GST and the new Airbnb/Uber Tax

GST and the new Airbnb/Uber Tax

GST and the new Airbnb/Uber Tax

If you offer accommodation or ride share services in New Zealand via an electronic marketplace (e.g., Airbnb or Uber), new GST changes will impact on you from 1 April 2024, although the National Party has stated it will repeal the change if they are elected to Government in October this year.


At present, providers of these services are not subject to GST if their turnover is below the $60,000 GST registration threshold. However, the Tax Bill which passed through select committee on 2 March 2023 now imposes GST on accommodation and transport services provided through electronic marketplaces, regardless of whether or not the owner of the property or the driver is registered for GST. The Bill is likely to be passed into legislation in the coming weeks.


What is changing

The Taxation (Annual rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2) creates a category of services called ‘listed services’ which incorporate all commercial, short-stay and visitor accommodation (such as Airbnb, Bookabach and, as well as all ride-share and food and beverage delivery services (such as Uber, Ola and Lyft).


This change means the marketplace operator is deemed to be the supplier of the services and is required to collect and return GST at 15% on all services provided to end-users through their marketplace.


The supply between the marketplace operator and a GST registered property owner or driver will be zero rated for GST. For example, Sarah is GST registered and rents out a property via the Airbnb marketplace for $100 a night. Airbnb is deemed to be the party supplying the accommodation and adds GST to the nightly rate, therefore charging guests $115. Airbnb pays the $15 GST to the Inland Revenue. The transaction between Airbnb and Sarah is zero-rated, therefore Sarah includes $100 as a zero-rated supply in her GST return.


If the property owner or driver is not GST registered, the marketplace operator deducts 8.5% input tax from the taxable supply (referred to as a flat-rate credit), and passes that 8.5% credit to the property owner or driver. The flat-rate credit is intended to approximate the amount of GST that the property owner or driver could claim as input tax if they were GST registered. Therefore, if Sarah was not GST registered, she would receive a credit of $8.50 (8.5% of $100) from the marketplace. The marketplace will return net GST of $6.50 to the Inland Revenue ($15 – $8.50). Current commentary is unclear on how Sarah treats the credit in her income tax return and no doubt detailed guidance will be provided once the legislation is passed.


What are the exemptions

Large commercial enterprises who offer over 2000 nights of short-stay accommodation per year via a marketplace enter into an agreement with the marketplace operator to opt-out of the new rules and allow them to continue being responsible for their own GST obligations.


In a nutshell

Ultimately there should be no change to GST registered property owners’ or drivers’ back pockets, while non-registered property owners or drivers may have additional income to declare in their tax returns due to the flat-rate credit. Although non-registered property owners or drivers could voluntarily register for GST, this may not be the ideal solution for property owners.


If you require assistance in understanding how you will be impacted by this new GST rule, please contact us.