There is no question that the second outbreak of COVID-19 will affect NZ tourism and consequently short-term rental accommodation owners.

There has been some discussion that as a result, owners of short-term rental have transitioned to temporary long-term rental to provide some certainty. This has raised a potential GST issue as this could result in de-registration and a large GST bill.

Inland Revenue recently released a new variation to section to Section 52 (3) and 52 (4) of the GST Tax to help short-term rental accommodation owners who have made this change.

Under the existing rules, the Commissioner will not cancel GST registration if there are reasonable grounds for believing that the taxpayer will carry on any taxable activity within 12 months. i.e. returning to short-term rental. The taxpayer must provide information required within 12 months regardless of whether the taxpayer intends to carry on a taxable activity. Under this variation, these time periods will be extended to 18 months. 

While you may remain registered for GST, you may be potentially be required to perform a change in use adjustment calculation on their property. This will still result in some GST to pay, though will likely be claimed back eventually.

The determination applies to a GST registered person with a taxable activity of supplying accommodation who between 14 February 2020 and 31 October 2020 change to making exempt supplies of accommodation resulting in no taxable activity.

If you think this might apply to you please get in contact with one of the team.