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As your trusted partner in the short-term rental industry, we understand the importance of keeping you informed about changes that may impact your business. With the App Tax now in full effect, we want to ensure you're not only informed but also feel supported in navigating the latest tax regulations seamlessly.
As a valued host in the short-term rental industry, understanding your GST obligations is important for maintaining compliance and ensuring the smooth operation of your short-term rental. Here's a breakdown to help simplify the process:
Threshold for GST Registration
Should your turnover from all GST activities, including renting out property for short stays, exceed $60,000,you're required to register for GST and file GST returns. Given that renting short-stay accommodation is considered a taxable activity, it's crucial to monitor your turnover closely.
Calculating Your Turnover
When calculating your turnover, it's essential to consider all income generated from taxable activities. To find more information about calculating your turnover, head to: https://www.ird.govt.nz/property/renting-out-residential-property/gst-and-renting-out-residential-property/gst-and-your-short-stay-rental-income
Effective April 1, 2024, guests booking short-stay accommodations through online platforms, including Bachcare, will now pay a further 15% GST on rent.
For hosts who aren't GST registered, the new regulations do not mandate GST registration, and your property is not impacted by GST upon future sale. The rent you receive from us will continue to be exclusive of GST, with the GST paid by the Guest paid directly to the IRD by Bachcare. Additionally, hosts receive a cash payment known as the flat-rate credit, amounting to 8.5% of the rent received, funded by the IRD. Bachcare facilitates this payment alongside regular rent payments. The flat-rate credit is not taxable income for income tax purposes. However, hosts must adjust expenses claimed in their tax return on a GST-exclusive basis for income derived solely from electronic marketplaces. If required to register for GST in the future, hosts should promptly notify Bachcare of their change in registration status.
For hosts who are GST registered, you must notify the Bachcare team with your GST registration number. Bachcare is required to assume responsibility for remitting GST on rental income to the IRD, and you will need to disclose your rent payments as zero rated supplies in your GST return. While you won't receive the flat-rate credit, you can continue claiming allowable GST on property-related expenses in your own GST return.
Mixed use assets - GST treatment on disposal
For GST registered owners, under current rules, if your property is used partly for taxable purposes and partly for non-taxable purposes (e.g., private use), GST generally applies to the sale or disposal of the property.
However, recent changes allow GST-registered persons to elect to treat certain assets that have predominantly private use to not be subject to GST on disposal. The property cannot have been acquired or used for the principal purpose of making taxable supplies and the person cannot have claimed GST deductions for the cost or capital improvements to the goods (or purchased them zero-rated).
If you have a minority taxable use and have claimed GST or purchased zero-rated, you may be able to repay the GST and elect to treat the asset as not subject to GST on disposal(subject to certain conditions). This is only available until 1 April 2025. Your accountant or tax advisor can provide you with more information.
Repeal of apportionment rule for holiday homes
The special GST apportionment rule for “mixed use asset” holiday homes (which are used both privately and for taxable use, with at least 62 days vacant use per year) will be repealed from 1 April 2024. The general GST apportionment and adjustment rules will apply instead. Your accountant or tax advisor can provide you with more information.
While we endeavour to provide comprehensive guidance, your peace of mind remains our utmost priority. Should you have any questions or require assistance, our dedicated Bachcare team is always here to support you. Remember to seek advice from your accountant or tax advisor for tailored recommendations aligned with your unique situation.
The information provided above does not, and is not, intended to constitute legal or tax advice, and is for general informational purposes only. If you are unsure about your current GST status or are currently GST registered, you should seek advice from your accountant or tax adviser.
If you are a short-term rental owner looking for options and guidance, Bachcare is here to support you. Connect with us to find out more about our services and benefits.
