From 1 July 2019, all online accommodation providers will need to charge GST to customers. Previously, offshore sellers of Australian commercial accommodation had been exempt from the rule.
As well as hotels, this rule applies to: motels and hostels, serviced apartments, student accommodation, caravan and tourists parks, house boat hire, and bed & breakfast accommodation.
Similarly to all Australian businesses, the accommodation providers will only need to charge GST if their annual turnover exceeds $75,000. If their turnover is above this figure, they will need to calculate a 10% GST figure on all sales and provide a tax invoice to all customers.
Formerly, this space had been considered a ‘loophole’ within Australian tax law.
According to the ATO Deputy Commissioner, the new change will remove the competitive advantage that offshore sellers had over local accommodation providers.
For businesses who regularly book accommodation through offshore sellers, it also means they will be able to claim GST credits with the tax invoice they receive.
Notably, this change will not affect offshore agents that coordinate the booking of Australian accommodation through domestic accommodation providers. In these circumstances, the customer’s pay will typically be directed straight to the hotel provider and it will be their responsibility to provide the tax invoice noting GST charged.
If you have any questions about claiming GST credits, you can contact one of our tax champions on 03 8393 1000.