GST on Airbnb
Sep 09, 2022
Gst On Airbnb
You would have seen in the media recently proposed tax changes to Kiwisaver, what the media hasn’t reported on so much is the tax changes to Airbnb’s.
Generally, for Airbnb properties our main concern is to stay below the GST threshold and not be GST registered. These new rules, DO NOT CHANGE THE REQUIREMENT TO GST REGISTERED. As the law stands now an entity renting their property where their income is less than the $60,000 threshold in any 12-month period does not need to be GST registered. However, under the proposed new rule, GST would be levied by the platform providers themselves regardless of whether their hosts are GST registered.
While you, as the property owner, don’t need to do anything to comply with this change, what will happen is that your cashflow is going to reduce.
Currently if you are not GST registered and rent your property on Airbnb for $230 incl GST, you would receive all the $230 income.
Under the new rules, this will reduce to $217.
So the platform provider (e.g. Airbnb) would receive the $230, of which $30 is GST. For a non-GST supplier, Airbnb would use the flat-rate of 8.5%, and this $17 would go to the supplier, so you would get the GST exclusive amount of $200 plus the $17 = $217.
The $30 GST less the $17 flat rate = $13, would go to IRD.
RESULT - from 1/4/24 if you are a non-GST registered Airbnb or short-term accommodation provider, you are likely to have your income reduce by around 6%!
Just another cost to consider if you are thinking about Airbnb or short-term accommodation.
With all the tax changes, it is important to know what your property is making you, or losing you, and what tax you may have coming up. A meeting with us is a great opportunity to look at your cashflow, ways to minimise your tax or improve your equity long term. With higher interest rates and loss of interest deductions, your numbers could be very different over the next few years.
If you have any questions regarding the above, please give one of the team a call to discuss.