Tax and Revenue Administration Hotel Room Tax Act Special Notice Vol. 7 No. 1

Vol. 7 No. 1 / March 2005

ALBERTA HOTEL ROOM TAX SPECIAL NOTICE:
Bill 21 - Hotel Room Tax (Tourism Levy) Amendment Act

Bill 21, the Hotel Room Tax (Tourism Levy) Amendment Act, was introduced into the Alberta Legislature on March 14, 2005 and is expected to be passed into law this spring. This notice sets out important changes included in the bill together with their effective dates.

Effective April 1, 2005, the bill:

1. changes the name from the "Hotel Room Tax" to the "Tourism Levy",
2. reduces the rate from 5 per cent to 4 per cent, and
3. eliminates the $25 commission per reporting period.

The 5 per cent rate will continue to apply to all accommodation, including prepaid vacation packages, paid for prior to April 1, 2005. The 4 per cent rate applies to any accommodation paid for after March 31, 2005. As the levy proceeds will be used to determine funding levels for tourism marketing and development, and to be consistent with other tax legislation, the $25 commission per reporting period will be eliminated for all collection periods ending after March 31, 2005.

Operators must change their billing systems to reflect the reduction in rate effective April 1, 2005, and change (as soon as possible) "Hotel Room Tax" to "Tourism Levy" for any accommodation paid for after March 31, 2005.

Other important changes:

• A formal registration requirement for all operators will come into effect when the required regulations are passed. Operators with Business Identification Numbers who are required to file Hotel Room Tax returns for their establishments will be deemed to have already registered with Tax and Revenue Administration (TRA) with respect to the Tourism Levy.
• Effective April 1, 2005, a late filing penalty will be imposed on late returns, calculated as the greater of: the amount of the unpaid Tourism Levy at the required filing date and $25 per day of default, up to a maximum of $1000.
• Also effective April 1, 2005, interest and penalties may be waived under extraordinary circumstances beyond the control of the operator, or if the non-compliance was due to an error on the part of TRA.
• Various provisions to clarify existing administrative practices and enhance collection will be enacted.

Payment and reporting return due dates and methods will stay the same . New Tourism Levy reporting returns for the period starting April 1, 2005 will be mailed to operators in late April, together with more detailed information about the changes. Operators should continue to use the current Hotel Room Tax returns for the reporting period ending March 31, 2005.

Information circulars and forms will be updated to reflect all changes from the bill, and will be available on the Alberta Finance website as they are revised.