GST changes for online marketplaces and apps
25 April 2024
From 1 April 2024 “Electronic Marketplace” transactions will be subject to GST in New Zealand, even if the person delivering the service, is not GST registered.
This legislation was passed in 2023, and although National campaigned on repealing this law if they got into power, they confirmed in December 2023 that they will now leave the legislation in place.
The new legislation covers more than just properties, it also covers Uber and Uber Eats, for example. But we are just focusing on the property implications and what it means if you own or rent out a room, bach, or an investment property.
If you have booked a property for a work or family trip any time after 1 April 2024, you should also continue reading, as there are possibly implications for you too.
So, what does the law say?
That platforms like Airbnb, Booking.com, Expedia, Vrbo etc. are required to charge GST on all transactions and pay this GST over to Inland Revenue (IRD) where the owner of the property is:
GST registered:
- Pay 15% to IRD.
- Report your income as zero-rated on your GST return. This ensures the income is declared and you do not pay the GST twice. It also means that you claim your GST on expenses, and will likely receive refunds each GST return.
NOT GST registered:
- Pay 6.5% of the GST to IRD and pay the remaining 8.5% to the property owner.
- If you are not registered for GST there is nothing for you to do.
You only qualify for an exemption if:
- your income from these activities is over $500,000 per year: or
- you had more than 2,000 nights booked in a year.
This means that all these platforms are frantically updating their software to allow for the collection and payment of GST to IRD.
Here’s what we do know:
Expedia:
- They have NOT been able to update their software and will be removing ALL NZ listed properties from 1 April 2024, unless you qualify for the exemption above.
- If you have a property listed on Expedia, they possibly may remove it. There is no clear guidance as to what happens if you have bookings for the future but we suggest you contact your guests. Be careful how you do this though, as it’s against Expedia’s rules to make contact with guests outside of their system.
- If you are travelling and made a booking on Expedia, you may also have an issue - contact your host to work out what to do.
Vrbo (ex Bookabach):
- While owned by Expedia, they have upgraded their software and will be able to cope with the new GST.
- But be aware, from 1 April they will automatically add 15% GST to all bookings. So, this will increase your nightly rate by 15% and make your property more expensive. You will have to manually update your rates to reflect this change.
Airbnb:
- They, too, have decided they will add 15% GST to every booking from 1 April 2024.
- Their system says they are not yet set up to deal with NZ GST.
Booking.com:
- They have not yet provided guidance on what they are planning to do.
- Will they be like Expedia and just stop supporting NZ properties or will they be like Airbnb and just add 15% to all bookings?
So, a warning, if you are not GST registered, and you have not told your platform provider, it appears they will default to adding 15% GST to your property and pay this 15% to IRD. How you get your 8.5% back remains a mystery.
If you are planning on booking accommodation, be wary of using Expedia or Booking.com, as a booking after 1 April 2024 could potentially cost you 15% more! In any event, landlords and holiday makers should revert to their booking platform for the latest information and policies. If you want to know more please reach out to us.
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