Australia, Victorian State Government 7.5% Short Stay Levy to be introduced 1/1/25

[Colin764]

Has anyone got documentation about exclusions of the Victorian State Government 7.5% Short Stay Levy to be introduced 1/1/25?

Does it also exclude Businesses Registered for GST with the Australian Federal Government? 

At this point the only thing we have found is "The levy will apply to all bookings, unless your listing is your Principal Place of Residence".

This has been defined by the State Revenue Office as being attached to you PPR and not just on the same land.

The definitions in the Victorian State Government 7.5% Short Stay Levy, refer you to a part of the Federal GST legislation in regards to GST but it appears open to interpretation.

Colin Dayman

Church Lane, Accommodation.

Milawa, Victoria, Australia.

[Frances3408 · Accepted solution]

@Colin764 Hi Colin, it sounds like you have looked into this pretty thoroughly already.

I have a "feeling" that the intention of the levy was meant to target full time non hosted residential only so owners will be forced to return those properties to the long rental market and/or STR for longer . I think they will likely refer to council zoning as the meaning of commercial accommodation where it is more commonly applied for rates and valuations. The calculation of the levy as interacting with GST is another headache as residential rent is currently not subject to GST but commercial rent for business premises is. I dont know about motels though.

In their ORIGINAL August announcement of the pending legislation the ALP said:

"The levy will not apply to a homeowner leasing out all or part of their principal place of residence for a short stay. When a homeowner goes on holiday and someone else stays there temporarily, the levy does not apply. Commercial accommodation such as hotels, motels and caravan parks are also exempt. The levy will also only apply to stays less than 28 days. Transitional arrangements will be in place, and the levy will not apply to bookings made prior to 1 January 2025"

The problem is also as you say, what is a principal place of residence as under Federal tax laws anything that is rented out, even part of your own home may not be 100% PPOR exempt when it comes to CGT. But also under Federal tax laws a PPOR can include up to 5 acres surrounding a home.

Given their opposition, have you reached out to the state and Federal LNP for some assistance?.  They would no doubt have people who researched this bill and be more aware of the implications and what was actually passed.

But these are just my views and I am not an expert. I can say its going to be one mess for the STRs to administer in the transitional period. So you have my sympathy. Good luck and let us know what you find out as this levy may spread further.

[Colin764]

Hi Frances,

Yes we reached out to both sides of Politics with no definitive answers.  We have also requested information from Airbnb's Legal Department around a week ago and haven't heard anything from them either. Do you know how we can contact Airbnb's Legal Department, this Tax gets implemented in around 8 weeks and nobody is talking to us. We need to find out from Airbnb if we can opt in or out of having them collect the levy. We want to opt out as we meet the definition of being exempt. How do we contact Airbnb 's Legal department?

Regards

Colin

Church Lane Accommodation,

Milawa.

[Rebecca]

Hello @Colin764,

I am tagging @Frances3408 here for you, so they will receive a notification of your message and can hopefully come back to share more insights!

Quick tip: To tag someone, tap "@" and select the host's username from the dropdown menu 😊

[Frances3408]

@Colin764. Hi Colin, good to see our taxpayer dollars hard at work.

I dont know how to contact their legal department directly and whether its them or some other area. I'd start by ringing Airbnb on (02) 8520 3333. Airbnb Australia executives were keen on promoting the levy at the last Zoom meeting. They didnt provide any contact information for themselves though.

@Robin4  can you help?

In a practical sense I think technically if they want to collect it and the law has obvious exemptions they are going to have to build an opt in/out option or legally they cant collect the tax imo. I suspect it will be like land tax where you may need to contact State Revenue to explain why you are exempt if some does get remitted.

Either way I'd be keeping a careful eye on your payment transactions from January.

[Robin4]

@Colin764 

Hi Colin,

I am not an accountant, nor am I a resident, or conduct business in any way in the state of Victoria! So neither I or anyone else on this platform is qualified to give you a definitive ruling on certain parts of this new legislation.

All we can do is talk in board terms.....and as with any new legislation there are no doubt going to be 'grey' areas which are not definitively covered by the legislation in its present form.

But as a layperson and an experienced STR host lets look at the aspects of legislation and how it 'might' affect Victorians as a host!

A/.......On 17th October 2024 the Victorian Goivernment passed  legislation which will come into effect on January 1st 2025  introducing a 7.5% STR hosting levy on all Victorian STR properties where hosting takes place for LESS than 28 consecutive nights.

          1/......The levy will not apply to bookings made before 1 January 2025, even if the stay is completed on or after 1 January 2025.

Grey Area:  Not defined if confirmed booking prior to 1/1/2025 is to start after 1st January 2025.

          2/.....The levy will be a flat 7.5% of total booking fees paid, including fees and charges such as cleaning fees and GST (where applicable).

Now total booking fees Colin, is defined as..... if you accept a booking for a stay in Victorian accommodation that is shorter than 28 consecutive days, "and charge a fee for the stay". So, in other words it is not just the Airbnb service fees or any local government charges, it is on the entire fee that the host charges. If you let the property for a fee, the levy applies on that 'fee'

GST is applicable on STR rentals where the owner provides and uses an ABN (Australian Business Number) and claims expenditure as a tax deduction!

B/.......Who pays the fees: 

For a booking made through a booking platform, the booking platform pays the levy on the total fees for that booking.

A booking platform is any platform – online or not – that facilitates short stay bookings on behalf of accommodation providers, whether or not that platform facilitates payment of any fee for the booking. 

Booking platforms do not include services that only promote or advertise short stay accommodation but do not facilitate the bookings.

For a booking made directly with the owner or renter of a property, the owner/renter pays the levy on the total fees for that booking.

Where this gets messy is this next clause.......

If your total annual booking fees are $75,000 or less, you will complete an annual return. This means you will not be required to lodge your first return and pay the levy until 30 January 2026.

.If your total annual booking fees are more than $75,000, you will need to lodge quarterly returns. The quarterly periods begin on 1 January, 1 April, 1 July and 1 October each year. This means you must lodge your first return and pay the levy by 30 April 2025.

If you are liable to pay the levy, you must register with the SRO (State Revenue Office) by the due date of your first return. You will be able to register, lodge returns and pay the levy via the government Revenue Office website. That seems to infer that the responsibility for compiling the return rests with you, you must register and accept responsibility!!

C/.......Exemptions: 

The levy does not apply to:

• a property that is someone’s principal place of residence, whether they own or rent that property. For example, you own your home and live in it. If you go on holidays for 2 weeks, and during that period you use your home as short stay accommodation, any short stays that guests book and complete in that period will not be subject to the levy. The same applies if you rent your principal place of residence
• commercial residential premises, such as a hotel, motel, hostel or similar accommodation
• certain specialist accommodation, such as rooming houses, retirement villages and student accommodation provided in connection with an educational institution.
• Properties that are exempt can substantiate that the rental forms part of the principal residence such as a shared space, ie: Laundry facility, veranda, shared structure connected to the main residence. Would not apply to self contained structures remote from but, within the property boundaries.

Colin there are considerable vagaries at the moment and Airbnb's legal department would not be able to adequately assist you.

I would suggest your first approach should be to the Victorian SRO and throw the ball in their court. I would also seek the help of a professional  accountant to guide you through the intricacies of this new legislation.

But at this stage I would not expect too much assistance from Airbnb.

Good luck with it Colin, where ever these regulation schemes have been introduced they seem to have come with more problems than solutions. Look at the mess NYC is in with it's Local Law 18 which came into effect in Sept 2023. It's been a disaster and the only thing it has achieved is to raise long term rental rates by more than the US city average

All the best with this Colin.

Cheers.......Rob.

[Frances3408]

@Robin4. Rob, where did you grab the GST definition from ? "GST is applicable on STR rentals where the owner provides and uses an ABN (Australian Business Number) and claims expenditure as a tax deduction!"

Being a landlord and collecting residential rent does not necessarily mean you are running a business for Australian tax purposes either and you can still have an ABN and elect not register for GST if your other turnover is below the permitted threshold ie currently $75,000 for profit businesses. 

GST does not apply to residential rental income so you cant currently claim GST credits arising from it either. You are treated as an investor. If they have amended the GST Act and Income Tax Assessment Act for this I havent seen it.

Although I used to be a registered tax agent I leave it to my Chartered Accountant these days. 🙂

[Robin4]

@Frances3408 

Frances I prefaced my response by saying I am not an accountant and not qualified to give advice, All I can do is talk in generalities.

Homeowners who let out a portion or, all of their home at odd times in general do not have an ABN and provided any income falls below a predetermined threshold are not subject to GST on the income they achieve as there is no GST on residential rental income.

As I understand it an investor with multiple serviced apartments or commercial B&B properties who has an ABN, derives income, runs a profit and loss as a part of doing business is subject to GST which they can then elect to claim a tax credit.

You Frances would be in a better position to give advice with your background. I was simply responding to you tagging me in this thread and talking in generalities to the best of my personal knowledge.

I don't in any way purport it to be sound financial advice!

Cheers........Rob.

[Frances3408]

@Robin4. Sorry Rob, I should have been clearer. I just meant if you had a more direct contact for an Airbnb staffer in Australia, just like you did for Marie the other day.

[Robin4]

@Frances3408 

Hi Frances, over the past few years I have distanced myself from Airbnb support for obvious reasons. I don't involve them in anything now because I know it will end up in a hassle. 

Not trying to chest-beat but, I try to help others in any way I can and I know if I involved Airbnb support it would end up in more problems than it was worth!

I had an enquiry the other day for a reservation in mid March next year. She came to me in a pleasant way with the information to assess that she would be a satisfactory guest.

She did volunteer that she had just returned from another state dealing with the wash-up of her mothers affairs and simply asked when she would have to pay for this stay as she was somewhat stretched just at the moment.

Without hesitation I told her I would block her required dates on my calendar and when she got within 6 weeks of the stay and in a position to pay let me know in the message stream and I would open up the dates for her to book.

Frances I am not trying to dud Airbnb out of their booking, the whole thing still goes through Airbnb but I am helping this girl out....she thinks I am great and she thinks Airbnb is great.

But, it's not Airbnb policy and can you imagine the bun-fight if I tried to involve support in the correct protocol to handle something like that!!

If a guest reservation can't proceed, regardless of my cancellation policy I offer the guest a future credit for a stay here  noting it in the message stream and we don't involve support, cancelled reservations, change of dates or refunds and it all works well for both guest and me.

So no, I don't have any key Australian support contacts. But what I would suggest Frances you get onto our local Airbnb Facebook group moderator Sarah Huang......   @Sarah5000 . Sarah is also one of our Australian representatives on the Host Advisor Board and there is practically no-one in Airbnb that she doesn't have some form of contact with.

Here she was with Uncle Brian a couple of months ago......

I don't want to heap more work on Sarah's plate but, she would possibly have the contact information you would like Frances.

Cheers.......Rob.

[Frances3408]

@Robin4. Unfortunately I closed my Facebook, Linked In etc accounts a few years ago.  Its amazing how much free time I have now. But thanks anyway.

@Colin764