Ottawa, ON, Canada – A proposal to end Canada’s Visitor Rebate Program for its Goods and Services Tax (GST) was set to take effect Apr. 1. The proposal was part of the spending restraint measures announced by the Canadian government on Sept. 25, 2006.
The GST is a value-added tax that applies to most goods and services in Canada. The Visitor Rebate Program provides GST relief for certain property and services used during conventions and expositions held in Canada; for goods exported from Canada by nonresidents; for short-term accommodations; and for certain tour packages for nonresidents.
The wording of the new rules is complicated. Here is an overview:
- Nonresidents will be required to pay tax on the full cost of attending Canadian conventions after March 31;
- Nonresidents will not have to pay the tax to attend conventions organized by non-Canadian companies;
- Nonresident trade show exhibitors will no longer be eligible for a rebate of taxes paid for exhibit space or related services (show organizers who had signed contracts for events through March 31, 2009, before the suspension of the rebate was announced, will still be able to obtain rebates);
- Non-Canadian show sponsors may provide exhibitor space and services without paying the tax; all other exhibitors will be taxed;
- Non-residents of Canada will no longer be able to get a rebate for hotel stays that begin on or after April 1.
Sergi Micheli, executive director of the Canadian Association of Exposition Management, sent a letter to letter to Department of Finance Minister James Flaherty, P.C., M.P. last Fall, protesting the action, which he said was taken without consulting members of the tourism or trade show industries.
“This decision will have a profound effect on both leisure and business travel to Canada, particularly for convention and exposition organizers. For these clients of Canada, they (the legislature) are proposing to increase their cost of doing business in our country by 6 percent, which puts Canadian destinations and thousands of large and small show producers and facilities at a serious competitive disadvantage,” Micheli said in the letter.
The Tourism Industry Association of Canada also has worked to reverse the decision, but it was still set to take effect at press time.
According to a year-long study conducted between September 2004 and September 2005 by Tourism Toronto, 233,000 people from outside the region came to Toronto as exhibitors and show organizers during that period and spent $482 million Canadian (about $561 million U.S. dollars) while there. Toronto hosts about 20 percent of the shows held in Canada, according to the most recent CEIR Census.
Neither the Canadian Association of Exposition Management nor the Trade Show Exhibitors Association had any data concerning how many U.S. show organizers or exhibitors applied for the rebate on an annual basis.
However, Bob MacGregor, managing director of Diversified Business Communication Canada, told Trade Show Executive, “I don’t know if it will have a major impact. But it will add six percent to the cost of space.” MacGregor said only about 10 percent of Diversified’s exhibitors come from U.S. companies without a Canadian subsidiary and managers rarely get calls about the GST rebate.
For more information about the Canadian GST rebate program, go to www.fin.gc.ca/drleg/06-049_1e.html#Schedule or www.ccra.gc.ca/visitors or http://www.craarc.gc.ca/tax/nonresidents/visitors/qa-e.html.
Reach Bob MacGregor at (905) 948-0470 or firstname.lastname@example.org