Anyone who provides lodging or ride-sharing services through an online marketplace in New Zealand, such as Airbnb or Uber, will be affected by new Goods and Services Tax (GST) changes starting from April 1, 2024.

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Articles by Anthony Strevens

Anthony Strevens

GST for all Airbnb properties from 1 April 2024

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Anyone who provides lodging or ride-sharing services through an online marketplace in New Zealand, such as Airbnb or Uber, will be affected by new Goods and Services Tax (GST) changes starting from April 1, 2024. 

Note that earlier this year, the National Party expressed its intention to repeal this change. However, it is not part of the published “100 day action plan” so it will be interesting to see what comes out of coalition negotiations and whether this remains in place. Currently it is law, so it’s important for those it will potentially affect to have an understanding of what it is. 

What is the new legislation?
Presently, service providers are exempt from GST if their turnover is below the $60,000 GST registration threshold. However, the new legislation coming into effect on 1 April 2024 mandates GST on accommodation and transport services facilitated through electronic marketplaces, regardless of the GST registration status of the property owner or driver. 

The legislation introduces a new category of services called 'listed services’, encompassing commercial, short-stay, and visitor accommodations (like Airbnb and Bookabach), as well as ride-share and food/beverage delivery services (such as Uber and Ola).

Under this change, the electronic marketplace is considered the service provider and is obligated to collect and remit 15% GST on all services provided to end-users through their platform.

Transactions between the electronic marketplace and a GST-registered property owner or driver are zero-rated for GST. For instance, if Ronald, a GST-registered individual, rents out a property via Airbnb for $200 a night, Airbnb charges guests $230, including GST, and remits $30 GST to the Inland Revenue. The transaction between Airbnb and Ronald is zero-rated.

If the owner is not GST-registered, the electronic marketplace deducts 8.5% input tax from the taxable supply and passes this credit to the owner. This flat-rate credit is meant to approximate the GST that could be claimed if they were GST registered.

Larger commercial operations can opt out
It’s important to note that large commercial enterprises providing over 2,000 nights of short-stay accommodation annually through a marketplace can opt out of the new rules by entering into an agreement with the marketplace operator. This allows them to retain responsibility for their own GST obligations.

Summary
In summary, GST-registered owners should see no change in their financial situation but will need to ensure they advise the online marketplace of their registration status. Non-registered individuals will receive the flat-rate credit in cash, resulting in a net increase in revenue. This extra revenue is treated as non-taxable. 

If you require assistance in understanding the impact of this new GST rule, please contact your GRA CSM, or if you are not a client, request a meeting to see how we can help (the first meeting is free to new clients).


Anthony Strevens
signed
Anthony Strevens
Business Advisory Director
© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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Parvinder Kumar commented on

""Hi, a very informative article. I have one question regarding all this. If a person receives income from AIRBNB for providing services, like my friend who is a photographer offering photography services to AIRBNB, is his income taxable under GST? He is a GST-registered individual.""

Amanda Craddock

This change won't affect the photographer's GST situation. Whether or not the photographer charges GST will depend on whether they are themselves GST registered. If they are GST registered, which you say they are, then they should be charging GST on top of their fees for their professional services regardless of the GST status of their customers (including AirBNB).

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