If you own and rent out (on a short-term basis) a room in your home, the bach or an investment property, you need to understand the changes coming on 1 April 2024.

If you have booked a property for a work or family trip, anytime after 1 April 2024, you should also continue reading, as there are possibly implications for you too.

 In 2023 legislation was passed to make all “Electronic Marketplace” transactions subject to GST in New Zealand, even if the person delivering the service, e.g. the home owner, is not GST registered. National campaigned on repealing this law if they got into power, but confirmed in December 2023 that they will now leave the legislation in place.

This has meant that platforms like Airbnb, Booking.com, Expedia, Vrbo etc. are all having to frantically update their software to allow for the collection and payment of GST to Inland Revenue (IRD).

Some of the team at BFA have properties listed on Airbnb, Vrbo and Booking.com and we have a vested interest in understanding what’s going on, and we admit, it’s pretty disappointing to be this close to 1 April 2024 and not have all the answers!

This new legislation covers more than just properties, it also covers Uber and Uber Eats, for example. We are focusing on the property implications.

So, what does the law say?

That the platform is required to charge GST on all transactions and pay this GST over to IRD where the owner of the property:



1. is GST registered - to pay 15% to IRD
2. IS NOT GST registered - to pay 6.5% of the GST to IRD and pay the remaining 8.5% to the property owner                                               
3. Where the property owner is GST registered, they now have to report their income as Zero rated on their GST return. This ensures the income is declared and you do not pay the GST twice. This means that you claim your GST on expenses, and will likely receive refunds each GST return. 
4. If you are not registered for GST there is nothing for you to do. 
5. You only qualify for an exemption if:
6. your income from these activities is over $500,000 per year, or
7. you had more than 2,000 nights booked in a year

 
We have been made aware of the following:

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 rule to make contact with guests outside of their system.

If you are travelling and made a booking on Expedia, you may 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 should you wish to.
 

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, potentially a booking after 1 April 2024 could 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 are wanting to know more please reach out to your Client Advisor.