Articles by Anthony Strevens
In November 2023 I wrote a blog about the new GST rules being applied for Airbnb properties listed through online marketplaces. You can find this here.
There has since been an update to this that will make life marginally simpler for those owners who are not GST registered. In my blog I described the “flat-rate credit”, which is the 8.5% amount that will be paid by online marketplaces such as Airbnb to non-registered owners. I also described the tax effect of this credit as follows:
Do I have to pay income tax on the $17 flat-rate credit?
No, you do not. The $17 flat-rate credit is not taxable income. The catch is that a full deduction cannot be claimed for the GST inclusive costs associated with the short-term stay activity.
For example, if you spend $2,300 on property insurance, up until now you would have claimed a deduction for income tax purposes as a non-GST registered owner on the GST inclusive cost of $2,300. Under the flat-rate credit scheme, your deduction for income tax purposes is based on the GST exclusive amount. With GST at 15% the calculation is $2,300 / 1.15 = $2,000. (You claim $2000, not $2300 for income tax.)
The update is that you will now have the option to choose to include your flat rate credit as taxable income. If you do so, then you can claim the GST on your expenses as a tax deduction. So in the above example you would claim $2,300 as the insurance expense.
This may or may not work out in your favour depending on whether the GST you have paid on your expenses is greater than the flat rate credits you have received. However, it certainly makes the accounting and tax calculations much simpler for non-registered owners.
It’s important to note that while this is not yet passed into law, there is no indication that it would not be, and as per usual GRA are ahead of the game and bringing you the future of property investment before it arrives. If passed, it is effective from 1 April 2024 (i.e. the 2025 financial year).
If you have any questions about this please contact your GRA CSM, or if you are not a client, request a meeting to see how we can help (the first meeting is free to new clients).
Hi Matthew, my name is Mark Soster and I would just like to congratulate you on your wonderful book Property 101. A few weeks ago I had a "financial awakening" and began devouring all the books I could find on the subject, however I keep coming back to yours. After 3 reissues from the library I think it easier now just to buy it. Wonderfully simple yet complex enough to require multiple reads and note taking. It has taken a lot of the fear away with regards to property investment but also tempered me with caution. Without it I would probably have stupidly invested anywhere but Auckland, telling myself it’s too expensive, I now appreciate why would you invest anywhere else? The numbers never lie, in a 20 year plan then Auckland is King for capital gain. As a fan of maths (the only perfect thing on earth?) I can see how each opportunity can be ruthlessly examined on a purely financial level. Anyway, thanks again, I will definitely be contacting your company with regards to coaching and expertise. - Mark Soster - October 2017
Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.
We help new, small and medium property investors become long-term successful investors through our education programmes and property portfolio planning advice. With our deep knowledge and experience, we have assisted hundreds of clients build wealth through property investment.
Learn More
Free Resources, Tools & Downloads
