Concepts
Short-term accommodation
Short-term accommodation is a paid stay for a limited period, such as a holiday rental or room booking, and its GST treatment depends on the type of premises and the host's registration status.
Short-term accommodation covers paid stays for relatively brief periods, such as a holiday house booked for a weekend, a room let through an online platform, a serviced apartment or a stay at a hotel or motel. For GST, the central question is whether the supply is a taxable one, an input-taxed one or even outside the GST system. The answer depends on the kind of premises, how they are used and whether the host is registered or required to be.
The law separates residential premises from commercial residential premises. Long-term residential rent is input-taxed, which means no GST is charged and the landlord cannot claim credits for related costs. By contrast, accommodation in commercial residential premises, which includes hotels, motels, inns, hostels, boarding houses and similar places, is generally a taxable supply when provided by a business that is registered or required to be. Whether a particular holiday home or spare room falls into one category or the other can depend on how it is run, so the facts matter.
The threshold also matters. A host who earns from accommodation is carrying on an enterprise if the activity is business-like, and must register for GST when their GST turnover reaches $75,000. A host below that level may choose to register voluntarily, and some do so to claim credits on furnishing and running costs. Once registered, GST of one-eleventh of the price is included in the total charged to guests for taxable stays, and the host reports it on the BAS.
Hosts who list on a platform should check how the platform presents the price. The nightly rate, cleaning fee and platform fees can be separate supplies with different parties. The platform's own commission or service fee charged to the host is a separate supply, and fees charged by an overseas platform may be treated differently from those charged by an Australian one. Keep platform statements and invoices because they support what you report as sales and as costs.
For guests who are in business, a stay for work can include GST that may be claimed as an input tax credit if the guest is registered and holds a valid tax invoice for purchases above $82.50. Individuals on holiday simply pay the price shown. Longer stays can be treated differently from short ones, so the length of the arrangement can change the GST result and should be checked against ATO guidance.
Common misunderstandings include assuming that a holiday rental is always input-taxed because it is a home, assuming the platform pays all GST for the host, and forgetting that income tax applies to rental income whatever the GST position. Hosts also sometimes overlook that renting out a home may affect other tax settings such as capital gains tax treatment.
Because the line between residential and commercial treatment can be fine, this is general information only. Please confirm your own arrangements with the ATO or a registered tax professional before deciding how to charge and report GST.
Worked example
Priya runs a registered holiday cottage and charges $330 per night for 100 nights in the year, so $33,000 in total, which includes GST. GST on these sales is $33,000 divided by 11, which is $3,000. She spent $5,500 including GST on cleaning, linen and repairs for the cottage, giving credits of $500. Across the year she owes $3,000 less $500, so $2,500 net GST, reported through her BAS.
Practical tips
- Work out early whether your property is residential premises or commercial residential premises, as this decides if GST is charged or the supply is input-taxed.
- Record booking income, cleaning fees and platform fees separately so your BAS figures match your statements.
- Do not assume you can wait until you reach $75,000 if your short-term letting operates like a hotel business. Get advice on whether you are required to register.