GST Changes for Holiday Accommodation
Starting in April 2024 new rules apply to charging GST on holiday accommodation in New Zealand. Previously, if your gross revenue from accommodation was under $60,000 per year then you did not have to register for GST or charge your guests GST. While that general rule continues to exist, operators of Online Accommodation Platforms (such as airbnb, vrbo, bookabatch, etc.) are required to charge and remit GST on all rentals facilitated through their platforms. This means that your guests will be paying GST whether you are registered or not.
An interesting part of this new plan is that the OAP will be able to claim a GST rebate of 8.5% and refund this to you if you are not GST registered. And, doing so does not taint the property in terms of making any future sale of the property subject to GST.
If your total revenue (excluding GST) does go over $60K then you will be required to register (as always). Your OAP will continue to charge and remit GST (your revenue from them will be treated by you as zero-rated; special opt-out provisions exist for operators with over 2,000 nights) but you will no longer be entitled to the 8.5% GST rebate (you must notify your OAP immediately) as you will now be entitled to claim all your GST Input Tax Credits directly. But the more important effect is that your property will now be subject to the GST on Sale rules.
Should I register for GST?
If your total revenue is over $60K (across all properties) then you have no choice. But if it is under $60K then you may actually be better off under the new rules. Registering comes with unpleasant complications on sale, so registration should be avoided especially for mixed-use properties or where you are buying a standard residential property and not making any serious modifications. But if you are planning to buy a new property exclusively for short term rentals from an existing STR operator or plan extensive modifications then registering may be the best option.