Australia

Australia - New Tax on Short-Term Rentals in Victoria

September 10, 2024

The Australian State of Victoria government presented a Bill to the State Parliament introducing a new short-term rent tax. If approved and adopted by the State Parliament, the new Bill, known as the Short Stay Levy Bill 2024 (Bill), would come into effect on January 1, 2025.

Although this Bill aims to regulate short-term rentals of up to 28 days, not all short-term accommodation providers will be affected by this legislation.

Impact of the Bill

The new Bill states that a 7.5% tax on the total booking fee will apply to short-term rentals booked through a booking platform such as Airbnb or Stayz. Thus, the total payable amount for this type of rental includes short-term rental tax and GST.

Short-term rental services provided by hotels, motels, and caravan parks are exempt from this tax. Also, homeowners who rent out the whole or only part of their residential house are not affected by this Bill.

Platform operators and those who offer rental properties through those platforms must apply to the Commissioner for registration and submit tax returns regarding the services provided. According to the Bill, property owners who rent out their premises through the digital platform are imposed with additional obligations and responsibilities.

The owner offering property for rental must officially inform the digital platform whether the property is available for short-term rental. Even if, in the declaration, the owner states that the premises are not available for short-term rental and later it is determined that they were, the owner and the digital platform will be jointly responsible for paying any due taxes, penalties, and interest.

Conclusion

Digital platforms that connect property owners and those seeking properties available for short-term rental, as well as owners themselves, may feel additional pressure if this Bill is adopted and implemented. Also, it remains to be seen what effects this Bill will have on the market and if the number of properties offered for short-term rental will decrease.

Apart from a potential decrease in the number of available properties, if the prices of available properties go up, this may lead to fewer tourists visiting this part of Australia.

Source: KPMG, Short Stay Levy Bill 2024

What is the Short Stay Levy introduced by the Victorian Government?

The Short Stay Levy is a 7.5% tax on the total booking fee for short-term rentals in Victoria, applicable to stays of less than 28 consecutive days. This levy, effective from January 1, 2025, applies to bookings made through platforms like Airbnb and Stayz.

Which properties are subject to the Short Stay Levy?

The levy applies to short-term rentals such as entire homes, apartments, private rooms in non-primary residences, granny flats, and tiny homes. It does not apply to stays in hotels, motels, hostels, or properties that serve as the owner's principal place of residence.

Who is responsible for paying the Short Stay Levy?

For bookings made through a platform, the platform operator is responsible for registering, lodging returns, and paying the levy. For direct bookings without a platform, the property owner or tenant accepting the booking must handle these responsibilities.

Are there any exemptions to the Short Stay Levy?

Yes, the levy does not apply to properties that are the owner's principal place of residence, even if rented out occasionally. Additionally, stays in hotels, motels, hostels, and similar accommodations are exempt.

How will the revenue from the Short Stay Levy be utilized?

Revenue generated from the levy will fund Homes Victoria, supporting the construction and maintenance of social and affordable housing across the state. Notably, 25% of the funds are earmarked for investment in regional Victoria.

What are the registration and reporting requirements for the Short Stay Levy?

Entities collecting booking fees over $75,000 per year must lodge and pay the levy quarterly, while those with $75,000 or less in annual booking fees must do so annually. Registration with the State Revenue Office is required by the due date of the first return.

GST