SIDE. BUT WHAT AIRBNB TAX IMPACTS SHOULD YOU LOOK OUT FOR?

taxes?]opportunity to rent out that spare room without the long termcommitment. Or, it’s a handy way to lease a holiday home that wouldbe quiet for much of the year. Both of these things are great – butsome Airbnb hosts may not realise the effects and benefits come tax
time. time.Australian Airbnb tax information for Australia can be tricky to find,so let’s try to touch on some important bits right here…

IS AIRBNB LEGAL IN AUSTRALIA?



Posted September 13, 2016Web-based sharing sites and apps like eBay, Uber and AIRBNB haverevolutionised the way in which we use and sell goods and services.Rather than a straight transaction with a seller and a buyer and nointermediary, these sites do not sell anything at all. Rather, theyintroduce a person wanting to sell with a person wanting to buy. Theparties then conduct the transaction between themselves. Thesedisruptive matchmakers are currently testing the limits ofAustralia’s existing legal and regulatory framework. This articleunpacks the different facets of the way our current laws are fallingshort of interfacing with the new breed of disruptors, using Airbnb com.au as an example.

SHARECOVER – IAG AND NRMA



contents insurance product designed for people who list their house ora room on online accommodation sharing services such as Airbnb orStayz. It is designed to cover short-term stays, so you only pay apremium for the nights that you have a guest staying.ShareCover covers theft, damage, personal liability, identity theft,and portable valuable contents on holiday rental properties.ShareCover was launched in 2015 to fill “the protection gap”for hosts, with most standard home and contents insurance policiesnot covering damage or liability caused by a paying guest. Consumerresearch by IAG and NRMA showed nearly 2 in 3 Australians who puttheir homes on Airbnb and Stayz were worried about their property andcontents getting damaged or stolen.
Related article Related articleMake money by renting out a room 

OTHER REGULATORY ISSUES



There are also numerous other regulatory matters that round out theconfusion. Mostly, they involve a lack of regulation in areas suchas:* Food, health and safety regulations;* Fire or disability access regulations; and* The requirement for public liability insurance.***What do you think about Airbnb’s current ambiguous legal status inAustralia? Let us know your thoughts on LegalVision’s Twitter twitter.com

AIRBNB HOST PROTECTION INSURANCE



Airbnb’s Host Protection Insurance airbnb.com in partnership with a Lloyd’s of London participating insurer toprovide hosts with up to $1 million of liability cover. It coversprimary liability claims where a guest is physically injured or hastheir property damaged or stolen during their stay on your property.The insurance can be used even if the host has other insurances overthe property as well.Airbnb’s website says that Host Protection Insurance _may_ alsocover claims if a guest damages building property, including claimsfiled by a landlord if the host is a renter themselves. Landlords arecovered only if the guest charges Airbnb and/or the host in theirliability claim. Hosts and landlords of renting hosts may be betteroff choosing a full landlord insurance policy instead of relying onthe fact that damage to their property _may _be covered by Airbnb HostProtection Insurance.Airbnb Host Protection Insurance is available for nearly 1 millionAirbnb hosts who live in:* Australia* Canada* China* France* Germany* India
* Ireland * Italy* Japan* The Netherlands* New Zealand* Portugal* Singapore* Spain* United Kingdom (UK)* United States of America (USA)The insurance does not cover your liability arising from intentionacts to harm the guest, loss of earnings if your guest cancels or cutsshort their stay, personal and advertising injury, harm to the guestcaused by fungi or bacteria, Chinese Drywall, communicable diseases,acts of terrorism, product liability, pollution, or asbestos, lead orsilica.

TAX AVOIDANCE



Airbnb arrangements have also come under fire with the AustralianTaxation Office (ATO). This heat was due to the fact the sharingeconomy lets people operate “commercial arrangements”, which canbe used to evade tax, including Capital Gains Tax and GST.Technically income earned from an Airbnb short-term holiday let mustbe declared to the tax office, but many avoid this obligation, whichis easy to do without a firm regulation of the industry.

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com.au considered whether Airbnb was a sublease or licence. In this case, alandlord, Ms Swan (landlord), owned a two bedroom apartment inMelbourne (apartment) which she leased to the tenants Uecker & Greaves(tenants) in August 2015 for a 12-month lease (lease).The tenants then listed the apartment on Airbnb to third party guestsfor short-term stays. The landlord upon discovery initiatedproceedings because the tenants had sublet the apartment unlawfully tothird parties without the landlord’s consent.At first instance, in the Victorian Civil and Administrative Tribunal(VCAT), it was held that the tenants only granted licences rather thanleases to the Airbnb guests com.au As such, the VCAT ruled that the tenants had not sublet the apartment.However, the Supreme Court overturned the original VCAT decision,deciding that the tenants had let the whole apartment and that it wasa sublease rather than a licence. This sublease was considered abreach of the tenant’s lease which prohibited subleasing.This case considered the narrow issue of subleasing and that thelandlord’s consent was required. It did not consider whether Airbnbitself was illegal. In fact, a test case may be difficult given thediffering laws between Australian states and territories and withinlocal government areas.

EXTRA INCOME MEANS EXTRA TAXES TO PAY AT YEAR-END



WARNING: When you add a new source of income like Airbnb, don’t justtreat that income as spending money.Why not spend all your Airbnb income? Because earning that extraincome means you’ll be charged more tax by the ATO at the end of theyear. It is important to save some of what you earn through Airbnb soyou can pay the ATO at tax time.Don’t just save a few dollars!In the first year when you top-up your income with untaxed earningsfrom Airbnb and other types of ‘side businesses’, you might needto save as much as 30 or 40 per cent of your new earnings for tax! Theamount depends on the total income you earn and the amount of taxdeducted from your other income sources. Your tax agent can help youpredict the right amount you should save for the “tax man.”[Airbnb tax deductions and Airbnb tax expenses are important for hoststo consider]Renting out that spare room or property on Airbnb canbring in some useful extra cash – plus you can meet nice,interesting people. But be careful about your Airbnb tax obligationsand tax benefits – there is a lot to gain, or a lot to lose.

DON’T TRY TO HIDE YOUR AIRBNB INCOME



If you’re using Airbnb, it’s out there for everyone to see. TheATO can track this income easily, so even if you’re not earning alot of money, keep your records and be honest about the incomeyou’ve generated from the property. Airbnb tax is a real thing!The ATO is not “laid-back” about people who under-claim rentalincome and it can lead to back taxes owing plus new fines, penaltiesand interest charges.





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