Tax implications for Australian hosts!

[Robin4]

Since November 2018 Airbnb has been required to file share hosts financial information with the Australian Taxation Office, ATO!

Many hosts in the past have chosen to regard Airbnb earnings as some sort of 'back pocket'  deal ....this cannot be done any more without getting a 'Please Explain'  from the ATO.  Australian hosts should be aware of the difference this could make to their hosting situation.

After an assessment done by Domain and H&R Block in conjunction with the ATO they were shocked to come up with these figures.

I at this point say, I am not an accountant or have any expertise in financial advice, all I am doing is passing on to the community readily available figures!

The latest reliable Airbnb figures we have was for the year 2015-16 and these figures are as follows.....

Taking into account Capital Gains Tax (CGT) If you STR an Apartment. 

And the figures for  houses rented out is even bleaker.........

Without taking into account running costs and long term maintenance, many Aussie hosts are making under half what they are charging, some less than 25% and that is on the assumption they do not get sucked into Airbnb's Pricing Tips!

Now recent Government changes to the income tax structure has eased this slightly for some!

I would strongly advise all Australian hosts to seek some expert financial guidance before continuing.....

You could very well find out that by hosting all you are doing is working to support the Aussie tax system!

Cheers......Rob

[Joy298]

I totally agree @Robin4 

I've talked with someones who live overseas and let airbnb managing agents taking care of their properties. I was really shocked that they have very limited knowledge of taxation. They don't have a concept of their break-even point and most of them don't even know there would be a CGT applied when they sell the place. As they are usually offshore, they hope their places to be rented out as much as possible even at a very low ball price only to cover some loan interest. Hence the vicious STR competition in Sydney/Melbourne is aggravated.

[Kath9]

@Robin4, yes CGT is a killer. I'm trying to just ignore it and hopefully it will go away by the time I sell my house...

[Martin1160]

You are one step away from saving your Apple device from various issues or problems.

*solicitation removed*

[Robin4]

@Martin1160 

1/......I do not own an Apple device!

2/.....Product advertising is not permitted here on the Community Centre. We would be swamped with posts such as this if we allowed it!

Martin 2614 Please within the next 30 minutes edit and delete your post and if you do not, I hope the CC moderators are onto it quickly and remove it!

Cheers.....Rob

[Lynette57]

@Martin1160  you should get this advertising OFF our community web site and abide by rules

CC reps where are you now ?>?????????

[Stephanie]

Here! @Lynette57  @Robin4 !

As mentioned by both @Martin1160 , whilst it's wonderful to have your contributions on the CC, we prefer to not have solicitations for products or services. This is a place for hosts to discuss, share and have a positive experience with each other. 

You can review the guidelines here: Community Guidelines

Thanks,

Stephanie

[Susan17]

@Stephanie 

I realise the functioning of the CC has absolutely nothing to do with you, Quincy or Lizzie, Steph - so as always, my comments are not directed to you guys, but to the company you work for (SoG) - but I'm intrigued as to why the only posts that ever seem to get removed by the "Spam Quarantine Filter" are host comments, while all day, every day, all the real spam/advertising/marketing posts manage to slip right on through, to clog up the forum feed?

Also, there are several regular posters on this CC who include covert (and not-so-covert) links/pointers to their own listings and/or their other businesses/endeavours, in almost every single post they make - yet, there seems to be a blind eye turned to that practice? It's not as if it's not crystal clear what they're up to. Just because a contributor may include an "amusing" anecdote or a few words of advice in their posts, doesn't exclude those posts from being blatant spam. 

Rules should be applied unilaterally, not randomly or selectively. One rule for one, one rule for all. 

[Lynette57]

@Robin4 , You are so right , although it has never been an issue for me many people dont realise the actual costs involved.

one listing this yr gross income   $13700.

Running costs, incl, insurance, water , city rates, $11300

                                                             Net profit $2400

LOL sorry no that's wrong, cleaning after 11 lets @ 25 per hr average 6 hrs per time = $1650.

                                              Now Net profit = $750

LOL and I forgot that I drive 22 klms to my listing  to greet hand over keys and to go and start clean and finish clean a total of 88 KLMS every booking.  so that approx $8.50 every booking in fuel .so approx $100 in fuel 

                                              Now net profit = $650.00

Dam I forgot about the other things, Replacing broken crockery. stolen cutlery, new linen to replace torn or badly stained, replace stolen towels, repairs to broken furniture , 

Oh dam ............... I was just dreaming Profit = $0

and I still have to pay CC Tax when or if I sell ................. Have a great day everyone

AND continue to love people because that is why we do it

[Robin4]

@Lynette57 

Hey Lynette, I hope there was a certain amount of tongue in cheek there! ;-))

The bottom line in those assumptions were based around the amount the host actually gets to put in his/her pocket for each guest night that is hosted! And those figures are actually better than mine. But I have factored in all the running expenses where as those figures assume that has already been done

So for my last hosting year my gross $26,800 (after all expenses were taken out) turned into a net $15,574.40 that I could actually put into my pocket....$62.80 x 248 hosting nights.

Three hundred dollars  ($300.00) per week is not a fortune to be doing what I do, but on top of other income, it really does make a big difference to our lives.

Now Lynette, I can make a go of this because I don't have a mortgage and being retired this income doesn't attract an income tax component! One day there will be a CGT component but having owned the property more than a decade and being in an area of steady but not spectacular growth, that is reducing all the time and is not something I currently factor into what I  charge.

The price I put on my listing has to be able to attract guests...and it does. The price that a guest pays to stay here (inc service fees) is an average $113 per night.....$120 for the first night, $105 for subsequent nights, and still I get quite a few 4 stars for value, so I don't think I can push the choke much further where price is concerned . Some hosts in my area are charging $70 per night! How on earth they are making anything out of hosting is totally beyond me.

Almost everyone who doesn't host thinks Airbnb is a pathway to riches.......it isn't!

In certain situation a host can make money  but I would bet there is a large percentage that are not!

And I think come tax time this year, some are in for a rude shock!

Cheers......Rob

[Lara225]

I agree with what you are saying @Lynette57.   Electricity Bills of 3K a quarter, Water Bills of over 1K per quarter, rates, Gas, stolen items, broken items guests refuse to pay for or deny breaking,  wear and tear,  gardening, maintenance, washing, etc.

This brings me to the new AirBnb Tax - I see that it is now mandatory for hosts to select a type of tax that they want to be taxed.  I don't really understand this. Anyone got any other info on the new field that popped up on my dashboard today?

For a start, I really don't think it is feasible for airbnb to take the taxes on behalf of the ATO as tax rate paid is dependant on profit, which sometimes, as Lynette57 says, is actually almost nil, and one would be better off renting the house out and leaving it to tenants to pay  the bills, and then go and and get a normal job again.

I'm a little confused and would appreciate any feedback anyone can offer on the new feature that appeared today in the dashboard.

[Lynette57]

@Lara225   I must be missing something, Where is this tax thing that we have to choose, I cannot find it anywhere in my listings.

I have never chosen any tax bracket at any time , I declare all my gross and net income and the taxation department either sends me a bill or not.

[Robin4]

@Lynette57 

I must be missing something too Lynette, the only tax that is showing on my Airbnb transactions is the VAT on the service fee component that Airbnb have been required to collect and remit for the past 2 years. You can check that by going to your 'reservations' and clicking the 3 dots next to the item for each reservation called 'Details'!

Interestingly Homeaway-Stayz are deducting 10% of my overall listing amount as a tax component and I have not been able to get any details as to what is happening to that at this stage.

I will let you know when I fins something out!  

I cannot conceive that Airbnb are required to collect tax details for income tax purposes because every taxpayers situation is different. That is an accountants work, not Airbnb's.

@Lara225 , could you please post a screenshot of the tax declaration you are talking about. We might be able to shed some light on it then! 

Cheers.......Rob

[Lynette57]

Hi @Robin4  The only VAT should be on the service fee. There should be no other applicable taxes paid to ABB or Homeaway-stayz due to the fact that we are personally required to declare our income less costs then net income to the taxation dept, then we either receive a bill or not depending on our income.

I have tried to attach the form I use but it wont let me.