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Although the new coalition government has repealed a number of legislative amendments introduced by the Labour government, this is one change that has survived.
Introduced via the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023. The changes were enacted in March 2023 but were only recently effective to give Platforms time to prepare systems.
Starting from April 1, 2024, significant changes have been made to how Goods and Services Tax (GST) is handled for 'listed services' provided in New Zealand. Listed services include ride-sharing services, food and beverage delivery, as well as short-stay accommodation.
This article focuses on the latter, i.e. the provision of short-stay accommodation.
Specifically, when you book short-stay accommodation through an online Platform (like a website or app) operated by someone else, GST will be charged at 15% from 1 April 2024 (assuming that website or app is over the GST registration threshold of $60,000).
This applies regardless of whether the underlying accommodation provider (you) is GST registered. The responsibility for collecting and paying GST lies with the Platform operator, who will issue tax invoices to customers.
If you are GST registered, you’ll report these transactions as zero-rated supplies in your GST return (although large-scale operators can opt out). If you’re not GST registered, the Platform will handle the GST, and you will receive extra money through the flat-rate credit scheme.
Government officials expressed concerns that the growing adoption of online Platforms could gradually erode the GST revenue base over time and so GST legislation was expanded to include these listed services on top of the already legislated 'Netflix' and 'Amazon' taxes (relating to the provision of cross-border remote services and low value goods). Here is what you need to know.
I supply short-term accommodation; do I still need to charge GST?
Yes and no.
For those of you supplying accommodation via an online Platform such as Airbnb or booking.com, you will be deemed to supply accommodation to the Platform at 0%. When you prepare your GST return, these supplies will be reflected as 'zero-rated' sales. The online Platform will account for GST of 15% on the supply of accommodation.
Costs can be claimed as usual, as all supplies of accommodation are 'taxable supplies' at either 0% or 15%. So, you will continue to claim GST input tax as you ordinarily do.
Note that if you supply accommodation via your own website, or directly to the guest, i.e. not via an online Platform, the rules remain unchanged, and you would still account for GST at 15%.
I supply short-term accommodation, but I am under the GST registration threshold, do I need to register?
You are only compelled to register for GST if you are over the GST registration threshold of $60,000.
If you are under this, you are not required to register. However, the online Platform is required to account for GST at 15% on any stays at your accommodation regardless. In this instance, when GST is collected, the Platform gives non-registered suppliers an 8.5% flat-rate credit. This credit approximates what you could claim as an input tax deduction if you were GST-registered. So, out of the 15% GST charged, only 6.5% is actually collected by the Inland Revenue.
You are obliged to advise the online Platform of your GST registration threshold so that you can determine if you are eligible for the 8.5% credit.
The flat-rate credit is excluded income for the purposes of calculating your taxable income at year end. However, there are additional calculations required to determine deductible expenditure which will add to compliance costs.
Non-registered suppliers of accommodation can voluntarily register for GST if they so wish, however advice should be taken before doing so!
Is there any ability to opt out of these new rules?
Yes, but there are certain criteria to be met.
Certain accommodation hosts registered for GST can choose to ‘opt-out’ of the rules and handle their own GST returns (meaning they pay GST directly to Inland Revenue). To qualify for this, hosts must:
- exceed $500,000 in taxable supplies (those obligated to file monthly or two-monthly GST returns); or
- list more than 2,000 nights on a single Platform within a year.
If hosts don’t meet the $500,000 threshold but reach the 2,000-night limit, they need the Platform’s agreement to opt out.
The opt out rules are useful as many hotels, motels and other such large-scale accommodation providers will already have systems in place to capture GST on supplies made.
Additionally, specific rules apply to short-stay property managers, known as ‘listing intermediaries'. These intermediaries handle flat-rate credits for owners and decide whether to request an opt-out or let the Platform handle GST returns.
A listing intermediary is someone who lists short-stay accommodation on an online Platform on behalf of the accommodation host. Common examples include property managers and agents who enter into contractual agreements with the Platform operators.
Next steps
The above is a snapshot of the rules. Online Platforms should now have systems in place to determine the GST registration status of NZ suppliers and account for GST.
If you are GST registered, you should review statements for each Platform carefully and check your first GST return is in line with the new requirements. We can assist with a review if you require.
If you are not GST registered, you must confirm this status with each Platform. The Platform is required to issue statements at least monthly regarding the flat-rate credit you are entitled to. You will need to track the credits received as well as all costs incurred so you can correctly determine your year-end tax liability from the short-stay accommodation you provide. As the flat-rate credit is excluded income there is now a specific mechanism for determining deductible expenditure.
If you think that you may be a listing intermediary, further advice should be taken due to the complex nature of these rules.
Viewpoint
From a policy perspective the changes make sense as GST will now apply to all such services consumed in New Zealand regardless of whether the service is supplied via a Platform or not. It will however mean an increase in cost for end consumers given GST is now charged for both registered and non-registered suppliers.
There will in essence be no change for GST registered suppliers, however non-registered suppliers will have some added complexities given the year-end calculations required which will add to compliance costs.
