HomeMy WebLinkAboutDSD-19-102 - Municipal Accommodation Tax - ImplementationREPORT TO:Committee of the Whole
DATE OF MEETING:June 24, 2019
SUBMITTED BY:Cory Bluhm, Executive Director Economic Development,
519-741-2200 x7065
PREPARED BY:Victoria Boyle, Economic Development Assistant,
519-741-2200 x7957
WARD (S) INVOLVED:All Ward(s)
DATE OF REPORT:June 17, 2019
REPORT NO.:DSD-19-102
SUBJECT:Municipal Accommodation Tax-Implementation
_________________________________________________________________________________________
RECOMMENDATION:
That the Municipal Accommodation Tax By-law,included inReport DSD-19-102
Appendix A,be approved;and,
That the establishment of a new Municipal Accommodation Tax Reserve Fund be
approved in accordance with Report DSD-19-102, Appendix B.
BACKGROUND:
On April 29, 2019,theMunicipal Accommodation Tax(MAT), also referred to as a Transient
Accommodation Tax,was endorsedby Council to collecta4% tax from applicablehotel
transient accommodators (staff report CAO-19-007). The City of Kitchener will receive 40% of
the net revenue generated through the MAT.The following report contains the implementing
tax by-law and reserve fund.
REPORT:
This report provides thenecessary implementation toolsincluding the by-law which provides
the authority forcollecting the tax (as shown in Appendix A) and the establishment ofthe
Municipal Accommodation ReserveFund(as shown in Appendix B).
The Bylawprescribes details pertaining to the collection of the MATfrom applicableoperators,
including exemptions,penalties, etc. The bylaw has been developed in accordance with
provincial regulations, and is consistent with other municipalities in Ontario.
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Collections
-tier structure, it is most efficient for one collection agency to act on
behalf of all 8 municipalities. The Waterloo Region Tourism Marketing Corporation (WRTMC)
has agreed to facilitate collections through the Ontario Restaurant Hotel & Motel Association
(ORHMA). ORHMA will collect fees from all Waterloo Region accommodation providers and
remit revenues accordingly to the 8 municipalities. ORMHA will receive a small administrative
fee which will be deducted from the gross revenueprior to disbursement. ORMHA is providing
similar services to other municipalities in Ontario.
Municipal Accommodation Tax Reserve Fund
As per report CAO-19-007, Council endorsed the creation of a new reserve fund where
revenues will be directed. Withthe exception of existing financial commitments, Council will
approve spending of the reserve fund on an annual basis through the formal budget process.
Appendix B in Report CAO-19-007 identified the types of expenses and initiatives that these
revenues
deliberation on MAT expenditures will be as part of the 2021 budget, once a reasonable
accumulation has occurred.
COMMUNITY ENGAGEMENT:
WRTMC, in partnership with local municipalities, hostedan information session for all transient
accommodation providers, describing the collection process. All hotel operators have received
formal notification from the City of the impending tax. Hotel operators are generally in support
of the proposed tax, provided the revenues support improved tourism for the region.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
through the delivery of core service.
FINANCIAL IMPLICATIONS:
None at this time. Financial services staff hasdeveloped internal procedures forhandling of
revenuescollected from the MATthrough a new reserve fund.It is projected that the MAT will
generate approximately $375,000 annually for the City of Kitchener to be used for tourism
related investments.
ACKNOWLEDGED BY: Justin Readman, General Manager Development Services
Department
Appendix A Draft Bylaw
Appendix B Draft Reserve Fund Information Sheet
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BY-LAW -2001
OF
THE CORPORATION OF THE CITY OF KITCHENER
Being a By-law to establish a
Municipal Accommodation Tax (MAT)
WHEREASsection 400.1 of the Municipal Act provides that a municipality may pass a
by-law imposing a transient accommodation tax;
AND WHEREASOntario Regulation 435/17 provides regulations in respect of the
imposition of a transient accommodation tax;
AND WHEREASsection 23.2 of the Municipal Act, 2001 permits a municipality to
delegate certain legislative and quasi-judicial powers;
THEREFORE THE MUNICIPAL COUNCIL OF THE CORPORATION OF THE CITY OF
KITCHENER ENACTS AS FOLLOWS:
1.DEFINITIONS:
including, but not limited to the purchase of food, room service, mini bar products, internet,
movie rentals, and phone charges.
.
-law.
Accommodation.
Accommodation and includes agents, hosts or others who sell, offer for sale or otherwise
provides Transient Accommodation; where the Provider cannot easily be determined, the
owner of a property providing accommodation is deemed to be the provider of Transient
Accommodation.
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resort, and hostel.
2.APPLICATION
2.1 A Purchaser of TransientAccommodation shall pay, at the time of purchase, a
Municipal Accommodation Tax in the amount of four (4) percent of the purchase price of
the Transient Accommodation provided for a continuous period of less than 30nights.
2.2 The Municipal Accommodation Tax will not apply to Ancillary Charges that are
2.3 Where the Provider of Transient Accommodation fails to separately itemize Ancillary
Charges, the Municipal Accommodation Tax will apply to the total amount of the purchase
price.
3.EXEMPTIONS
3.1 The Municipal Accommodation Tax imposed under this By-law does not apply to:
a)The Crown, every agency of the Crown in right of Ontario and every authority, board,
commission, corporation, office or organization of persons a majority of whose
directors, members or officers are appointed or chosen by or under the authority of
the Lieutenant Governor in Council or a member of the Executive Council;
b)Every board as defined in subsection 1(1) of the Education Act;
c)Every university in Ontario and every college of applied arts and technology and
post-secondary institution in Ontario whether or not affiliated with a university.
d)Every hospital referred to in the list of hospitals and their grades and classifications
maintained by the Minister of Health and Long-Term Care under the Public Hospitals
Act and every private hospital operated under the authority of a licence issued under
the Private Hospitals Act;
e)Every long-term care home as defined in subsection 2(1) of the Long-Term Care
Homes Act, 2007;
f)Every treatment centre that receives provincial aid under the Ministry of Community
and Social Services Act;
g)Every house of refuge, or lodging for the reformation of offenders;
h)Every charitable, non-profit philanthropic corporation organized as shelters for the
relief of the poor or for emergency;
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i)Every hotel or motel room used by the City or its agents for shelter accommodation
purposes;
j)Every tent or trailer sites supplied bya campground, tourist camp, or trailer park;
k)Every accommodation supplied by employers to their employees in premises
operated by the employer;
l)Every hospitality room in an establishment that does not contain a bed and is used
for displaying merchandise, holding meetings, holding hearings, or entertaining; and
m)Every accommodation that is rented for 30or more consecutive nights.
4.TAX COLLECTED BY PROVIDER
4.1 Providers of Transient Accommodation shall list the Municipal Accommodation Tax
4.2 Providers of Transient Accommodation shall collect the Municipal Accommodation
Tax from the Purchaser at the time of purchase.
4.3 Providers of Transient Accommodation shall, on a monthly basis within 15 days of the
end of each calendar month for the month prior, remit the Municipal Accommodation Tax
to thetax collection agent designated by the City in a manner the City Treasurer deems
acceptable.
4.4 Providers of Transient Accommodation shall, on a monthly basis within 15 days of the
end of each calendar month for the month prior, provide a monthly statement in the form
required by the tax collection agent; these monthly statements shall include:
i.The number of rooms sold;
ii.The purchase prices of the rooms sold;
iii.The number of rooms that were exempt under the by-law and proof the Provider
reliedon; and
iv.The Municipal Accommodation Tax Collected.
4.5 Providers of Transient Accommodation shall provide any information as required by
the City Treasurer for the purposes of enforcing this by-law.
5.REFUNDS
5.1 Where a Purchaser has paid an amount that is not payable, the City Treasurer or the
amount was wrongly paid, and if such a determination is made, the City or its agent shall
refund or credit all or part of the amount, but no refund shall be made unless an application
is made within twenty-four (24) months after the payment date.
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5.2 Where a Provider of Transient Accommodation remits a surplus in error, the City or
its agent, may upon receipt of satisfactory evidence, make a determination that an amount
was wrongly paid, and if such a determination is made, the City or its agent, shall refund
all or part of the amount, but no refund shall be made unless an application for such a
refund is made within twenty-four (24) months after the date of remittance.
refused, the City or its agent shall provide a statement of disallowance in such form as
determined by the City or its agent, and the statement shall specify the amount of
disallowance and the reasons for the disallowance.
6. TAX COLLECTION AGENT
6.1 Thetax collection agent shall be The Waterloo Region Tourism Marketing Corporation
or such other designate which may bedetermined from time to time by Council.
6.2 The Chief Administrative Officer, in consultation with the City Solicitor, may designate
additional tax collection agents for the City and enter into agreements with designated tax
collection agents.
6.3 Thetax collection agent(s) shall collect and administer the Municipal Accommodation
Tax as an agent for the City in accordance with the agreement between the City and the
tax collector(s) and this by-law.
7. INTEREST, FEES AND LIENS
7.1 Penalties and interest at a monthly rate of interest applicable to overdue property
taxes shall apply to any outstanding Municipal Accommodation Tax and shall be payable
monthly by the Providers of Transient Accommodation on the amount of any tax payable
or remittable from the business day following the date on which the Municipal
Accommodation Tax was payable or its remittance was due up to and including the date
on which such tax is paid or remitted in full.
7.2 All Municipal Accommodation Tax penalties and interest that are past due shall be
manner as municipal property taxes and shall constitute a lien upon the lands.
7.3 A fee, as prescribed by the Fees & Charges of the City,shall be charged in respect
of all remittances made by cheque that are not honoured by the financial situation upon
which it is drawn.
8. AUDIT AND INSPECTIONS
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8.1 Every Provider shall keep, for no less than three (3) years, books of account, records,
and documents sufficient to furnish the City or its designated tax collection agent(s) with
the necessary particulars of:
i.sales of accommodation;
ii.amount of the Municipal Accommodation Tax collected; and
iii.the remittances made to the tax collection agent.
inspect and audit all books, documents, transactions, and accounts of Providers and
require Providers to produce copies of any document or records required for the purpose
of administering and enforcing this by-law.
designated tax collection agent for reasonable inspection, copies of any books,
documents, transactions, accounts or records required for the purposes of the
administration and enforcement of this by-law.
9.OFFENCES AND PENALTIES
9.1 Every person who contravenes any provision of this by-law is guilty of an offence.
9.2 Every director or officer of a corporation who knowingly concurs in the contravention
of any provision of this by-law is guilty of an offence.
9.3 Every person convicted of an offence under this by-law is liable to a minimum fine of
$500 and a maximum fine of $100,000 as provided for in subsection 429(3) of paragraph
1 of the Municipal Act, 2001.
9.4 Every person convicted of an offence under this by-law is liable, for each day the
offence continues, to a minimum fine of $500 and a maximum fine of $100,000 as
provided for in subsection 429(3) paragraph 2 of the Municipal Act, 2001. The total of all
the daily fines for a continuing offence is not limited to $100,000.
9.5 The Superior Court of Justice or any court of competent jurisdiction may, in addition
to any penalty imposed on a person convicted of an offence under this by-law issue an
order:
a)Prohibiting the continuation or repetition of the offence by the person convicted; or
b)Requiring the person convicted to correct the contravention in a manner prescribed by
the court.
10.ADMINISTRATION
10.1 The administration of this by-law is delegated to the City Treasurer.
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11.GENERAL
11.1 This by-law shallcome into force and effect on July 1, 2019.
READ A FIRST TIME
READ A SECOND TIME
PASSED
MAYOR
CLERK
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Reserve Fund Information Sheet
Name of Reserve/Reserve Fund Municipal Accomodation Tax
Category Reserve Fund
Type Discretionary
Classification Program Specific
Purpose
Provides funding to support and enhance tourism within the city.
Funding Source
-40% of the Municipal Accomodation Tax amount collected by the Waterloo Region Tourism Marketing Corporation
is allocated to the city (less an administrative fee)
-interest income
Appropriation of Funds
-funding is to be used to support and enhance tourism, sport and cultural offerings, as well as major event
attraction efforts.
Target Level
Minimum:
Closing balance should not drop below zero
Rationale: funding is being used to support and enhance tourism therefore if balance is below zero,
work can not be completed.
Maximum:
Closing balance should not exceed $1,900,000
Rationale: Approximates five years worth of revenue to be received.
Allows for balance to build in order to accommodate increased cost of high ticket items
like bid support and marketing costs.
Excess:
All funding remains in the Reserve Fund
Next Review:2021 Budget
Reporting
-annual report to FCSC
Accountability
Cost Centre4011006
Divisional OwnershipEconomic Development
Ownership LeadDirector, Economic Development
Interest Allocation
Yes
Other
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Reserve Fund Information Sheet
Previous PolicyNew
Previous TitleNot applicable
Resolution Date
Amendment Date(s):
Repeal Date:
Proposed start date
End Date (if applicable)
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