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ATO hits offshore hotel retailers with GST loophole closure

Offshore retailers of Australian accommodation must now include GST in their prices.

Sellers of Australian-based commercial accommodation must now price their products inclusive of Goods & Services Tax (GST) after the Australian Tax Office closed a loophole in an effort to improve the competitiveness of Australian-based, tax-paying retailers.

The move, effective immediately following the passage and ratification of a Federal Treasury Laws amendment on 13 September, applies to all online and offline businesses retailing Australian accommodation and earning more than AUD$75,000 through these revenues over a 12-month period. Domestic accommodation providers utilising offshore resellers are not impacted by the move as payments are usually made direct and rates provided are already inclusive of GST due to the accommodation provider being a GST-registered Australian business.

Types of accommodation affected include hotels, motels and hostels, serviced apartments, student accommodation, caravan and tourist parks, houseboats, B&B operators and Australian-based cruise operators.

ATO Deputy Commissioner Deborah Jenkins said she was pleased to see the loophole closed.

“This change removes the competitive advantage that offshore sellers had over domestic accommodation providers. It also allows businesses that book accommodation through offshore sellers to obtain a tax invoice and claim GST credits.”

Tourism Accommodation Australia (TAA) CEO, Michael Johnson, said the move levels the playing field and comes following extensive lobbying by the organisation and its chairman, Martin Ferguson.

“We have been pushing for some time to have this loophole closed and to see global offshore booking giants pay their fair share of tax.

“It takes away some of the competitive advantage the large offshore sellers have had over Australian-based accommodation providers for some time,” Johnson added.

Accommodation Association of Australia (AAoA) CEO, Dean Long, urged accommodation providers to be diligent in reading and understanding the terms of agreements they signed with online travel agents and sellers of their rooms via foreign websites.

“This new law only applies when offshore travel agents act as Principals, not agents. As a result, it becomes extremely important that accommodation providers understand the agreements they are signing with OTAs and the implications for GST.”

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