Renting out your holiday home or providing services online?
If you rent out the family bach through Bookabach or Airbnb or do some driving on Uber for extra income or more generally, if you earn income through online platforms that put together service providers with customers, there are more tax changes you need to know about.
From 1 January 2024, New Zealand is adopting OECD’s sharing and gig economy information and exchange framework. This means platforms such as Uber, Airbnb, and other online marketplaces are required to conduct due diligence on their sellers. To collect and report information about sellers and transactions on their platforms. Information including sales income, IRD numbers to share with IRD and relevant overseas tax authorities by early 2025.
The effect of this will be to make income earned through online marketplaces and the activity of sellers registered on these digital platforms more transparent to Inland Revenue for tax collection purposes. As well as short term accommodation and ride-sharing services, this covers people who:
- provide assets such as cars, caravans, parking, or storage space.
- personal services such as graphic design platforms like Pocket Jobs.
- deliver food on apps like Delivereasy.
- covers trades people who provide services to customers through online platforms.
- online selling or classifieds, like Trademe, eBay or Carsales
- cryptocurrency exchanges
- peer-to-peer finance or crowd funding.
All these activities, if you earn income from them, you need to consider how income tax, GST and other obligations may apply to you. Additionally, from April, people who rent out their Bach on Airbnb or Bookabach, drive for Uber or other ride-sharing platforms, or who deliver food and beverages through online platforms should be aware that their online marketplaces are required to collect and return GST of 15%. This applies whether the seller is GST-registered
or not, though the rules work a bit differently for people who aren’t registered for GST.
This is a sector that continue to see rapid changes and Inland Revenue have made it clear that they will continue to monitor it.
Our recommendation
1. If you provide services on an online marketplace you’ll still need to declare all income in your tax return.
2. It’s important you understand your GST obligations under the new rules, as well as the information reporting requirements for Inland Revenue.
3. Keep good records of income earned and expenses incurred.
4. Contact us if you like more information about how the GST rules will apply to you.
5. Contact us for more information if you want to discuss the situation for your business.