We want to update you on the recent tax changes to Airbnb properties which haven’t been widely reported on in the media. The current law is that an entity renting their property where their income is less than $60,000 in any 12-month period does not need to be GST registered and the new changes do not affect this.
What is changing is that under the new rule, which is set to come-in, in April 2024, GST would be levied by the platform provider, for example Airbnb, regardless of whether you are GST registered or not. So what do you need to do? Nothing, as the property owner you don’t have to make any changes. What you will see though is a reduction in cashflow. For example, at the moment, if you are not GST registered and rent your property on Airbnb for $230 incl GST, you would receive all $230. However under the new rules, you would receive $217.
This is because the platform provider, in this case Airbnb would receive $230 of which $30 is GST. If you’re not GST registered then Airbnb would use the flat-rate of 8.5%, which is $17. So the owner of the property would get the GST exclusive amount of $200 + $17 to make $217. The remaining $13 ($30 GST - $17) would go to the IRD. This means that you will see your income on your Airbnb property or short-term accommodation reduce by around 6%. As we say these changes are set to come in until April 2024, so in the meantime, if you have an Airbnb property, why not come in for a meeting with us and we can go through your cashflow and look at how we can minimise your tax. Get in contact by calling 07 578 5416.