Is running an Airbnb classed as running a business?

In this blog Stellar Accounts CPA Debbie Hoffman explains whether running an Airbnb classed as running a business.

In my accountancy and bookkeeping business – and on the free Facebook community that I manage for Aussie Airbnb hosts  – I field a lot of queries about whether Airbnb is business income.

The short answer is no. In the eyes of the Australian Tax Office (ATO), Airbnb is not business income.

Rather, in 95% of cases Airbnb income is treated as investment income and should be included in your income tax return.

I cannot stress enough that it’s important to get good advice as this can be a complex area and being on the wrong side of the tax law can have significant implications.

Short Term Property Rentals and the ATO

Here’s what the ATO has to say about share economy properties are classed for tax purposes:

The tax treatment of what you earn from these services [for example Airbnb and Stayz, whether you rent out a room or the whole house/unit for a short-time basis] is the same as any other residential rental property arrangement.

This means you must include the rental income in your income tax return. For example, if a husband and wife jointly own a property that they rent out through a sharing service, whatever they earn needs to be declared on their income tax returns in the same proportion as the ownership of the house in the year they earned the income. 

GST does not generally apply to residential rental income.

So, when could Airbnb and other short-term rental income be classed as business income?

A very small proportion (around 5%) of short-term rental income situations fall into the category of business income.

This typically occurs if the ATO deems you to be providing commercial residential accommodation.

In this scenario, the ATO will treat your activities in the same way as hotels and motels meaning that the rent could trigger a GST liability for you (although you might be able to claim back some GST credits on expenses you pay).

The most common example of this is multiple occupancies – think a block of apartments or central property management, and where services are provided beyond accommodation (room servicing or breakfast).

What if I own multiple investment properties and rent them via a sharing service?

There is a chance you could be running a business, but it’s best to speak to a short-term rental expert and tax agent like Debbie from Stellar Accounts to be 100% sure. This way we can discuss your personal situation and can provide tailored advice.

Is running an Airbnb classed as running a business?

If you want help completing your income tax return or navigating your tax requirements with the ATO – or even if you’re still unsure whether you might be running a business – please get in touch with us.

Debbie Hoffman is a short-term rental expert who helps people across Australia just like you every day.


Accountant Chermside 4032 - Stellar Accounts
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Stellar Accounts is Brisbane’s leading small and new business accounting firm. We have a reputation for simplifying your accounting, tax and bookkeeping needs so you don’t need to stress or worry.

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