GST changes for short-stay accommodation hosts

Are you a short-stay accommodation host? If so, a GST change taking effect on April 1st 2024 is almost certain to impact you, whether you’re registered for GST or not.

From this date, booking platforms like Airbnb, Book-a-Bach and Expedia will be required to collect GST on behalf of hosts, whether they are registered or not. The booking platforms will also be collecting IRD numbers and sales data to provide to Inland Revenue.

Hosts who are not registered for GST

The booking platform will collect GST at 15% and will provide a credit of 8.5% back to the host. This will result in a GST cost for them of 6.5%. They will not bear the full 15% GST to reflect that the host will not be able to claim GST back on expenses. *Scroll down to see an example.

Hosts who are registered for GST

The booking platform will collect GST of 15%. The host will be treated as making a sale to the booking platform that has GST charged at 0% (referred to as a ‘zero-rated’ supply). The host may then claim GST-inclusive expenses against the sales revenue and should be consistently receiving GST refunds (provided they don’t have another GST-inclusive revenue stream). *Scroll down to see an example.

When the GST-registered host files their GST return including bookings paid for after 1 April 2024, they will disclose the post-1 April sales in the zero-rated sales box of their GST return. If they incorrectly use the GST-inclusive sales box (box 5) they will pay GST twice.

In practice, GST-registered hosts will need to update the sales codes in their accounting software from 1 April, 2024, to show a zero-rated status for GST (not an exempt status). Note: This is just for income received from the booking platforms. If you receive direct bookings, have drop-ins etc., these still need to be returned with GST.

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***UPDATE***

Further changes to the new rules have been made providing that, for bookings taken before 1 April 2024 for accommodation provided after 1 April 2024, the booking platform will not be required to collect GST on behalf of hosts. Therefore, for unregistered hosts, GST will not be collected and there will be no flat-rate credit of 8.5%. For GST-registered hosts, you may have a mix of revenue with GST at 15% and 0%, depending on when the booking was taken.

However, it is the responsibility of the booking platform to determine what is subject to GST at what rate and provide a notice of this to hosts. It will be essential that coding of GST returns is done property. If this applies and you require assistance with your GST return, please get in touch.

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We expect the IRD to monitor this and check that sales through booking platforms match your income tax returns. If they don’t, the IRD may be in contact.

Feel free to give friends and family a heads-up by sending them this post. If you have any questions about the changes and how they impact you, please get in touch.

Hosts who are not registered for GST

• If you list your property for $115 on a platform such as Airbnb and you are not GST registered, Airbnb is now required to treat a portion of this $115 sale as being inclusive of GST.
• The GST portion of $115 will be $15. This GST will be split into $8.50 to be returned to you and $6.50 to be passed on to IRD by Airbnb.
• What this means in terms of the money you receive from Airbnb is that while before 1 April 2024 you would have received $115 from Airbnb, from 1 April 2024 onwards you will receive $108.50 from Airbnb.

Hosts who are registered for GST

• If you list your property for $115 on a platform such as Airbnb and are GST registered, you will previously have included the $115 in your GST return and claimed the Airbnb service fee.
• Airbnb will now pay $15 of GST on your behalf, take their service fee, and pay you the balance ($100, less service fee).
• You will then include $100 of zero-rated sale in your GST return and claim GST on inclusive costs (such as linen, management, toiletries, and service fee).

Tax law is always changing.

If you’re reading this long after the published date, please get in touch to see if it’s still relevant.