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Small Business Tax Guide: Tourism Business

If you’re a travel professional or operate a travel agency business and you sell accommodation or camping packages in Canada, you don’t want to miss a potential tax rebate. Wouldn’t you like to bring tour groups to Canada while saving money at tax time?

With the Foreign Convention and Tour Incentive Program (FCTIP), you may be able to claim a rebate on the taxes you pay for sold accommodations. In particular, you can receive a rebate for the goods and services tax (GST) and harmonized sales tax (HST).

Foreign Convention and Tour Incentive Program Rebate Requirements

You have to sell a tour package for an all-inclusive price to qualify for the FCTIP rebate, and it must include the following:

  • A short-term and/or camping accommodation in Canada
  • At least one service (a service does not include items classified as property, such as meals or admission fees, or services included in an all-inclusive accommodations package)

You can claim the following rebates:

  • Up to 50% of the GST/HST taxes you’ve paid for a tour package that includes accommodation in Canada
  • 100% of the GST/HST taxes you paid to create an eligible tour package in Canada

If you’re claiming a rebate for the tax paid on an eligible tour package that you purchased and resold, you can claim a rebate for part of the tax paid on the tour package.

Generally, the rebate for an eligible tour package is equal to 50% of the GST/HST taxes paid on the package. But the rebate shrinks if any of the nights of accommodation fall under the category of ineligible accommodations, such as overnight shelter on a boat or train.

You can calculate your reduced rebate amount as follows: (A/B) x 50% x GST or HST paid.

A” is the number of nights of short-term and/or camping accommodations in Canada included in the tour package. “B” refers to the total number of nights in Canada included in the tour package, including ineligible accommodation.

Special eligibility rules apply to foreign travel operators, but if you’re eligible for the rebate, you’re only required to submit an application to take advantage of this opportunity to help your bottom line.

When tax time comes around, you want to keep as much money in your pocket as possible. Automatically organizing expenses and creating custom tax categories with a cloud-based accounting solution makes filing taxes easy. QuickBooks Online can help you maximize your tax deductions. Keep more of what you earn today.

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