GST charges for AirBnB in New Zealand

[Brad1034]

Hi

Does anyone know what Air BnB's policy is regarding charging GST on bookings in NZ?  I gather the new law, coming in on 1 April, requires AirBnB to charge GST, but accommodation that is part of the owner's residence (whatever that means in detail?) is exempt under the law.  That applies to me, but Air BnB have not asked me to clarify whether the accommodation I offer is part of my residence.   Why not? Are they planning to? Soon?

It's potentially important in that if GST is charged by AirBnB, and forwarded to IRD on my behalf, that might mean my home, or part of it, is inadvertently classified as subject to GST, with fairly drastic ramifications.

Brad

[Paula]

Hello @Brad1034, welcome to the Community Center.

I am reaching out to some fellow hosts in New Zealand to see if they would be willing to share some suggestions on this matter: @Michelle4022 @Helena815 @Kathy888 

All the best,

[Kathy888]

Hi Paula this is in fact a serious issue for Airbnb hosts in NZ. Airbnb need to obtain an opinion and issue a ramifications newsletter to hosts.

@Brad1034 is correct and will have read all the briefs offered by other accountants online and be suitably and appropriately concern not to have his family home suddenly subject to 15% GST tax. Brad if you have not spoken to your accountant it is time to do so and NOW. Ask him/her how he would help you establish an arms length entity that may distance you from this very expensive risk. I believe we the hosts need to establish a means of lobbying the local management so we can gain specific to NZ assistance in this. Other option sadly is exit. If  you want to chat you should be able to locate me with a little searching Kathy **  North or Monarch Manor Apartments.

**[Name hidden due to privacy concerns - Community Center Guidelines]

[Kathy888]

Brad needs to review IRD technical paper IS20/40

[Brad1034]

Thanks Kathy!  We've read IS 20/04, and still feel uneasy about the issue. Some of the interpretations seem a bit self-contradictory and, as it's a new law, with a new view on gst, we think we'll wait til there are some cases tested in court, with resulting refinements, before we feel we can trust either IRD  or AirBnB. The house we use and live in is owned by trusts, and there's alot at stake. We don't want to set up an additional entity at this stage, so we'll just forego the income. I've blocked bookings from 1 April, and will likely cancel AirBnB hosting from 31 March. 

We'll check in with our accountant, and MP, but I suspect the law will require a period of bedding in and until that happens I believe no one can be confident about outcomes.

I do feel a bit abandoned by AirBnB, though I guess it's too complex and risky for them to deal with, too. Our neighbours have withdrawn from AirBnB already and I'm sure many others will do so as well.  Perhaps AirBnB are hoping to avoid a mass exit, but I do hope that does not mean many NZ hosts get caught out.

It's a pity that withdrawals will probably hit the tourism and hospitality areas, not to mention our retirement income and enjoyment of hosting.

Regards

Brad

[Frances3408]

@Brad1034Brad, I am not a tax agent but I found this summary from Deloitte which does talk about GST on a future sale. https://www.taxathand.com/article/29781/New-Zealand/2023/Implications-of-new-GST-platform-rules-for-... Apologies if you knew this already.

From what I read it sounds like it would be easier if Airbnb could simply add a Yes/No button to host information re "Registered for GST?" in the interim (ie the 2 year transitional period). Of course property owners who use a PM as host are still likely caught as most PMs will have bookings above the threshold and already be registered for GST.

Although across the ditch I wouldnt be suprised if we see something similar here in the near future so thank you for adding this issue to the forum.

It sounds like you have done the best you can in waiting for the dust to settle.

Good luck.

[Brad1034]

Thanks Frances, that link was very helpful.  I've just heard from our accountant.  He attended a presentation on the App tax three weeks ago and, based on that, says it's extremely unlikely our house or trusts would be inadvertently caught in a GST "trap".  That would require a deliberate change by IRD and would not be applied retrospectively.

So, we are comfortable enough to continue with bookings.  We won't get anywhere near the $60k cut-off.

I'm unclear about the details but I guess GST will be applied to the gross value of the booking, and the "GST refund" will presumably also be based on that, with AirBnB's fee reduced as it would have already had GST paid off the top - to avoid double GST charges. Will have to wait and see I guess.

Regards

Brad

[Helen427]

@Brad1034 

@Kathy888may be able to confirm, however the way we read it is there's an 8.5 % GST rate taken from us who are Home Share hosts regardless of our Private Financial circumstances that are none of anyone else except the Tax departments concern.

I would be surprised if many Home Share type of Hosts would so much as be paid the $60 000 Per Year permittable allowance.

A poorly thought through Template, once again.

It would be helpful if ABB sorted out there Templates so we can select appropriate and Fit for Purpose to our lives "Options" in this and other parts of there Templates as they don't adhere to what Policy writers have written.

@Paula @Bhumika @Quincy @Stephanie @Breanna

@Sergi @Anna @Emilie 

[Brad1034]

I understand that AirBnB add 15% to our asking prices. They forward 6.5% to IRD as GST, and 8.5% goes to the host, as part of our payout from AirBnB, to cover GST components of our costs. So if we do nothing, our prices go up 15% and we get 8.5% more.  We can chose to lower our prices if we want to.

We can still claim rates, insurance, supplies etc as before, including their GST components, at year-end.  That's only if total income is less than $60k pa.

Do others agree with that interpretation?

Brad

[Adam2176]

Yes unfortunately my experience mimics your interpretation. I don't understand though why airbnb haven't reviewed their approach - a simple fix would be to give the hosts the option whether the GST component should be added to, and absorbed within the rates we publish on airbnb as currently rates on booking.com will always be cheaper as they dont add GST to the rate. airbnb suggested I just raise the rates on booking.com to match, or drop the airbnb to match but I use a platform manager as I only want to maintain one set of rates 

Since this change was made I have received ZERO new bookings on airbnb since April but I continue to get  heaps through booking.com which will continue as long as airbnb inflate the rate. I'd expect Airbnb to continue to lose market share in NZ if they make don't a change. 

[Leihia0]

I second this.  I've received zero bookings since April. I'm now thinking of pulling my property from AirBnB and listing with Booking.com.  Do you have your Booking.com property listed as Bed and Breakfast? I normally had mine listed as self-contained until as it's part of my home, so not sure how to list it.

[Craig-and-Lynne0]

Are you able to see and show any transaction that demonstrates what you are interpreting?

eg an Airbnb invoice or statement.

Cheers

Craig

[Adam2176]

hi Craig / All - I didnt know this thread was continuing. Annoyingly people have started using AirBnb again which now creates an issue for me as I've given them my GST number and they say they are remitting GST for me but the payment summary they send doesnt have any GST remitted and there is no extra reporting to confirm how much and the customer service team are clueless. Sorry I cannot help but airbnb have totally dropped the ball here and its obvious why their business is failing. 

[Anne-Marie420]

I am interested in how this  works too. We are not gst registered as we earn under the $60k threshold. However, airbnb are now charging 15% gst and paying us 8.5% back .......but why are they giving us any back? Shouldn't they be paying the full 15% to IRD??