If you’re renting out short-term and your turnover is over $60,000 from all GST activities, you’ll need to register for and file GST returns. This is because short-term renting is seen as a taxable activity.
When you’re working out your turnover, you need to add up the turnover from all of your taxable activities.
To work out if your turnover is over $60,000 include your:
- total gross rental income
- business income
- income from working as a contractor (self-employed)
- rents from an associated person (you must include these at the full market value, that’s the rent you normally charge).
When you’re working out whether your turnover is over $60,000, do not include:
- rental income if your property is joint-owned. Treat it as separate from your own turnover. This is because the income is not all yours, it belongs to the owners jointly
- your salary or wages.
Joe and Pierre wonder if they register for GST because of their rental income
Joe and Pierre own a home jointly.
Joe is a self-employed plumber by trade and has $55,000 turnover in a 12-month period. His partner, Pierre, is a self-employed model and his turnover is $58,000 in a 12-month period.
Joe and Pierre do not need to register for GST because the turnover for each of them is less than $60,000.
Joe and Pierre regularly rent out short-term two rooms in their house over the year on Airbnb and get a total of $6,000. The rental income is shared equally. They do not include this income when they work out whether either of them need to register for GST. It is treated for GST as belonging to Joe and Pierre together and is separate from their turnovers. In this example Joe and Pierre do not need to register for GST.
Joe owns the house and Pierre lives with him, do they register for GST?
In this example Joe and Pierre’s situation is almost the same except Joe owns the house on his own and Pierre lives with him.
Because Joe is the owner the $6,000 of rental income only gets added to his other plumbing turnover to see if he needs to register for GST.
In this case Joe, as the owner, would have to register as he's going to have turnover of more than $60,000 in the year.
Curtis is GST-registered and and rents out short-term to his sister
Curtis is registered for GST and his sister, Saroj, uses his rental property. As his family member, she’s an associated person.
Curtis charges Saroj $50 per night for her stay. Normally market rent for Curtis' property is $150 per night. For GST, Curtis must return GST as though he was paid $150 per night (the market value), not what he charged Saroj.
In the end, it does not matter what Curtis charges Saroj for her stay. Even if she stays for free Curtis must return GST at market value for the days Saroj uses his rental property.