Airbnb Tax Crackdown
The shared use economy has seen a plethora of homes turned into Airbnb’s and of vehicles turned into ‘uber’ taxis. While this has changed the way that many people travel, a number of the owners of the homes and vehicles have forgotten that they are generating an income.
And that income is required to be declared and taxed in New Zealand.
‘Cashies’ from tradespeople and the hospitality sector have been actively targeted by Inland Revenue in recent years.
With the smart technology that Inland Revenue now has available, many of these owners are likely to be in with a shock, as Inland Revenue identifies that you have undeclared taxable income – or as they call it are ‘tax cheating’.
As well as using their robotools, Inland Review is lobbying hard to get its hands on the Airbnb records, which are held offshore. But IR is working to obtain this data via data-sharing agreements according to the New Zealand Herald.
The tax rules around short term accommodation income were clarified in early 2019 (See our blog post here) https://www.moneyworks.co.nz/blog/post/46886/Thinking-of-renting-out-your-property-on-Airbnb-or-Book-a-Bach--Issues-to-consider/, and tax experts expect a crackdown to start in 2020.
It is estimated that there is around $800 million - $1 billion+ in tax that is not being paid from the hidden economy.
These taxes can range from income tax, or if you earn more than $60,000 per annum, the owners are liable for GST on the income. Significantly, if the income from the property is GST assessable, the proceeds of any property sale are also likely to be GST assessable.
According to Terry Baucher tax specialist, Inland Review will usually search back through five years of income at a minimum, but can search back further. If there is deliberate tax evasion or avoidance, Inland Revenue can audit an entire income history and may even prosecute for tax evasion.
Find out more about how to account for your Airbnb income at this blog at Beany https://www.beany.com/2018/07/air-bnb-income-and-how-to-handle-it-blog-from-jenny-marklew-beany-lead-accountant/