you are generating because Airbnb taxes Canada on business income are reported differently and may allow for more deductions than Airbnb taxes Canada on rental income.
Most short-term rentals in Canada apply GST/HST, provided their total taxable revenue exceeds a certain amount.
You must register for a GST/HST account and apply the tax to your guests if your total taxable revenue exceeds $30,000 in four consecutive calendar quarters. If you do not register, Airbnb will collect and remit GST/HST on your behalf for bookings in Canada, and you are not obligated to collect and remit the GST or HST on your accommodation.
Please note that you must register for Quebec sales tax (QST) for short-term accommodation in Quebec.
Now that you have understood this, you might wonder, ‘How much tax would I pay for Airbnb income?’
Let’s cover that in the next section.
You need to know a few things before calculating the tax you need to pay for your Airbnb income, such as how much you earn from your rental, your residence location, and whether your Airbnb activity is considered a business.
Your Airbnb income is taxed based on the federal and provincial tax brackets you fall into, and it will be added to your personal income for the year. This means that the more income you generate from Airbnb and other sources, the higher your marginal tax rate could be.
Note: The CRA collects both federal and provincial income taxes on behalf of the provinces and territories in most provinces in Canada (except Quebec). Hosts residing in Quebec collect and administer their provincial income tax through Revenu Québec and their federal income tax to the CRA.
Example calculation of tax owed on Airbnb earnings
Let’s calculate a simplified estimation of Airbnb earnings for Ontario residents:
You have made $15,000 from Airbnb in a year, and your regular employment income is $50,000.
Your total income is $65,000.
The estimated marginal tax rate is 29.65% (Federal tax: 20.5% and Ontario tax bracket: 9.15%)
So, you would pay approximately $4,447.50 ($15,000 × 29.65%) tax on your Airbnb income before deductions and expenses.
Note: The tax amount can be reduced by claiming eligible Airbnb expenses, which we will cover later in the blog.
The Airbnb tax reporting Canada requires you to submit your Airbnb income on your T1 tax return by the 30th of April 2025 or the 16th of June 2025 (if you or your spouse or common-law partner is self-employed).
You must report all your earnings from short-term rentals, regardless of whether you rent it out occasionally or as a side hustle. As the Airbnb income is added to your total taxable income for the year, you must declare your gross earnings and related expenses.
Remember to identify whether you are reporting a rental or business income before completing a form.
For rental income, you must complete Form T776 (Statement of Real Estate Rentals), which is on line 12600 of your T1 return.
The CRA allows Airbnb tax deductions by claiming eligible deductions related to your Airbnb rental. Some common eligible deductions are:
You must keep all receipts and records to support your Airbnb tax deduction claims.
The CCA for depreciation involves long-term investment claims such as furniture, rental place appliances, repairs or renovations. It is the deduction spread over several years based on the CRA’s prescribed rates. For instance, if you buy a new dryer for your rental, you can claim a percentage of the cost you have spent as CCA for depreciation. This claim can help to reduce your taxable income gradually.
View an example of the CCA calculation details here.
The pro-rata method applies only when renting out part of your home. You can only claim a portion of your home-related expenses based on:
Here is an example of a simplified pro-rata method calculation:
Scenario: Renting out a room in your home. The room makes up 25% of your home, and you rent the room for 80 days a year.
Deductible Percentage = Space Percentage × Time Percentage
= 25% × 80/365 ≈ 25% × 21.9% = 5.5%
You can claim the 5.5% as eligible expenses.
The GST/HST applies whether you’re a sole proprietor, partnership, or corporation.
You can register voluntarily if your total taxable revenue is less than $30,000. Voluntary registration allows you to claim input tax credits (ITCs) on business expenses, which can help deduct the GST/HST you pay on repairs, supplies, or renovations for your rental property.
For hosts who are not registered, Airbnb will collect and remit GST/HST on your behalf for bookings made through the platform. When registered, you are responsible for collecting and remitting the tax yourself.
How to charge, collect, and remit GST/HST
Once you have exceeded the $30,000 threshold, you must:
Step 1 ▶️ Register for a GST/HST account with the CRA.
Step 2 ▶️ Start charging GST/HST on your Airbnb bookings.
Step 3 ▶️ Remit the collected GST/HST to the CRA.
Remember, the GST/HST rate varies by province, so check the rate for your property’s location. For provinces or territories where Airbnb do not collect the tax for you, it’s your responsibility to add GST/HST to your nightly rate, collect it from the guest, and remit it to the CRA.
Adding GST/HST will increase the total cost for your guests, and you need to be transparent about this in your listing.
You can include the GST/HST in 2 ways :
It is important to stay transparent with guests and plan your pricing strategy to remain competitive while complying with the tax rules.
What will happen if you don’t register for GST/HST?
Airbnb will add the tax automatically, which could make your listing appear more expensive to guests. Without proper registration, including tax in your base price could lead to double taxation or higher prices, so it’s important to update your listing settings if you register for GST/HST.
Below are three common scenarios to help you understand how taxes apply to your hosting style.
Note: You may view the tax calculation example in the earlier sections of this article.
Understanding these differences helps you manage your tax obligations correctly and make informed decisions about your Airbnb hosting.
Keep detailed records such as receipts, income logs, expenses, and any fees charged. Place all the information where you can remember, and organize the records neatly for easy reference. Detailed records make reporting your income, calculating, and claiming the right deductions easier. It saves time, too, if the CRA requests proof or audits your filings.
Accounting tools or apps for short-term rental hosts can assist in managing your Airbnb finances, such as reducing financial errors, invoicing, tax preparation, and expense tracking. You can integrate the apps with Airbnb or a bank account to streamline income and expense management. Some popular options in Canada are QuickBooks Online, FreshBooks and Wave Accounting.
Hiring a tax professional is a good idea for managing your Airbnb finances. A tax expert can help you understand whether your income is classified as rental or business income, ensure that you meet the GST/HST requirements, and help maximize your deductions while keeping you compliant with CRA regulations.
These tips can help you manage your Airbnb taxes efficiently and correctly.
It is not necessary to register if you are only renting a room or home occasionally on Airbnb. Most casual hosts report their earnings as rental income on their tax return using Form T776 (Statement of Real Estate Rentals).
However, if you are offering extra services such as security and cleaning, the CRA may classify your business as business income, and it is necessary to register your business to host on Airbnb. For business income, you need to report your earnings using Form T2125 (Statement of Business or Professional Activities).
If unsure, you can check with the CRA or a tax advisor to see if you require a business registration.
Yes, Airbnb will send your income details to the CRA if you earn income through their platform. Airbnb provides hosts with an annual earnings summary, which you should use to report your income on your tax return accurately.
It is important to report all your Airbnb income, even if you do not receive a statement.
No, you cannot avoid tax by listing under someone else’s name. As the person who earns through their Airbnb business, you must report all your income under your name.
You can face legal consequences for misreporting or hiding your income,
So, stay transparent, stay compliant and avoid illegal shortcuts such as listing under someone else’s name.
Owning an Airbnb business in Canada is one of the profitable ways to earn side income. To operate your Airbnb efficiently, you must comply with the tax for Airbnb in Canada.
Plan ahead for tax season. Keep organized with detailed records from the start for efficient Airbnb Taxes Canada reporting and Airbnb tax deductions. Invest in accounting tools or hire a tax professional to manage your Airbnb finances.
Tax rules can change over time. Refer to the CRA website or consult your local tax advisor for the latest update on Airbnb taxes Canada.
Want to know more about Airbnb taxes in Canada and managing short-term rentals in Canada? Get in touch with Maxima Properties, the Airbnb property management expert in Toronto, today!
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