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Australia Explains New GST Rules For Hotel Bookings

by Mary Swire,, Hong Kong

08 August 2019

The Australian Taxation Office (ATO) has explained how changes to the taxation of online hotel bookings will work once legislation has passed.

At the 2018 Budget, the Government announced that it would take steps to ensure that offshore sellers of Australian hotel accommodation calculate their goods and services tax (GST) turnover in the same way as local sellers.

Under the present rules, these offshore sellers are exempt from including supplies of hotel accommodation in their GST turnover. As a result, they are often not required to register for and charge GST on their mark-up on the wholesale price of the accommodation.

The ATO said that removing this exemption will level the playing field by ensuring the same tax treatment of Australian hotel accommodation when booked through a domestic or an offshore seller.

Schedule 2 of the Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) will amend the GST law and will have a start date of July 1, 2019. The legislation was introduced on July 4 and is currently before the Senate.

The ATO explained that once the legislation passes Parliament it will have a retrospective effect for affected offshore sellers. Accommodation paid for (in part or in full) before July 1 will not be subject to GST.

Once the law has passed, affected sellers will need to provide a tax invoice within 28 days of customers' requests for taxable sales of accommodation from July 1, 2019.

If sellers make a genuine attempt to comply, they will not have to pay penalties during the first 12 months the measure is in operation. The concession is not automatic and the seller will need to advise the ATO that they wish to access the concession.

Australian accommodation providers using offshore intermediaries to sell accommodation will need to determine if they are selling directly to the customer or to the offshore intermediary. If offshore intermediaries are reselling the accommodation, the provider will need to issue tax invoices to them within 28 days of their request to enter into a Recipient Created Tax Invoice Agreement.

TAGS: compliance | tax | tax compliance | revenue guidance | law | goods and services tax (GST) | Australia | tax authority | offshore | legislation | tax reform | penalties | services | BEPS

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