Short Term Rentals & Online Marketplaces

May 13, 2024

If you rent out the family bach through Air BnB, if you drive with Uber, or, more generally, if you earn income through an online platform that puts together service providers with customers, you need to be aware of requirements for online marketplaces in New Zealand.

From 1 January 2024 New Zealand adopted the OECD’s sharing and gig economy information and exchange framework. This requires online marketplaces to conduct due diligence on all their sellers, and to collect and report information about sellers and transactions on their platforms.

The effect of this will be to make income earned through online marketplaces and the activity of sellers registered on these digital platforms more transparent to Inland Revenue for tax collection purposes.

DOES THIS AFFECT YOU?

Online Marketplace Sellers and Income Tax

If you are registered with an online marketplace as a seller or provider of services and you receive income from that, you:

• must declare all income you receive in your tax return
• can claim certain expenses as income tax deductions
• need to keep records of the income you earn and the expenses you incur to earn that income

Whatever marketplace you sell through, what you earn is taxable income and must be declared in your tax return.  You may also have to account for GST.

Online Marketplaces and GST

From 1 April 2024 online marketplace operators need to be able to identify sellers that are GST registered or not.  Those who facilitate the sale of listed services, must collect and return GST when the service is performed, provided, or received in New Zealand.  This applies whether the seller is GST registered of not.

This covers:

• Short stay and visitor accommodation* – this includes fees charged on top of accom costs i.e. cleaning
• Ride sharing & ride hailing
• Food and beverage delivery

If you are GST registered already:

If you are already GST registered, you need to include your supplies sold through an online marketplace as a zero-rated supply in your GST return.  You will still be able to claim GST on the costs of making supplies.  There are circumstances where you can opt out of the marketplace rules and be responsible for your own GST, we will contact our clients direct if this applies to you.

If you are not GST registered:

A new flat-rate credit scheme will apply.  Marketplace operators will collect GST at the standard 15% rate on the services.  They will then pass on 8.5% to you, recognising the GST on your costs supplying listed services.  The remaining 6.5% is returned to the IRD.

There are special rules for how the flat rate credit and GST on supplies is then treated for income tax, which we will take care of for you.

Still got questions?  Contact your usual dpa expert for more info.