If you're hosting on Airbnb in Toronto, you've probably noticed that 8.5% getting added to your guests' bills. That's the Municipal Accommodation Tax (MAT), and while Airbnb handles most of the heavy lifting, there are still things you need to know to stay compliant.
Here's the complete breakdown of how MAT works, what Airbnb does automatically, and what you still need to do yourself.
What is the Municipal Accommodation Tax (MAT)?
MAT is a tax that Toronto charges on short-term accommodations. It applies to hotels, motels, bed and breakfasts, and yes, Airbnb rentals. The city uses MAT revenue to fund tourism marketing, infrastructure, and events.
The tax is charged on the room portion of the rental only. Things like cleaning fees charged separately, food, or other services aren't subject to MAT (though HST still applies to everything).
The Current Rate: 8.5%
As of June 1, 2025, Toronto's MAT rate increased from 6% to 8.5%. This temporary increase runs until July 31, 2026, primarily to help fund infrastructure and services for the FIFA World Cup 2026.
What This Means for Your Guests
MAT is added on top of your nightly rate. Here's how it breaks down for a typical booking:
Example: $200/Night Booking
| Nightly Rate | $200.00 |
| MAT (8.5%) | $17.00 |
| Subtotal | $217.00 |
| HST (13%) | $28.21 |
| Guest Pays | $245.21 |
Note: Cleaning fees and other charges are subject to HST but not MAT.
Who Has to Pay MAT?
Let's be clear about this: your guests pay the MAT, not you. It's added to their booking total. Your job as a host is to either:
- Use a platform (like Airbnb or VRBO) that collects and remits MAT automatically, or
- Collect the 8.5% yourself on direct bookings and remit it to the city quarterly
Either way, the money comes from the guest. You're just the collection point if you're not using a platform with automatic collection.
How Airbnb Handles MAT
Here's the good news: if you're listing on Airbnb, you don't have to do much. Airbnb has signed a Voluntary Collection Agreement with Toronto, which means:
Airbnb Adds It Automatically
The 8.5% MAT is added to your guest's booking total. They see it as a separate line item at checkout.
Airbnb Collects It
When your guest pays, Airbnb collects the MAT amount along with your payout.
Airbnb Remits It
Airbnb sends the MAT directly to the City of Toronto. You never touch this money.
What About VRBO?
VRBO also has an agreement with Toronto and handles MAT collection automatically, similar to Airbnb. The same rules apply: they collect and remit, but you still file quarterly reports (excluding VRBO revenue).
Direct Bookings: You're On the Hook
If you take direct bookings (through your own website, social media, repeat guests who contact you directly), you need to:
- Add 8.5% MAT to the room portion of every booking under 28 days
- Collect it from your guest at the time of booking or check-in
- Track every penny meticulously
- Remit it quarterly to the City of Toronto
- File your quarterly reports including this revenue
This is where many hosts get into trouble. It's easy to forget to add MAT to a direct booking, or to lose track of what you've collected. If you take significant direct bookings, consider using accounting software or a full-service management company that handles this for you.
Quarterly Reporting Requirements
Every registered STR operator in Toronto must file quarterly MAT reports. Here are the deadlines:
| Quarter | Period | Report Due |
|---|---|---|
| Q1 | January - March | April 30 |
| Q2 | April - June | July 30 |
| Q3 | July - September | October 30 |
| Q4 | October - December | January 30 |
What to Include in Your Report
- Direct bookings only if Airbnb/VRBO handles your other revenue
- Number of nights rented during the quarter
- Total revenue from room charges (not cleaning fees)
- MAT collected (8.5% of room revenue)
If you had zero direct bookings and all your rentals went through Airbnb/VRBO, you still file a report. It'll just show zeros for the direct booking portion. The city wants to see that you're tracking everything.
When MAT Doesn't Apply
MAT isn't charged on everything. Here are the key exemptions for Airbnb hosts:
Stays of 28+ Days
If your guest books for 28 consecutive days or longer, it's not a "short-term rental" under Toronto's definition. No MAT applies. This is a big reason why the mid-term rental strategy (28+ days) is popular.
Non-Room Charges
Cleaning fees, extra guest fees, pet fees, and similar charges aren't subject to MAT (as long as they're itemized separately). HST still applies to these, but not the 8.5% MAT.
What Happens If You Don't Comply?
Toronto takes MAT compliance seriously. Here's what you're looking at if you fall behind:
Late Payment Interest
1.25% monthly on overdue payments, increasing to 15% annually for extended defaults.
Registration Impact
Non-compliance can result in your STR registration being revoked or renewal denied.
Fines
Violations can result in fines up to $100,000 per offense.
NSF Charges
$40 fee for any payment returned due to insufficient funds.
Step-by-Step: How to Handle MAT
Here's your action plan for staying compliant:
Confirm Airbnb/VRBO Collection
Check that your platforms are collecting MAT automatically. In Airbnb, this should be automatic for Toronto listings. You'll see MAT as a separate line item in your booking details.
Track Direct Bookings Separately
If you take any bookings outside of Airbnb/VRBO, track them meticulously. Record the room revenue, nights stayed, and MAT collected for each booking.
Set Calendar Reminders
Mark April 30, July 30, October 30, and January 30 in your calendar. These are your quarterly reporting deadlines. Don't wait until the last minute.
File Your Quarterly Reports
Log into the City of Toronto's MAT portal and file your report. If all your bookings were through Airbnb/VRBO, your direct booking numbers will be zero, but you still need to file.
Remit Any MAT You Collected
If you collected MAT on direct bookings, submit payment along with your quarterly report. Keep records of everything for at least 3 years.
Frequently Asked Questions
Does Airbnb automatically collect MAT for me?
Yes, Airbnb has a Voluntary Collection Agreement with Toronto and automatically adds 8.5% MAT to your guests' bookings, collects it at checkout, and remits it to the city. You don't need to manually calculate or submit payments for Airbnb bookings. However, you still need to file quarterly MAT reports with the city.
Do I still need to file MAT reports if Airbnb collects the tax?
Yes. Even though Airbnb collects and remits MAT on your behalf, you're still legally required to file quarterly MAT reports with the City of Toronto. Don't include Airbnb revenue in your reports since Airbnb reports directly to the city. You must file even if you had zero bookings that quarter.
What if I rent through VRBO or direct bookings?
VRBO also has an agreement with Toronto and collects MAT automatically. For direct bookings (your own website, Facebook, etc.), you must collect the 8.5% MAT from guests yourself and remit it to the city quarterly. This is where many hosts get tripped up.
Do mid-term rentals (28+ days) pay MAT?
No. MAT only applies to short-term rentals under 28 consecutive days. If your guest books for 28 days or longer, no MAT is required. This is one reason the mid-term rental strategy is so popular with Toronto hosts.
When are MAT reports due?
Reports are due quarterly: Q1 (Jan-Mar) due April 30, Q2 (Apr-Jun) due July 30, Q3 (Jul-Sep) due October 30, Q4 (Oct-Dec) due January 30. Late payments accrue 1.25% monthly interest.
What happens if I don't pay MAT?
Non-compliance can result in your STR registration being revoked or renewal denied. Late payments accrue interest at 1.25% monthly, increasing to 15% annually. Fines can reach up to $100,000 per violation.
Is MAT included in my nightly rate or added on top?
MAT is added on top of your nightly rate. If you charge $200/night, your guest pays $200 + $17 MAT (8.5%) + HST on the total. The guest sees and pays the full amount including MAT.
Why did Toronto increase MAT to 8.5%?
Toronto temporarily raised MAT from 6% to 8.5% (June 2025 to July 2026) to help fund infrastructure and services for the FIFA World Cup 2026. The rate may return to 6% after July 2026, but check the city's website for updates.
This article is for informational purposes only and does not constitute legal advice. Bylaw and regulation details change frequently. Always verify current rules directly with your local municipality before making hosting decisions.
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