Considering the implications of the rules is particularly important for larger short-term accommodation providers. Hotels, motels and serviced apartment owners may sell accommodation both directly, and through various online platforms. In all instances, we would expect these providers to already be GST registered. The imposition of GST on the platform, therefore, creates a need to potentially change existing processes.

How the rules will apply will depend on the size of the accommodation provider. In a hotel context, if supplies made by the hotel group exceed $500,000 annually, there is an ability to opt out of these rules and continue paying out GST and claiming input credits in the same way they currently do by notifying the platform. The original Tax Bill required the consent of the platform before an operator could opt out, but this is no longer required. There is also the ability, by agreement with the platform, to opt out of these rules if over 2,000 nights annually are listed on the platform. However, as the nights test requires a platform’s agreement, we expect that most taxpayers would use the $500,000 test where possible.

Taxpayers who are not able to opt out of these rules will need to consider how the finer details of the rules apply to them, make decisions about the approach that will be taken and plan any system changes that may be required. Depending on the extent of system changes needed, this could potentially be timetabled for the period after the election result is known.

The rules are more complex for short-term accommodation that is rented by a manager for an owner. As a starting point, you need to have a clear understanding of the legal arrangements in place under your management agreement and whether the “underlying supplier” in the listed service's rules will be the unit owner or the manager. Given the level of complexity in both the new platform rules and the application of GST agency rules, we suggest you contact your usual Deloitte adviser to discuss how the rules will apply to you.

There are also a number of implications for those who operate short-term accommodation on a smaller scale. We have summarised these below:

For accommodation provided who are not currently GST registered:

• The platform will be required to charge 15% GST on the nightly rental (and any other related fees charged) on each booking made through their platform on or after 1 April 2024 (even if the accommodation provider earns well under the $60,000 per year GST threshold from the accommodation).
• The 15% GST charged by the platform will be split with 6.5% of the GST being paid to Inland Revenue and the remaining 8.5% of the GST charged being paid to the accommodation provider by the platform as a “flat-rate credit”. This is in effect a deemed input credit claim (calculated by Inland Revenue on the average input credits claimed by listed service providers currently). Receiving the flat-rate credit means that GST cannot be claimed based on actual expenses incurred.
• While the supply of the accommodation will be subject to GST, the changes do not bring the underlying property itself into the GST net. This means that if the property is sold in the future it will not be subject to GST if you are not otherwise required to be GST registered.
• If substantive capital expenditure is expected, such as a renovation or extension, there may be a benefit in registering for GST. The key downside is that the property will be bought into the GST net, and it will be subject to GST if it is sold or there is a change in use.
• If supplies through the platform exceed $60,000, either through increased rental or acquiring another property there will still be a requirement for the accommodation provider to register for GST and the consequences below apply.

For accommodation providers who are already GST-registered:

• The platform will be required to charge GST on the nightly rental (and any other fees charged) on each booking made through their platform on or after 1 April 2024.
• It is only large operators and groups of operators that can opt out of the platform rules and continue to return GST themselves (sales that exceed $500,000 or 2,000 nights are listed on the platform), as discussed further above.
• The GST payable on the guest stay will be paid to Inland Revenue directly by the platform. The accommodation provider will need to include this income as a zero-rated supply in GST returns.
• The accommodation provider will need to tell the platform about its GST registered status so that the platform does not claim and pass on the 8.5% flat-rate credit. If this is received in error, it must be repaid to Inland Revenue.
• Any future sale of the property is treated as it is currently, i.e. it will either be a zero-rated sale if it is to a GST-registered person who will use it for a taxable activity, or subject to GST at 15% if sold to a non-registered person. However, if your principal purpose was not taxable use, you can use the new (and separate) transitional repayment rules (discussed below).