Should I charge GST on my AirBNB Rental?

Short Term Rental – Commercial Residential Premises

Some AirBNB hosts may have multiple properties that they rent out on short-term stay and these properties may include “commercial residential premises” (i.e. properties built specifically to rent out). In tax ruling GSTR2012/6, ATO provide detail explanation of commercial residential premises included a hotel, motel, inn, hostel, caravan park, boarding housed or anything similar. ATO clearly states that a single home let on a short-term basis is not a supply for commercial residential premises.

Division 87 of the Goods and Services Act 1999 specifically addresses the issue of stay length as it relates to commercial residential premises. Short-term accommodation is when a guest stays for less than 28 continuous days, in which case you’re liable for GST of one-eleventh of the price you charge for the accommodation Long-term accommodation is defined under the GST Act – when a guest stays for 28 or more continuous days, in which case concessionary GST treatment applies

Common characteristics of operating premises as commercial residential premises (and therefore where GST applies) are:

•

Commercial intention

The premises are operated on a commercial basis or in a business-like manner even if they are operated by a non-profit body.

•

Multiple occupancy

The premises have the capacity to provide accommodation to multiple, unrelated guests or residents at once in separate rooms, or in a dormitory.

•

Holding out to the public

The premises offer accommodation to the public or a segment of the public.

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Accommodation is the main purpose

Providing accommodation is the main purpose of the premises.

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Central management

The premises have central management to accept reservations, allocate rooms, receive payments and perform or arrange services. This can be provided through facilities on-site or off-site.

•

Management offers accommodation in its own right.

The entity operating the premises supplies accommodation in its own right rather than as an agent.

•

Provision of, or arrangement for, services

Management provides guests and residents with some services and facilities, or arranges for third parties to provide them.

•

Occupants have status as guests

Predominantly, the occupants are travellers who have their principal place of residence elsewhere. The occupants do not usually enjoy an exclusive right to occupy any particular part of the premises in the same way as a tenant.

For hosts that have multiple AirBNB properties, you can see there are some grey areas since your AirBNB guests are considered to be guests and the host provides guest with services and facilities.

Ultimately, whether premises are commercial residential premises and where GST is applied is a matter of overall impression involving the weighing up of all relevant factors. While not an exhaustive list, factors that may indicate that premises are not a hotel, motel, inn, hostel, boarding house or similar premises include:

(a)

the operator and occupant agree for accommodation to be supplied for a periodic term (which may be for a period of months or years at a time), such as in a residential lease;

(b)

the operator and occupant document the condition of the premises under a written contract before the accommodation is initially supplied and when the occupant ceases to occupy premises;

(c)

the operator has the right to impose a cleaning fee on the occupant when the occupant ceases to occupy the premises;

(d)

the occupant is permitted, subject to the terms of the lease or licence, to alter the part of the premises occupied by the occupant, such as by attaching hanging devices on a wall;

(e)

the occupant is permitted, subject to the terms of the lease or licence, to keep pets in the premises;

(f)

the occupant must separately arrange and pay for the connection of a telephone, electricity, or gas service;

(g)

the occupant is responsible for the cleaning and minor maintenance of the premises, such as changing light bulbs in their room;

(h)

the premises are unfurnished; and

the right to occupy the residential premises is supplied to the occupant in exchange for the occupant loaning an amount to the operator together with other fees.

While the accommodation provided through short term rental platforms such as Airbnb, Stayz and Booking.com for residential premises does display some characteristics of commercial residential premises, the supply of the accommodation through the single apartment or house is not sufficiently similar to a hotel, motel, inn, hostel or boarding house to be characterised as accommodation provided in a commercial residential premises. The fact that the platform or manager acts as agent in respect to several apartments or houses and offers accommodation in that capacity to several parties at once is not sufficient to characterise the supply a short term rental host makes to the guests through the manager as accommodation provided in commercial residential premises. For one the host does not reside at the premises and the premises has more residential semblance than commercial (kitchen, laundry, car garage, dishwasher, no-onsite management).  It’s fair so say though this is a grey area and one that way be further clarified by the ATO in in the future (this article for reference was written in November 2024).