There is no legal or tax requirement if you are running an Airbnb apartment to register for Goods and Services Tax (GST) under current legislation, but this may change in the future as the ATO are concerned about the shared economy and want to ensure business owners and operators are paying tax on their enterprise activities.
GST is specifically not required on residential property and owners cannot claim the GST paid on residential property through long term rentals. This is specially carved out in the GST legislation.
In the instance of renting a property or rooms out via Airbnb then there is no requirement to be GST registered, which means you cannot claim GST and do not need to collect and remit GST to the ATO.
As an investor who rents more than one property out or has more than $75k of turnover through Airbnb for short term holiday rental, then it becomes murkier:
- If the activities are run in a business-like manner for a business purpose, then GST may apply and the investor may elect to be voluntarily registered; and
- certainly, if the income of the Airbnb rental activities is more than $75k per year then GST registration is mandatory.
- This means that GST can be claimed on the expenses incurred in running the Airbnb business and GST is charged on the income for the Airbnb property. The net result either a payment to the ATO or a refund for net GST paid for the activity from the ATO on an annual or quarterly basis (over $150k then it is compulsory to submit quarterly BAS returns).
Owners of multiple investment properties rented in the short-term market via Airbnb and othered shared economy platforms should be wary of the GST legislation to ensure they do not fall foul of the rules.
The consequences of not being registered and carrying on an enterprise turning over more than $75k through the shared economy short term rental market could be expensive, with penalties incurred from the ATO and other authorities including local councils as higher council rates may also need to be charged.
If you are unsure of your situation in terms of your investment rental through the short-term shared economy on platforms such as Airbnb, call in at your local TaxAssist Accountants.
David Cornes CPA
Date published 22 Jun 2020 | Last updated 22 Jun 2020This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
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