AirBnB – BnB Careful
A couple of weeks ago, we were doing some thinking work with one of our customers regarding the accommodation landscape in Ballarat. As part of our research, we had a look at AirBnB to see what they had listed.
Imagine our surprise when we found that Ballarat, on any one night, has in excess of 550 venues available! This seems incredible. So, we had a good look at what was there.
The number of AirBnB listings was amazing. They range in price from “cheap and cheerful” to a little bit OTT, but they all seemed to hit various sectors of the market.
This is really good for visitors to our fine city, however, there are some consequences which our earnest AirBnB providers need to consider:
- The Australian Tax Office (ATO) gets data feeds from AirBnB;
- The ATO therefore knows what your income is from your AirBnB activities are;
- You had better declare your income on your tax returns; and
- You are, where you’re using your private home as the rental, exposing yourself to Capital Gains Tax consequences when your sell your property.
There are numerous other issues around the whole traveller accommodation business which we cannot cover in a short blog post. One of them is your insurance cover.
A lot of people get into AirBnB because they can see an easy way to make some good money from their home. Yes – it is a good return for only short term inconvenience. However, the activity which seems pretty easy to do can have some profound and long term consequences for you from a tax perspective. This needs to be carefully considered when you are looking at embarking on this course of action.
Oh, one other thing – if you have a couple of AirBnB properties in your own name or through your business structure, you will be required to register for Goods and Services Tax (GST) once your gross revenue exceeds $75,000 per year (pro-rata). This is another little challenge for AirBnB operators. And with the new ATO data capture and analysis systems, you will be found and they will ask questions.
At the end of our research, we determined that the AirBnB space is already a significant disruption to the classic accommodation business model. It does, however, present challenges. After the first year or two when the ATO comes hunting, it may well lose some of its attractiveness to a number of the new players in the market.
If you’d like to discuss the potential impact for you of commencing and AirBnB operation with your property, come and have a chat with us!