Operating a Bed & Breakfast in your Home

Did you know that Bed & Breakfast income may be considered business income, as opposed to rental income?

You can deduct expenses which are necessary and customary for your B & B business including costs for cleaning, guest meals, cutlery, linens, utilities, dishes, maintenance, insurance premiums etc.

If you are operating a Bed & Breakfast with an income of more than $30,000 for the last four calendar quarters, you would need to register for the GST/HST number. You must also register if your taxable revenues at any time in a single calendar quarter are more than $30,000.

If you are a registrant, you must collect the GST/HST in your B & B operation on amounts charged for the following taxable sales:

Accommodation of less than one month

Prepared meals and other food and beverages

Parking

There is a special rule for collecting HST for Bed & Breakfast businesses.

If you provide accommodation and a meal for a single price of more than $20 per day, you must collect the GST/HST on the entire amount. This holds true even if you consider the accommodation portion to be $20 or less. For example, if you charge a single price of $22 of which $15 is for accommodation and $7 is for breakfast, you must collect the GST/HST on the single price of $22.

The $20 threshold is based on the per room charge, not the charge per person. Therefore if you split a room rental charge that is more than $20 per day by invoicing separately, and each individual sharing the room is not billed more than $20, you are not relieved of the GST/HST charge. For example, if three individuals are each charged $15 for shared accommodation in a single room, you must charge and collect the GST/HST on each of the $15 charges. On the other hand, if you are providing a non-exclusive use of a room (such as typical dormitory-type hostel accommodation) with a "per occupancy charge" (as opposed to a "per room charge”), you do not charge the GST/HST if your price, including meals, is $20 per day or less.

If the total price for accommodation and a meal, or accommodation only (no meal provided) is $20 per day or less, you do not need to charge or collect GST/HST.

Running a B & B will be a breeze when you realize your tax responsibilities!