We’ve listed out commonly asked MRDT questions below, along with our responses. If your questions about the MRDT application process, program and reporting requirements aren’t addressed here, we encourage you to reach out to us at MRDT@destinationBC.ca or by phone at 604-953-6704. If you have questions about collecting the MRDT, we recommend that you reach out to the Ministry of Finance at CTBTaxQuestions@gov.bc.ca.
Notice to Accommodators: Changes to Online Marketplace Facilitators
Effective July 1, 2022, all online marketplace services, located in or outside of BC, must register to collect and remit PST on these services: http://www2.gov.bc.ca/assets/gov/taxes/sales-taxes/publications/pst-142-marketplace-facilitators.pdf
Tourism agents that sell their own packages online do not qualify as online marketplace facilitators. The application of provincial sales tax (PST) and municipal and regional district tax (MRDT), if applicable, to the sale of tourism packages by tourism agents has not changed.
Tour operators do not qualify as marketplace facilitators as they are not selling accommodation on behalf of a third-party. The tour operators are selling their own tourism packages, which package transportation, accommodation and possibly specialized services (e.g., skiing) and/or meals. In effect, this is no different from a case where a person operates their own website to solicit sales of accommodation at their own properties. There is no third-party involved in facilitating those sales, as there would have to be for a person to be an online marketplace facilitator.
The application of PST and MRDT to the purchase of accommodation by tourism agents has not changed, and the discussion on page 8 of Bulletin PST 120 – Accommodation continues to apply when accommodation providers sell accommodation to a tourism agent.
Online marketplaces for short-term rental accommodation (eg. Airbnb) will continue to collect MRDT as OAP revenue. Online marketplaces for large accommodation properties (eg. Hotels) will collect MRDT as general MRDT revenue.
Related to the above changes, the following have been revised:
If you have any questions on the above changes, please email: CTBTaxQuestions@gov.bc.ca or call 1-877-388-4440.
The Municipal and Regional District Tax (MRDT) is a tax of up to three percent on the purchase of accommodation imposed in specific geographic areas of the province (designated accommodation areas) on behalf of municipalities, regional districts or eligible not-for-profit business associations. The MRDT program was originally introduced in 1987 and raises revenue for local tourism marketing, programs and projects. Affordable housing was added a permissible use of funds through Budget 2018.
The MRDT applies to the purchase of accommodation in designated accommodation areas. Taxable accommodation can include hotels, motels, resorts, bed and breakfasts, houses, cottages and cabins, and other short term lodging. Online accommodation platforms are also now enabled to collect PST and MRDT through Budget 2018. The MRDT applies in the same manner as the eight percent provincial sales tax (PST) on accommodation. For more information on the application of the MRDT, see Bulletin PST 120, Accommodation, and Provincial Sales Tax Notice.
Section 123 of the Provincial Sales Tax Act imposes a tax of up to three percent on the purchase price of accommodation in a designated accommodation area on behalf of a municipality, regional district, or eligible entity (designated recipient).
The tax is only applicable in designated accommodation areas. Designated accommodation areas can be a municipality, a regional district or a part of a regional district. For a list of participating areas and their tax rates, see MRDT Participating Municipalities, Regional Districts and eligible not-for-profit business associations in Bulletin PST 120, Accommodation.
The maximum rate of tax under the MRDT is three percent of the purchase price of accommodation in a designated accommodation area. The MRDT is in addition to the eight percent PST on accommodation. Municipalities, regional districts and eligible not-for-profit business associations may voluntarily apply for either a two percent or a three percent MRDT rate.
The following are eligible to be a designated recipient under the MRDT program:
To qualify as an eligible not-for-profit business association, an applicant must:
A designated recipient is the organization that applies and is responsible to the Province for MRDT within a designated accommodation area. A designated recipient can be a municipality, a regional district, or an eligible not-for-profit business association. An eligible entity is typically a not-for-profit society such as a Destination Marketing Organization (DMO).
The Designated Accommodation Area Tax Regulation sets out the authorized purposes for revenue under the MRDT program. Authorized purposes of MRDT revenue for all designated recipients are tourism marketing, programs and projects. Some designated recipients are authorized to use revenue for other purposes as set out in the regulation.
Spending on tourism marketing, programs or projects under the MRDT should contribute to the increase of local tourism revenue, visitation, and economic benefits. Spending related to affordable housing initiatives should assist communities to address local needs related to affordable housing.
Please contact Destination British Columbia if you have any questions on approved uses of MRDT revenues at MRDT@destinationbc.ca
Using revenue from the MRDT to finance capital expenditures (beyond affordable housing) such as new tourism facilities or infrastructure will only be given consideration in special circumstances. Proposals for capital spending must be included in a designated recipient’s five- year Strategic Business Plan, and must demonstrate strong local stakeholder support in order to be considered as an authorized use of MRDT program funds. These proposals will be considered and approved on a case-by-case basis by the province.
Applicants must contact Destination BC program staff at MRDT@destinationbc.ca prior to submitting an application that includes proposed capital expenditures.
Detailed instructions on the application process for the MRDT are found in the Municipal and Regional District Tax Program Requirements. For more information, visit www.destinationbc.ca//what-we-do/funding-sources/mrdt/.
MRDT collected through online accommodation platforms (OAPs) will not affect the way that applicants have consulted accommodation providers in the past (i.e. only requiring consultation with those who provide 4 or more units of accommodation). Applicants are not required to identify, consult, or list on the accommodation directory individual hosts who only list on registered online accommodation platforms.
Designated recipients are only required to consult those accommodation providers who are registered under the Provincial Sales Tax Act and who physically provide taxable accommodation; whose owners/property managers are readily identifiable; and whose addresses and total number of accommodation units are on record with the Province; and who provide 4 or more units of accommodation. This includes hotels and motels, bed and breakfasts, and vacation rental reservation systems that list properties with verifiable property managers. For specific information on what types of accommodation is taxable under the PST, please see Bulletin PST 120, Accommodation and Provincial Sales Tax Notice.
Yes, the Province is able to provide the names and addresses of registrants to assist applicants in identifying which accommodation providers to consult. The Province is prohibited by law from providing any other information about an accommodation provider without that accommodation provider’s written consent.
While the Province is able to provide names and addresses of registrants under the Provincial Sales Tax Act, it remains the responsibility of the designated recipient to provide a complete Accommodation Directory Form (Appendix 1.3) that includes:
A tax rate increase is completely voluntary and will only take effect after an application has been approved by the Province. All existing designated recipients must make a request to the Province to increase the tax rate in the designated accommodation area by submitting a completed application at least nine months prior to the desired implementation date. Applications must contain all requirements listed in the MRDT Program Requirements.
Yes, designated recipients may voluntarily apply for a rate increase (to three percent) prior to their renewal date, but they are subject to the new MRDT Program Requirements and must complete a new application package for approval.
As set out in the MRDT Program Requirements, new applications for the MRDT must be submitted at least nine months in advance of the desired implementation date of the tax.
Renewal applications for designated recipients already collecting MRDT must be submitted at least six months in advance of the end of the five-year term (repeal date).
Voluntary rate change applications (increase from two percent to three percent) must be submitted at least nine months in advance of the desired effective date of the tax. The new tax rate implementation date will be the start date for the new five-year term. Designated recipients not subject to renewal requirements will be required to submit a complete application for the new rate but will continue to not be subject to ongoing renewal requirements.
Voluntary applications that include using general MRDT revenues (revenues from traditional accommodation providers, including hotels, motels, bed and breakfasts and vacation rental reservation systems that list properties with verifiable property managers) for affordable housing must be submitted at least six months in advance of the desired effective date of the tax.
The new tax rate implementation date will be the start date of the new five-year term. Designated recipients not subject to the renewal application requirements that would like to use general MRDT revenues on affordable housing initiatives must submit a complete application as outlined in the MRDT Program Requirements.
Designated recipients are required to submit a new MRDT application requesting an extension of the MRDT in the designated accommodation area every five years. They must follow the same procedures found within the MRDT Program Requirements.
Designated recipients that were approved between 1987 and 1999 were grand-parented from the requirement to submit renewal applications to extend the MRDT every five years. These designated recipients are Tourism Vancouver, the City of Prince Rupert, the Resort Municipality of Whistler, the District of Oak Bay, the District of Saanich and the Town of Smithers. These designated recipients will continue to be exempt from the requirement to submit renewal applications.
Grand-parented designated recipients must submit a five-year Strategic Business Plan every five years. They are also required to make their Strategic Business Plan available to tourism industry stakeholders and accommodation providers.
As set out in the MRDT Program Requirements a designated accommodation area may be:
The tax may be levied in more than one municipality or regional district on behalf of a single designated recipient.
Generally, an electoral area is the smallest portion of a regional district that may be prescribed as a designated accommodation area.
Tourism industry stakeholders may include, but are not limited to, the following within the designated accommodation area:
A complete application package must be submitted in PDF format to Destination BC via email at MRDT@destinationbc.ca. The applicant will receive an email from Destination BC confirming receipt of the application package.
Destination BC will review the application and may contact the applicant for additional information. The application is checked for completeness and adherence to MRDT Program Requirements.
If the application includes affordable housing initiatives, Destination BC will share that information with the Housing Policy Branch who will review and provide feedback to the Ministry of Finance for approval. The Housing Policy Branch may contact the applicant for additional information.
Once Destination BC has conducted a review of the completed application package and approved the Five-year Strategic Business Plan and one-year Tactical Plan, the application will be forwarded to the Ministry of Finance for their review and recommendation to Cabinet.
If the application is approved by the Ministry of Finance, the application will be forwarded to Cabinet for approval and the Designated Accommodation Area Tax Regulation will be amended if Cabinet approves the application. The Regulation sets out the designated recipient, the designated accommodation area, the rate of tax, the effective date of the tax, the repeal date of the tax, and the approved uses of the revenue.
The applicant will be informed by the Ministry of Finance when the amendment to the Designated Accommodation Area Tax Regulation has been made and will be given information via email on when the tax will come in effect.
Please note: Once an application package has been sent to the Ministry of Finance, Destination BC is unable to provide any additional information on the status of the application until a decision has been made by cabinet.
Under the Provincial Sales Tax Act, all designated recipients must account annually to the Minister of Finance for how money received from the tax has been spent.
As set out in the MRDT Program Requirements all designated recipients must submit the following information, signed by their authorized signing authority to MRDT@destinationbc.ca:
• Annual Financial Report by May 31 of each calendar year
• Annual Performance Report by May 31 of each calendar year
• One-year Tactical Plan by November 30 of each calendar year.
• Annual Affordable Housing MRDT Report by May 31 of each calendar year (if applicable).
• Annual Affordable Housing Plan by November 30 of each calendar year (if applicable).
Templates for the reporting requirements listed above can be found as Appendices to the MRDT Program Requirements.
Designated recipients not subject to renewal application requirements must also submit a Five- Year Strategic Business Plan. They are also required to make their Strategic Business Plan available to tourism industry stakeholders and accommodation providers.
All reporting must be based on activities for the previous calendar year (January to December) for the Annual Financial Report and Annual Performance Report and on activities for the upcoming calendar year for the one-year Tactical Plan. This will ensure consistency to allow for the Province to report out on program-wide outcomes and performance measures.
The requirements of the five-year Strategic Business Plan are set out in Appendix 1.2. All applicants will be required to submit a five-Year Strategic Business Plan, at time of application. Designated recipients not subject to the renewal application requirements will be required to submit a five-year Strategic Business Plan every five years.
The five-year Strategic Business Plan must adhere to the MRDT program principles. It must identify marketing strategies, key markets and targets that the community will focus on to build its tourism business and the steps it needs to take to achieve desired results. All designated recipients will be required to make their five-year Strategic Business Plan available to tourism industry stakeholders and accommodation providers. Also, please ensure there is alignment between provincial tourism strategies and community tourism efforts.
Please contact Destination BC if you have any questions on completing your five-year Strategic Business Plan at MRDT@destinationbc.ca.
Yes, all designated recipients choosing to implement a three percent tax rate will be subject to enhanced reporting requirements in regards to Stakeholder Satisfaction, Community Collaboration, and Coordination with Destination BC (refer to Appendix 2.2 of the MRDT Program Requirements for further details).
It is intended that each designated recipient choosing to implement a rate of three percent will sponsor and contribute to a provincial Tourism Events Program. Under this program, 0.2 percentage points of the incremental one percent of the tax will contribute to a provincially-led program to support tourism events that have provincial significance.
The Tourism Events Program (TEP) is a program open to all organizations and communities in British Columbia to support events and celebrations with a high tourism value. The TEP was created to address a need for the Province to be able to make more strategic investments in tourism by supporting events that increase the volume of visitors to British Columbia, increase global recognition of the province, and/or bring economic benefits to communities across BC. TEP provides incremental funding to eligible events to support their marketing or promotional activities in order to increase and broaden the impact of the event. It is expected the TEP will enhance the overall impact of MRDT by supporting events that will help ensure our tourism sector remains competitive.
The TEP will be sponsored by MRDT communities that voluntarily choose to apply a 3% MRDT rate.
More information is available at Tourism Events Program.
For new applications, the tax will be implemented effective the first day of the month that is three full months after the month in which the tax was approved. For example, if Cabinet approves the tax in May, the tax will be imposed on accommodation purchased in the Designated Accommodation Area beginning September 1. This provides sufficient time for accommodation providers to prepare to collect the tax.
For voluntary rate changes or applications that include affordable housing, the new tax will be implemented effective the first day of the month that is 1 full month after the month in which the tax was approved. For example, if Cabinet approves the tax in May, the new tax rate will be imposed on accommodation purchased in the designated accommodation area beginning July 1.
The Ministry of Finance will notify accommodation providers prior to implementation for new MRDT applications. Generally letters will go out 30-45 days prior to implementation of the MRDT. Accommodation providers will be notified of a rate increase one month prior to the new rate coming into effect.
The Ministry of Finance will also provide information on the procedures for collecting and remitting the tax. Accommodation providers may also refer to PST Bulletin 120, Accommodation and Provincial Sales Tax Notice.
No change required in the guideline document as the wording is not so specific as the FAQs.
Requests for interim changes to the designated recipient or the designated accommodation area will not be considered.
A designated recipient may voluntarily request a change in the rate of tax to three percent of the purchase price of accommodation prior to their renewal date by submitting a complete application containing all MRDT Program Requirements. If approved, the tax will be renewed for another five-year period.
Requests to use general MRDT revenues (meaning revenues beyond online accommodation platform (OAP) revenues) for affordable housing will only be considered once a designated recipient or applicant submits a new application at any time during the five-year tax lifecycle. The package must include all documentation required for a renewal or rate increase application outlined in Sections 7 and 8 of the MRDT Program Requirements.
Plans to use MRDT revenues generated only from online accommodation platforms for affordable housing are not required to submit a new application; however, information on affordable housing is required as outlined in the MRDT Program Requirements. Designated recipients that have committed to using OAP MRDT revenues for purposes other than affordable housing in their tactical plan cannot redirect those revenues to affordable housing midway through the year; they must wait until the submission of the next tactical plan due November 30.
Proposed changes in the use of revenue from the tax by the designated recipient that require amendments to the Designated Accommodation Area Tax Regulation will generally only be considered with renewal applications, for example: a proposal to use revenue from the tax for capital projects (beyond affordable housing). Written requests for interim amendments to the Designated Accommodation Area Tax Regulation to change the approved uses of revenue by the designated recipient will only be considered if the Province is satisfied that:
The designated recipient will also need to provide evidence that there is substantial support for the proposed amendment from the vast majority of the tourism industry and accommodation providers in the designated accommodation area.
Designated recipients should determine that the Province’s pre-conditions for consideration have been satisfied before seeking support from the tourism industry and accommodation providers in the designated accommodation area.
Designated recipients do not require approval from Destination BC for changes in marketing tactics previously submitted in their one-year Tactical Plan (as part of their application package or submitted with the annual review), as long as the tactics are consistent with the overall approved five-year Strategic Business Plan.
All other proposed changes in the one-year Tactical Plan or the five-year Strategic Business Plan must be submitted to Destination BC for review and approval in advance of the change being implemented.
The Ministry of Finance undertakes various compliance-related activities as part of the administration of provincial consumption taxes to ensure that all amounts due are remitted. These compliance activities include the MRDT collected on behalf of designated recipients.
The MRDT is levied under the Provincial Sales Tax Act. Any compliance activities undertaken in relation to the MRDT are thus carried out as part of those conducted for the PST. As a result, such activities will be undertaken according to schedules and guidelines established for PST.
The Ministry will not undertake any compliance activities in relation to the MRDT beyond those undertaken during the regular course of administration of PST. This includes conducting any investigations into variances between outside estimates of revenues and amounts actually paid to the Ministry by operators.
The Ministry will review specific lead information provided, for example a hotel operating without collecting applicable taxes, and will make a determination as to what if any additional follow up may be warranted. In addition, where large or persistent fluctuations in typical revenues are observed, the Ministry may conduct any further investigation deemed warranted.
Due to privacy restrictions, the Ministry is not able to disclose information regarding individual accounts without the expressed written consent of the account owner. The Ministry is able to provide the names and addresses of registered accommodation providers.
The following activities would be considered in non-compliance of the MRDT Program:
If a designated recipient does not comply with the MRDT Program Requirements, including the Annual Performance Management and Reporting Requirements, and the non-compliance is not corrected in a timely manner, the tax may be terminated in the designated accommodation area.
A designated recipient may make a written request to the Minister of Finance to have the tax cease before the scheduled repeal date.
If the tax ceases in a designated accommodation area for any reason (e.g. failure to submit a completed renewal application on time, written request for early termination, or termination for non-compliance) a new application to impose the tax in that designated accommodation area would be required and it would be subject to the normal processing time associated with new applications. If the tax was cancelled for non-compliance the applicant will also be required to demonstrate that the non-compliance has been corrected and will not be repeated.
In Budget 2018, the government announced that the eligible uses of MRDT revenues would be expanded to include affordable housing initiatives. At the same time it was announced that online accommodation platforms located outside of BC would be enabled to register to collect provincial sales tax and MRDT on purchases of accommodation through their platform.
In keeping with these announcements, the MRDT Program Requirements have been updated to reflect the changes. In particular, the revised Program Requirements include the following clarifications:
No, it is at the discretion of the designated recipient to determine if either all or part of OAP revenues be used either for affordable housing or tourism marketing programs or projects.
Filing frequencies for OAP’s can vary. OAP revenue is disbursed in the same disbursement period in which the return payment is received by the Ministry. The Province will provide information on both general MRDT revenue and OAP MRDT revenue to the designated recipient.
Designated recipients are able to use OAP MRDT revenues on affordable housing initiatives without submitting a new five-year strategic business plan or application package; however, the Ministry of Municipal Affairs and Housing will be consulted prior to implementation of affordable housing initiatives and details must be included with the annual tactical plan due on November 30th each year.
Designated recipients that wish to use general MRDT revenues must submit a complete application package including all of the documentation required for a renewal or rate increase application outlined in the MRDT Program Requirements. A new application package can be submitted at any time during the five-year tax lifecycle.
Note: Designated recipients not subject to the renewal application requirements that would like to use general MRDT revenues on affordable housing initiatives must submit a complete application as outlined above.
Designated recipients have the flexibility to define, identify, and fund affordable housing initiatives that they deem appropriate to meet local needs. This could include housing for workers in tourism-oriented communities facing worker housing challenges. Designated recipients may use MRDT revenues for the following purposes for spending on affordable housing initiatives:
Designated recipients cannot redirect revenues to affordable housing midway through the year; they must wait until the submission of the next tactical plan due on November 30, and completing an Affordable Housing MRDT Plan.
Yes, the Province can provide information on the amount of revenues generated from online accommodation platforms to designated recipients.
Revenue collected up to the first disbursement in early 2019 can be used for affordable housing initiatives starting in January 2019 for activities outlined in the submitted tactical plan and Affordable Housing MRDT Plan.
No, to qualify to apply for MRDT, there must be traditional accommodation (non-OAP) in a designated accommodation area as these accommodation providers’ support is required for the implementation of the MRDT in a designated accommodation area.
Designated recipients determine how MRDT funds are directed. In some cases, the designated recipient is not the local government and instead is an eligible entity. However, it is the strong expectation of the Province that in these cases the designated recipient and the municipalities work closely together to determine whether OAP MRDT revenues will be used for affordable housing initiatives. In situations where the designated accommodation area includes more than one municipally the regional district should also be involved. Details around these discussions must be included with the submission of an Affordable Housing MRDT Plan.
A completed Affordable Housing MRDT Plan as part of the overall tactical plan that outlines spending in the upcoming year must be submitted in PDF format to Destination BC at MRDT@destinationbc.ca prior to implementation and on November 30 of each year. The applicant will receive an email from Destination BC confirming receipt of the plan.
The Housing Policy Branch will review the Affordable Housing MRDT Plan and may contact the applicant for additional information. The plan is checked for completeness and adherence to MRDT Program Requirements.
The Affordable Housing MRDT Plan must include a description of how a particular project will respond to affordable housing needs in a community (for example, if the project oriented towards providing housing to tourism workers).
Yes, all designated recipients choosing to implement affordable housing initiatives, regardless of whether the revenues are solely from OAP revenues or from general MRDT revenues, will be subject to enhanced reporting requirements and must complete the following:
Affordable housing was added as a permissible use of funds in Budget 2018 to help address local housing needs and ensure tourism workers can find housing. Designated recipients have the flexibility to define, identify, and fund affordable housing initiatives that they deem appropriate to meet local needs. Affordable housing funding must be consistent with fiscal prudence and accountability, and will be subject to additional reporting requirements. For more information, please refer to Section 8 of the MRDT Program Requirements.
Designated recipients have the flexibility to define, identify, and fund affordable housing initiatives that they deem appropriate to meet local affordable housing needs. This could include housing for workers in tourism-oriented communities facing worker housing challenges.
The requirements of the Affordable Housing MRDT Plan are set out in Appendix 1.8 of the MRDT Program Requirements.
Designated recipients that wish to use MRDT revenues for affordable housing must provide an Affordable Housing Plan prior to implementation and due on November 30 of each year to outline spending in the upcoming year.
The plan must identify project name and address, project rational and details, MRDT contribution, housing provider/project owner, funding partners and contribution (if applicable), estimated completion date, estimated number of housing units, and evidence of consultation from local government(s) if the designated recipient is not a municipality.
Please contact Destination BC if you have any questions on completing your Affordable Housing MRDT Plan at MRDT@destinationbc.ca
MRDT Program Application & Reporting Questions
Destination BC Vancouver Office
Tax Administration and Enforcement Questions
Ministry of Finance
Hours of operation: Monday to Friday, 8:30am – 4:30pm
Phone: 1-877-388-4440 (toll free within Canada)
For more information, find the MRDT Program Requirements here.
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