Municipal accommodation tax

Hotel and short-term rental buyers meet this tax because the business may be the one collecting it from guests and paying it to the city. The City of Toronto tells hotel and short-term rental operators to collect its version, which it calls the Municipal Accommodation Tax (MAT). Ask whether any amounts are unpaid; the hotel and motel buyer checklist covers others.

What Ontario law says

Under s.400.1 of the Municipal Act, 2001, the tax must be a direct tax, and a by-law must state the subject of the tax, the rate or amount, and how it is collected, including any persons designated as collection agents. The by-law may also provide for exemptions, rebates, penalties, interest and audit powers. Section 400.2 lists persons the tax cannot be imposed on. O. Reg. 435/17 applies when a municipality imposes the tax. This entry covers Ontario and Toronto only; check the by-law where the business is.

What to ask

• Which municipality’s by-law applies and whether it makes the business a collector.
• Whether returns were filed and amounts paid for every period, and whether any assessment, penalty or interest is outstanding.
• Whether the city requires the business to register or hold a licence as a hotel or short-term rental operator; see short-term rental licence.