Despite questions and concerns over a report on the increase short-term rental sites in town will have to pay into the municipal accommodation tax starting next year, Niagara-on-the-Lake council is moving forward with plans already set, approving an update to the existing bylaw.
The process began in June 2022 when council approved the tax for accommodations with five or more bedrooms at a rate of two per cent, with it rising to three per cent on Jan. 1, 2024, and to five per cent at the start of 2025.
In May, council approved charging all short-term rentals the tax, including bed and breakfasts and regardless of how many rooms are available.
Coun. Maria Mavridis first put a motion on the floor to defer approval of the report and bylaw updates until after the short-term rental committee meets in late November, but rescinded it after chief administrative officer Marnie Cluckie said postponing an update to the bylaw would result in the one-per-cent increase in the new year not applying to any accommodations, that it would be “status quo” for them at that time.
Mavridis was satisfied when Cluckie explained that further revisions to the bylaw can still be made after the new rule is in effect.
“Bylaws are always dynamic that way,” said Cluckie.
Staff says a letter has been received by the Niagara-on-the-Lake Bed and Breakfast Association, which outlines technology and implementation concerns with the tax for short-term rental operators.
Staff have addressed those concerns in the bylaw and will update related support materials on the town's website, the report to council said.
Another housekeeping item included a change to remittance deadlines to bring them more in line with trends in the province.
Hotels, motels, and inns will now be on a monthly remittance schedule, with short-term rentals remitting the tax they collect quarterly.
Revenues that include short-term rentals in the accommodation tax may generate an additional $1.24 million in revenue, which will have to be shared 50 per cent with the local Destination Marketing Organization, Niagara-on-the-Lake Tourism, a branch of the NOTL Chamber of Commerce, the report said.
Citing concerns related to technology, booking, and management of the tax, the bed and breakfast association (STAY Niagara) is asking that short-term rentals be able to charge an “equivalent MAT fee,” saying it is “not practical” to have the accommodation’s technology calculate the tax.
“This simple clarification will ease the MAT implementation across the different reservation systems and online travel agencies typically used by the STR community,” the association said.
The system does not have to calculate the tax, and “a line item or a note which explains the charge on the receipt is acceptable,” staff said in its report.
Coun. Gary Burroughs raised a question about one section of the bylaw, which says accommodations “shall keep books of account, records, and documents sufficient to furnish to the town or its agent with the necessary particulars of sales of accommodations, amount of MAT collected and remittance.”
He believes the local government should seek a legal opinion about this part of the bylaw.
“The town doesn’t have the right to evaluate their calculations of room rates,” said Burroughs.
Director of corporate services and treasurer Kyle Freeborn said this is a “standard clause” related to MAT bylaws, but the town will “follow up to the legal requirements” of that part of the bylaw.
