Air BnB - GST Changes

Do you own a property rented out on Air BnB or a similar platform? If so, this will almost certainly be of interest.

It is well established that long-term residential rental activity does not attract GST. But short-term renting, on the other hand, is a taxable activity.

Generally, if the income earned from short-term accommodation is under $60,000 in any 12 months period, then you do not need to register for GST on the basis of earning less than the compulsory registration threshold.

The new proposed changes do not change this requirement.

Up until now, if your income fell below the threshold of $60,000 and you're not registered for GST, the total rent earned on a platform like Airbnb would be passed on to you. However, under the new rules, this amount would be reduced.

The Government will be requiring platform providers such as Air BnB to directly levy GST on all sales. IRD gave an example on how that would look like in practice. For example, if you rented out a property for $230 (GST incl) and you are not GST registered, $30 of GST will be split into $17 to be returned to you and $13 to be passed on to IRD.

The Government’s rationale for the change is to supposedly “level the playing field” between small scale short-term accommodation providers, and traditional larger providers such as motels / hotels / caravan parks etc . At present there is a perceived unfair advantage in favour of small Air BnB type accommodation providers who do not need to register for GST.

These GST changes are coming into effect from 1 April 2024.

If you would like to discuss how these may affect your business, please do not hesitate to get in touch with your usual MDA advisor.