GST EXEMPTION FOR OFFSHORE SELLERS OF HOTEL BOOKINGS TO BE REMOVED: DRAFT LEGISLATION RELEASED

On 20 July 2018, the Treasurer released draft legislation to ensure offshore sellers of hotel accommodation in Australia calculate their goods and services tax (GST) turnover in the same way as local sellers from 1 July 2019.

In particular, the government proposes to amend the GST Act by requiring offshore suppliers of rights or options to use commercial accommodation (eg hotels) in the indirect tax zone (broadly, Australia) to include these supplies in working out their GST turnover. If the GST turnover of such offshore suppliers equals or exceeds the registration turnover threshold, GST must be remitted for their taxable supplies.

Currently, unlike GST-registered businesses in Australia, offshore sellers of Australian hotel accommodation are exempt from including sales of hotel accommodation in their GST turnover. This means they are often not required to register for and charge GST on their mark-up over the wholesale price of the accommodation.

The government says both Australian and foreign consumers are increasingly booking Australian hotel rooms through online services based offshore, which are taking advantage of an exemption designed for offshore tour operators. Removing the exemption is designed to level the playing field by ensuring the same tax treatment of Australian hotel accommodation, whether booked through a domestic or offshore company.

The measure will apply to sales made on or after 1 July 2019. Sales that occur before 1 July 2019 will not be subject to the measure even if the stay at the hotel occurs after this date.

Submissions close on 9 August 2018.

If you would like to know more please contact one of our accountants on 07 4639 1099 or come in and see us at 14 Russell Street Toowoomba.