The new GST rules highlight that rather than the underlying supplier, electronic marketplace operators will be treated as the supplier for GST purposes and therefore be liable for GST. While this is appropriate for underlying suppliers who do not run a large commercial operation This isn’t appropriate for commercial accommodation providers and will increase their compliance costs.
The opt out rules will allow commercial enterprises providing taxable accommodation services to enter into agreements with marketplace operators. This means they will be responsible for their own GST obligations. There must be a documented agreement in place between the two parties.
What does it mean to enter an Opt Out agreement?
If a commercial provider has entered into an opt out agreement with the marketplace provider, it will mean that…
- The accommodation providers will remain responsible for collecting and returning GST on the fees received for provided services
- The operator of the marketplace will not be treated as the supplier of the accommodation services and consequently will not need to be collect and return GST
This means large commercial providers can maintain their existing accounting practices.
What is a large commercial provider?
The bill will define a large commercial provider as a person who meets all of the below requirements:
- Provides accommodation services through an electronic marketplace
- Lists more than 2000 nights of accommodation through the electronic marketplace within a 12-month period
Both of the above requirements must be met for an individual to be regarded as a commercial provider of accommodation.
Effective Date
The proposed bill will come into effect from the 1st of April 2024. There will be a transitional period provided to allow commercial enterprises to enter into agreements with online marketplace providers.
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