As of the 1st of April, there will be some new rules surrounding GST for anyone who provides these services…
Ride-sharing drivers
Food and beverage delivery
Short-stay accommodation
How these rules will apply to you
These new rules will affect your business in different ways depending on whether you are GST-registered or not. Remember if you are turning over more than $60k in a financial year, you are required to be GST registered.
For anyone who uses an online marketplace (such as a website or app) to sell your services, you are now required to collect and return GST of 15% whenever the service is provided or received. In most instances, your online provider will be collecting this at source for you, then passing your way - a flat rate credit. But, what you must do with the flat rate credit depends on your GST registration status.
In most cases, you probably have already received a letter from your online provider, like Uber or Air B&B.
If you are already GST-registered:
If you are already registered, you have to include the income services that have been received from your online marketplace as a zero-rated supply in your GST returns. You will still be able to claim GST on the costs of the services.
The GST content is managed by the Platforms themselves and submitted to the IRD so you will not receive the flat-rate credit if you advise your provider that you are GST registered from 1st April 2024. In the case that you do receive the flat-rate credit when you are GST registered, you’ll need to return it back to IRD by doing a debit adjustment to your GST return. If you don’t adjust this and continue receiving flat-rate credit you are at risk of getting penalised.
For those of you who don’t sell these services through an online marketplace, such as a website or app, these new rules won’t apply to you.
If you are not GST-registered:
This flat-rate credit is for you to keep. You will include it in your end-of-year turnover for tax.
Opting out for large accommodation
In a few cases of larger GST-registered accommodation businesses, they will have the option to opt out of the online marketplace GST rule and simply carry on with their GST obligations. If you are able to meet these requirements to opt-out you must make sure that your marketplace operator knows you are opting out before the 1st of April.
Opt out criteria…
You must make more than $500,000 of supplies in a 12-month period and be a non-individual.
You must meet a 2,000-night threshold. This is based on the number of nights of accommodation listed through a single online marketplace.
If you are at all unsure whether this is or isn’t relevant to you don’t hesitate to get in touch, I am more than happy to discuss this with you.