Additional Hotel Room Tax
Guidelines for Evaluation of Applications and Annual Review
2
3
4
1 ELIGIBLE ENTITIES
1.1
Municipalities and Regional Districts
1.2
The Hotel Room Tax Act also allows other eligible entities, as prescribed by the Lieutenant Governor in Council, to apply for the additional hotel room tax (AHRT) levied on their behalf.
Any public body, other than a municipality or regional district, interested in implementing the AHRT in a specific area should contact the Director of Tax
Policy Branch, Ministry of Finance (Finance), PO Box 9469, Stn Prov Govt,
Victoria, British Columbia, V8W 9V8. The remainder of this document refers to municipalities and regional districts, but requirements and conditions also apply to other eligible entities.
PURPOSE OF TAX
The additional tax is intended to assist municipalities and regional districts in funding tourism activities (particularly tourism promotion, and the financing and operation of new tourism facilities) which have the joint support of the municipalities or regional districts and tourism industry in the applicant’s geographic area. The tax funds are not intended to replace existing sources of funding for tourism in a community nor are they generally intended to fund existing facilities unless significant upgrading to the facilities takes place, although this may be considered in certain circumstances.
ENABLING LEGISLATION FOR THE ADDITIONAL TAX
Section 3 of the Hotel Room Tax Act enables collection of an additional room tax of up to 2 per cent on sales of accommodation in designated areas of the province. The following information is provided for municipalities, regional districts, and others who may be interested in this tax.
IMPLEMENTATION OF TAX
Municipalities and regional districts may request that the province levy, on their behalf, an additional tax on accommodation sold within their jurisdiction, with the funds collected being committed to a specific purpose. The tax may be levied in the whole municipality or regional district, or a prescribed area within the boundaries of the municipality or regional district.
This tax is collected by the province through the existing hotel room tax collection system run by the Ministry of Small Business and Revenue. The tax collected is then remitted to the municipality/regional district on a monthly basis. The branch
August 4, 2005 Page 1

Additional Hotel Room Tax
Guidelines for Evaluation of Applications and Annual Review
5 charges the municipality/regional district a collection fee to recover the additional costs incurred for collection of the tax and the dissemination of the collected funds to the municipality/regional district.
The AHRT will be implemented for a period of 5 years. In order to extend the tax for an additional 5 year period, a municipality, regional district or other eligible entity must re-apply to Finance. All applications are subject to the same requirements. There is no restriction on the number of times a municipality, regional district or other eligible entity can extend its AHRT.
Administration of the collected tax funds may be conducted by the municipality or regional district or through the establishment of a local organisation, like Tourism
Vancouver for example.
APPLICATION REQUIREMENTS
AHRT applications must provide no less than all of the following information:
5.1
Rate of the proposed tax up to a maximum of 2 per cent.
5.2
Municipality, regional district or other specific geographical area within a municipality or regional district to which the proposed tax will apply.
5.3
Desired effective date for implementing the new tax which allows for the lead time required to implement the tax.
5.4
How the revenue from the tax will be administered. Whether the applicant proposes to administer the revenue directly or whether an alternative local organisation (for example, Tourism Vancouver) is the proposed administrator.
5.5
A business plan is an integral part of the application and must describe the proposed use of funds. It must also provide evidence that the use of the requested funds will complement (not duplicate) existing tourism initiatives and that they are consistent with other regional and provincial industry initiatives.
Illustration of how the proposed use of the funds will contribute to an overall increase in tourism revenue.
5.6
Evidence that the AHRT tax funds are incremental to existing sources of funds. They should not replace existing sources of tourism funding in a community.
August 4, 2005 Page 2

Additional Hotel Room Tax
Guidelines for Evaluation of Applications and Annual Review
5.7
Note any additional funding sources that will be available to support the business plan, and the activities these sources will fund. Preferred consideration will be given to projects which do not solely rely on the additional tax.
5.8
The municipality or regional district must pass a bylaw that requests the province to levy the AHRT on its behalf, and provide a copy of the bylaw with its application. The bylaw should contain the following information:
•
Rate of tax to be imposed;
• Geographic area in which the additional tax will apply; that is, whether it will apply in the entire municipality or regional district or in a smaller area;
•
Purpose for the funds; and
• Desired effective date of the new tax, recognising that some lead time will be necessary to implement the tax.
If the applicant is a regional district, it must provide evidence of its authority to use the funds for the intended purpose, either through letters patent or statutory authority.
5.9
The municipality or regional district must have consulted and have broad support for the application and business plan from the tourism industry in general and documented support from the local accommodation sector specifically. A lack of support for the application and business plan may lead to its rejection or a request that the business plan be revised.
The applicant must provide evidence that:
• The proposal has enough support from the accommodation sector to merit a review. The minimal support by the accommodation sector is 51% of the number of establishments that would collect the AHRT, and representation of at least 51% of the total number of rooms. Higher support from the accommodation sector will increase the likelihood that an application will receive approval, providing that all other requirements are met;
• If a municipality is applying, the regional district in which it is located has been consulted and whether the regional district supports or opposes the imposition of the AHRT;
August 4, 2005 Page 3

Additional Hotel Room Tax
Guidelines for Evaluation of Applications and Annual Review
8
7
6
 If a regional district is applying, the municipalities within the regional district agree with the additional tax being imposed in the regional district.
Note: In the case of a conflict between a regional district and a municipality about whether additional hotel room tax should be imposed in a particular area, priority will generally be given to the position of the municipality.
5.10
A current list of all accommodation establishments that would be subject to the AHRT and located within the specified geographic area must be provided. This will ensure that all accomodation operators within the jurisdiction can be contacted and issued tax return forms for submitting the tax.
5.11 Any additional information that you believe will support your application.
5.12 Applicants should consult with Tourism British Columbia to ensure that proposed spending in the business plan does not duplicate the agency’s broader promotional programs.
ASSISTANCE WITH APPLICATION
Before submitting a formal application, municipalities and regional districts may wish to consult with the Director of Tax Policy Branch.
REVIEW OF APPLICATIONS
Applications should be submitted to the Minister of Finance, PO Box 9048 Stn
Prov Govt, Victoria, British Columbia, V8W 9E2. The Ministry of Tourism, Sports and the Arts (MTSA) and Finance will review the applications and make recommendations to Cabinet. Please note that the applicant may be asked to provide additional information.
An applicant can contact the Director of Tax Policy Branch for an update on the status of its application.
UPON APPROVAL OF APPLICATION
An Order in Council will be prepared for the Lieutenant Governor in Council to authorise the government to collect the AHRT on behalf of the applicant. The applicant will be informed when the Order in Council is passed. As well, the
Consumer Taxation Branch will provide information on the procedures for
August 4, 2005 Page 4

Additional Hotel Room Tax
Guidelines for Evaluation of Applications and Annual Review collecting the tax to all accommodation establishments required to collect the tax.
9 ANNUAL REVIEW
Under the terms of the Hotel Room Tax Act , agencies, i.e., municipality, regional district or other eligible entities which have the AHRT in place, are required to annually submit audited documentation to the Minister of Finance. The document must show the disposition of all funds collected and contain a statement that the AHRT funds were used for the purposes originally approved and are consistent with the business plan.
Financial reporting should be consistent with the municipality or regional district’s business plan. The implementation of the business plan will be monitored in conjunction with the audited financial statements.
If at any time a municipality or regional district wishes to change the approved uses of the AHRT, a new business plan must be submitted to the Minister of
Finance for approval. This new business plan must be reviewed by the local tourism industry, primarily the accommodation sector, and the results submitted with the revised plan. A lack of support for the new business plan may result in its rejection or a request for revisions to the plan.
Officials of Finance and MTSA will review the annual report for compliance.
Should a municipality or regional district be found to be in non-compliance with these requirements, Finance and MTSA will investigate and seek to resolve outstanding issues. Failing this, the parties will recommend to the Minister of
Finance, and the Minister of Tourism, Sports and the Arts whether the AHRT should be discontinued in that municipality or regional district.
10 FURTHER INFORMATION
For further information, please contact the Director of Tax Policy Branch, Ministry of Finance, PO Box 9469, Stn Prov Govt, Victoria, British Columbia, V8W 9V8.
Information on the administration of the Hotel Room Tax Act may be obtained by contacting Customer Service and Information Branch, Ministry of Small Business and Revenue, PO Box 9442, Stn Prov Govt, Victoria, British Columbia,
V8W 9V4.
August 4, 2005 Page 5