A 7.5% levy on the total booking fees will apply for short stay rentals from 1 January 2025. The total booking fee is the sum of all fees and charges related to the booking, eg, cleaning fees, GST etc. However, the total booking fee does not include credit card fees/surcharges.
The short stay levy (Levy) is prescribed in the Short Stay Levy Act 2024 (Vic) (STL Act).
Where a booking is done through a platform, the booking platform will be required to pay the Levy. Where the booking is done directly through the owner/tenant, then they will be required to pay the Levy.
When the levy applies
There are two elements that need to be satisfied for the Levy to apply. In particular, the stay must be:
- a ‘short stay’ that means occupation of a premises for a continuous period of less than 28 days; and
- in ‘short stay accommodation’ that includes an entire house/apartment, a private room or a granny flat.
For the purposes of determining whether accommodation is considered ‘short stay accommodation’, it does not matter whether the premises are permanent or temporary, or fixed to land or mobile (eg, a granny flat, caravan or portable home unit). Furthermore, it does not matter whether the premises are used for more than one purpose, including a purpose other than the provision of short stay accommodation.
The following example from the explanatory memorandum to the STL Act provides a useful example:
- Person A is the owner of a two-storey mixed-use property that is an investment property. The ground-floor premises is leased out to a business for use as commercial premises, whilst the first-floor premises is used solely for short stay accommodation. The short stay levy will be imposed on every short stay that is completed at the first-floor premises.
The Levy will still be imposed on a booking platform in relation to short stay accommodation anywhere in Victoria even if the owner/tenant is located outside Victoria.
When the levy will not apply
The Levy will not apply when an individual rents out their principal place of residence (PPR). For example, if the owner rents out some rooms in their PPR for short stays or goes on a holiday and rents out their whole PPR for a short stay, the Levy will not be imposed. Furthermore, an individual does not need to own their PPR for it to be exempt from the Levy. Naturally, if an individual is renting the whole or part of their property, then they should confirm whether their lease agreement allows sub-letting.
The following example in the explanatory memorandum to the STL Act clarifies that the Levy will apply to separate premises:
- Person A is the owner of a two-storey property, that has two separate premises. The property is under one title; however, each premises has its own entrance, living quarters and kitchen and bathroom facilities. Person A occupies the first-floor premises as their principal place of residence whilst the ground-floor premises is used for short stay accommodation. Each time a short stay is completed at the ground-floor premises, it will be subject to the short stay levy. However, each time a short stay is completed at the first-floor premises it will not be subject to the short stay levy as it is Person A’s principal place of residence.
Furthermore, the following are not considered ‘short stay accommodation’:
- Commercial residential premises. The ATO’s ruling GST ruling 2012/6 GST – Commercial residential property for GST.
- Residential care facilities.
- Retirement villages.
- Student accommodation provided by a higher education provider.
- Temporary crisis accommodation.
A short stay booking will not incur the Levy if the booking is made before 1 January 2025, regardless of whether the short stay is completed on or after 1 January 2025.
Notification requirements
All booking platforms, owners and renters that accept short stay accommodation will need to register with the SRO. Broadly, this registration needs to occur within the same calendar year that they accept the short stay rentals.
From 1 January 2025, if the booking platforms, owners or renters are earning:
- $75,000 or more per annum, they must lodge and pay the Levy quarterly; or
- less than $75,000 per annum, they must lodge and pay the Levy annually.
Furthermore, if booking platforms, owners or renters have previously registered with the SRO but no longer expect to incur the Levy, then they must notify the SRO and the SRO will cancel their registration.
If an owner or renter intends to use a booking platform to rent a property/private room on a short stay basis, then they are required to notify the booking provider if the Levy will not apply, eg, if the individual is renting their PPR.
Failure to lodge a return and pay the Levy by the due date will result in penalties and interest.
SMSF landholders
Self managed superannuation fund (SMSF) landholders will need to be aware of their obligations under the STL Act. For example, if the SMSF is renting a property directly (ie, not through a booking platform), then they need to register with the SRO and determine when they need to pay the Levy.
Conclusion
In conclusion, the 7.5% Levy introduces new administrative and financial obligations for booking platforms, owners and renters who provide ‘short stay’ bookings in ‘short stay accommodation’ in Victoria.
DBA Lawyers provides advice on Victorian taxes. Please don’t hesitate to contact us if you want advice.
Related articles
- DBA Lawyers Tax Services
- Related Tax & Business Services
- Vacant Residential Land Tax in Victoria soon to be extended
- Vacant residential land tax — Q&A from recent DBA webinar
- Victoria’s vacant residential land tax – holiday home exemption
- VRLT — holiday home exemption extended to discretionary trusts and certain other structures
- VRLT — when should you notify the SRO?
- The new commercial and industrial property tax that starts in Victoria on 1 July 2024
- Objecting against land tax in Victoria
* * *
This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. The above does not constitute financial product advice. Financial product advice can only be obtained from a licenced financial adviser under the Corporations Act 2001 (Cth).
Note: DBA Lawyers presents regular SMSF Online Updates. For more details or to register, visit www.dbanetwork.com.au or call 03 9092 9400.
For more information regarding how DBA Lawyers can assist in your SMSF practice, visit
By Daniel Butler, Director ([email protected]) and Nick Walker, Lawyer ([email protected]) DBA Lawyers.
DBA LAWYERS
25 November 2024
