New GST Rules for Short-Term Accommodation - All You Need To Know

Back in early 2023 was the first time we heard of the proposed changes relating to GST treatment for ‘listed services’ including short-term accommodation booked via an online platform. We’re now in April 2024 and these changes have come into force as of the 1st of this month being labelled as the “App Tax”.

 

What are the changes?

Under the new legislation for short-term accommodation, the online booking platform (e.g Airbnb, Booking.com, Expedia or property manager websites like Harcourts Holiday homes) will be required to collect and remit 15% GST on all stays booked via their online platform regardless of the GST status of the underlying property owner.

 

Who does this affect?

The changes affect all ‘listed services’ whether or not the seller/owner is registered for GST. You can read more about what is deemed a ‘listed service’ from IRD here.

The rationale behind this is to level the playing field between bigger and smaller operators, who earn less than $60,000 per annum and do not have to register for GST on their services. The government hopes new legislation will increase tax compliance and move the GST accountability to the online platform provider.

 

 

What do you need to know?

We strongly recommend you work closely with your regular advisor to understand how the changes will impact you based on your specific circumstances.

If you are GST registered the GST component will be collected by the online platform and returned to the IRD – this should be treated as zero rated. Owners can continue to claim GST for any expenses incurred as normal.

For non-GST registered owners the full GST will still be collected by the online platform, however the online platform will provide the owner with an 8.5% flat-rate credit of that GST collected on your rental income. The balance of 6.5% will be paid to IRD under the new legislation. You can read more on this here.

 

Who can help?

We highly recommend you seek advice from your trusted advisor (accountant) and have a clear understanding of these changes that may impact you financially. They can assist you with understanding the impacts and tailoring your position to the changes to give you and your property the best outcomes.

 

 

What can Harcourts Queenstown Holiday Homes do for you?

Harcourts Queenstown has a dedicated Holiday Homes team who are managing this GST remittance process for our owners as a listing intermediary. Our team work hard to remain updated on legislative changes that may impact our industry and immediately notify our owners so they can seek the relevant advice. 

We’re working hard behind the scenes to bring our well-oiled existing systems and processes in line with the legislation and provide an ease of transition into the new system for our owners. We’re constantly communicating with our valued property owners and are always happy to help where we can. 

If you’re considering a property manager for your short-term rental that can help you manage this process as well as achieve high occupancy rates for your home, please contact us here.