New GST Rules for Electronic Marketplace and Ride Share Companies
GST: Marketplace Rules for Accommodation and Transportation Services
With the growth of technology and the internet, many businesses have arisen that utilise the electronic marketplace and have made it possible to do almost everything from our phones. We can easily book transport through Uber and accommodation through Airbnb. Our current GST system does not extend over online service providers. Although these services such as ride share and accommodation are subject to GST, when they are provided through online marketplaces, they are often not subject to GST. This creates unfairness and places traditional providers at a disadvantage.
What are the proposed amendments?
The new Taxation, Platform Economy and Remedial Matters Bill (No 2) proposes amendments which extend GST to a new category of listed services. Listed services include; transportation, food delivery and accommodation services provided through online marketplaces. The listed services are not exclusive to those mentioned above and will also include services that are in connection with those listed. The operator of the marketplace will be treated as the supplier of the listed services and therefore liable to GST. The owner of the accommodation is not treated as the supplier, as they do not usually have a large commercial operation of providing accommodation.
Who is the supplier?
- The entity which authorises the charge for the supply of listed services to the client
- The entity which has set a term/condition under which supply of listed services is made
Example
Pally lives in Australia and is looking for accommodation in NZ for a holiday. She uses Airbnb to book a Bach in Queenstown. Under the Proposed amendments, Airbnb who is the marketplace operator will need to account for GST.
Application
The new bill will come into action on the 1st April 2024 and will apply to listed services booked after this date.
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