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If you plan to rent out your property on this platform, you may wonder whether you need an Airbnb ABN (Australian Business Number) to declare your rental income.
Generally, you don’t need an ABN to rent out your place on Airbnb, as it’s considered a hobby or a personal activity rather than a business.
However, there are some situations where you may need an ABN to take part in the sharing economy, such as if you’re renting out multiple properties on Airbnb, renting out an investment, or providing additional services like cleaning or catering.
It’s essential to understand the circumstances under which you need an ABN for your Airbnb property, as failing to register for one when required can result in penalties and legal issues.
In essence, ABN stands for Australian Business Number. It is a unique 11-digit identifier issued by the Australian Business Register (ABR) to businesses in the country. An ABN is used to identify an entity with a full business name and ownership, both to the government and other companies.
The Australian Securities and Investments Commission (ASIC) requires you to obtain an ABN if you own an investment property within a business context, specifically if the investment property is part of a business activity or series of activities, such as running a serious enterprise, non-profit organisation or charity.
If you frequently rent out your whole property on Airbnb, it’s possible that you are deemed to be a person running a business and therefore require an ABN.
Having an ABN for your Airbnb property has several tax implications. Firstly, it allows you to claim deductions for expenses related to your Airbnb business, such as cleaning fees, maintenance costs, listing service fees, and insurance premiums.
It’s important to note that having an ABN does not necessarily mean you’re registered for Goods and Services Tax (GST). If your annual turnover from your Airbnb rental is less than $75,000, you may not need to register for GST. However, if you do need to register, you can do so through the ABR website as well, and you will need to use your ABN.
If you have an ABN, it’s important to note that a portion of your Airbnb rental income will need to be reported as part of your income-earning activities on your tax return.
As an Airbnb host with an ABN, you may need to consider additional insurance options.
While Airbnb provides Host Liability Insurance and Host Damage Protection, these policies may not cover all damages or losses.
Therefore, you may need to take out additional insurance, such as public liability insurance, to protect yourself and your property. Additionally, some insurers may require you to have an ABN to be eligible for certain insurance products.
Note that some insurers exclude short-term rentals from their policies, so make sure you check with your insurer to see if you are covered.
You can increase your rental income as an Airbnb host with an ABN.
For example, you can claim expenses related to your Airbnb property as tax deductions, including:
However, make sure you keep receipts and records of all your expenses to claim these.
Additionally, if you rent out your primary residence on Airbnb, you may be eligible for the home-sharing exemption. Note that this is only available in some areas of Australia, like Tasmania.
This exemption allows you to earn up to $10,000 per year tax-free. However, you must meet certain criteria to qualify to be eligible for this exemption and have an ABN.
Another critical factor is understanding the legal responsibilities and penalties for not getting an ABN when it is required for your Airbnb rental property.
Failing to register for an ABN can result in penalties and fines from the Australian Taxation Office (ATO). The penalties may vary depending on the circumstances, such as the period of non-compliance, the type and proportion of income earned, and your tax obligations.
In addition to the financial penalties, having an ABN may ensure your ability to claim tax deductions related to your Airbnb rental activity. This could result in paying more tax than necessary and reduce your overall profit.
Having an ABN may also ensure your eligibility for specific Australian Government programs or support.
You can contact the ATO directly for guidance if you’re unsure whether you need an ABN for your Airbnb rental.
If you’re a co-host on Airbnb, you may also need to obtain an ABN, depending on your level of involvement in the rental activity and how much rental income you earn from it.
For example, if you provide occasional assistance to the house or main host, you may not need to register for an ABN. However, suppose you determine you’re responsible for managing the entire property, communicating with guests, and coordinating cleaning and maintenance. In that case, you may be considered to be running a business and need to register.
Additionally, if you’re deemed to be running a business as a co-host, you may also need to evaluate other tax obligations, such as registering for GST and keeping accurate records of your rental income and expenses.
If you need clarification about your obligations as a co-host on Airbnb, we recommend you seek advice from a tax accountant or registered tax agent.
You’ll need to apply through the Australian Business Register (ABR) to get an ABN for your Airbnb property. The application process is free and can be completed online.
When applying for an ABN, you must provide some basic information about yourself and your business, such as your name, address, and business structure. Depending on registration requirements and the nature of your business, you may also need to provide additional information.
Once you’ve applied, it can take up to 28 days to receive your ABN, and it’s important to note that having an ABN doesn’t automatically mean you’re running a business. Depending on your circumstances, you may still need to register for other tax obligations, such as capital gains tax or depreciation.
Need help to grow your Airbnb? We can help you with that! While we’re not tax experts, we’re in the know when it comes to short-term rental property success. Contact our Airbnb property managers to get started.
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