The rules regarding GST for offshore accommodation sellers who sell Australian accommodation have changed. Previously, many business travellers have been caught out by overseas sellers who were unable to provide tax invoices on the sale of Australian accommodation as they were not registered for GST. These sellers were not required to be registered for GST, even if they were over the $75,000 turnover threshold.
How have the rules changed?
Previously, offshore accommodation sellers were not required to register for GST, and so, were not required to issue tax invoices. Hotels could not issue a tax invoice as the sale of the accommodation was made by the overseas entity, not the hotel.
Now, offshore accommodation sellers who sell over $75,000 worth of accommodation per annum must be registered for GST. This means they will have all the same obligations as Australian businesses. These businesses will be required to provide a tax invoice when asked, and to report their earnings and GST.
An online hotel booking website based outside of Australia, in the United States, sells accommodation in different countries to travellers across the world, including to Australian consumers.
The website purchases rooms from an Australian hotel at the hotel’s wholesale rate + GST. The Australian hotel is required to charge and report GST on hotel rooms it has sold.
An Australian consumer then pays for a booking at the Australian hotel on the overseas website. The website makes over $100,000 on the sales of Australian Hotel rooms in the last 12 months. Now the website must register for GST and account for GST in any sale made post 1st July 2019.
If you are the provider of accommodation under online platforms (e.g.: Airbnb)
If you rent out all or part of your home under the sharing economy, you will not need to pay GST. However, you will have other obligations you must fulfil with the ATO. You will need to:
- Keep records of all income you earned through renting out your home and then declare it on your income tax return.
- Keep records of all expenses you can claim as deductions.
Be aware the ATO advises that if you rent out your house or unit (be it just part or all of it), you must treat as assessable income all payments you receive. This means:
- you must declare the income as rental income in your tax return
- you can only claim deductions for associated expenses apportioned to:
- the time the room/property is rented (or occupied for payment), and
- only the part of the property that is rented.
If you carry out services in addition to providing room, like breakfast or cleaning, you are still not required to charge GST.
In the case you are, or will be, carrying on an enterprise renting out commercial residential premises (e.g.: a commercial boarding house), you might be required to register for GST and will have different income tax and GST obligations.
How to register for GST
The simplest way to register for GST is through GSTregister.com.au. We are registered tax agents, so, we can assist any business with their registration. Whether you need to backdate or need assistance applying, we can answer any questions and show you what you need to do. Our team have also created a simple form to get you up and registered in a matter of hours.
When you are registered for GST you will have some obligations to the ATO to keep. These include, lodging a BAS monthly or quarterly, including GST in the price of any taxable sale, issue tax invoices when one is requested, and meet any record keeping requirements.
As a registered business you will also be able to claim GST tax credits, reducing the amount of GST you need to pay to the ATO.
For more information contact GSTRegister.com.au