HELLO ATO…ARE YOU AWARE OF WHAT’S REALLY GOING ON?
A Melbourne Airbnb operator – let’s call him John – used social media yesterday to ask this question:
“I rented residential properties then sublet them (e.g. three of them). I used a trust structure with Pty Ltd as the trustee. I used my personal name to rent the property, but use my business name to rent it out as a short stay. I am using booking.com - it requires me to use an EFTPOS machine or payment system to take the money from the renter’s credit card myself. And I now have my own website to take bookings. Am I considered similar to running a hotel/motel? Does this have GST implication if total income >75k?”
John’s posting prompted many questions in return. Top amongst them were:
“Is this legal?” “Do the owners of the properties know what he’s doing?”
And replies to such questions are always interesting. One landlord reported:
“We own an investment property in the name of the trust and it generates approx $63,000 annually.”
On the issue of claims related to depreciation, an Airbnb landlord running commercial tourist/visitor rentals wrote:
“We are operating a family partnership with an ABN. So if we are running a short-term stay business where we are actually renting the properties and then subletting them, are we not simply investment property owners? Then presumably we can claim for items over $300 and when we have our tax depreciation report prepared by a Quantity Surveyor we should include this amongst our deductions…”
One wonders how many homes listed on online booking platforms and run commercially are being negatively geared? We’re assuming the answer to that question is: All of them.
Individuals do have every right to purchase a holiday home for their own use or to be used by friends and relatives, with the applicable Land Tax paid. One has to accept though that regardless of whether short-term holiday rentals are/are not illegal, we have a rapidly growing population in Australia and this supposedly sees coastal towns and other regional centres as perhaps the only affordable option for those priced out of Sydney/Melbourne/Hobart etc. Yet that is often not the case. Please do read this article from today’s Byron Echo entitled: Why ‘affordable housing’ in the Northern Rivers is only for the rich.
The former Snowy River Shire Council approved short-term rentals as “holiday dwellings” in the 1980s and the newly merged Snowy Monaro Regional Council writes that they approve these types of buildings for the same purpose as “serviced apartments”. A serviced apartment is a category class 3 dwelling (Building Codes of Australia). It would seem that no adherence with Federal Building Codes, Disability Access Legislation or Fire & Rescue requirements are being observed. The Snowy Monaro Shire, in the two years to December 2018, saw Airbnb listings shoot up from 115 to 828 homes lost – a 620% increase. Jindabyne and surrounds are obviously hollowing out. And Council failed to advise who ‘managed’ the holiday home in which a four-year old boy was burnt to death.
Negative gearing was set up to encourage and support those who provide rental accommodation to the thousands and thousands of Australian Residents who need rental housing. Is negative gearing now a bonus for those turning homes into Airbnb and Stayz non-accredited, uncertified hotels and serviced apartments? To take advantage of negative gearing, a residential tenancy agreement should be in force. Short-term rentals in NSW are not residential tenancy agreements. While not accountants, the actions of Airbnb and Stayz landlords appear to us to be huge tax rorts. So, is our ATO aware of all these short-term rental taxation ‘hidey-holes’?
Homes not Hotels Communities not Transit Zones
People before Profits Neighbours not Strangers