If you currently have a rental property that you let short-term through platforms like bookabach, Airbnb or holidayhouses, you should pay attention to the new GST rules.
GST and short-term accommodation
There's no GST to pay on rental income from long-term residential renting. 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 don't need to register for GST, and you don't need to file GST returns.
The new proposed changes do not change this requirement.
What's new
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 would now require the platform providers themselves to levy GST on all sales. IRD provided an example of what it would look like. For example, if you rented out a property for $230 inc GST and you are not GST registered, then $30 of GST will be split into $17 to be returned to you and $13 to be passed on to IRD.
Why the change
Inland Revenue said that short-term accommodation providers often fall below the GST threshold of $60,000. This gives them an unfair advantage over traditional commercial GST-registered businesses. The proposed law change is designed to level the playing field.
When's the change effective from
The GST change is expected to take effect from April 2024 to give the companies time to build the required changes into their systems.
There are many nuances around the new change, GST applicability and tax calculations. If in doubt, talk to professionals specialising in accounting for rental properties to understand how this change applies to your circumstances.
The information contained in this article is exclusively for promotional purposes. It does not in any way constitute legal advice and should not be relied upon as the basis for any legal action or contractual dealings. The information is not and does not attempt to be, a comprehensive account of the relevant law in New Zealand. If you require legal advice, you should seek independent legal counsel. myRent.co.nz does not accept any liability that may arise from the use of this information.
