Recently, credit card fees particularly on short-term accommodation bookings have often been passed directly to guests as a surcharge. That model, however, is changing. These upcoming credit card surcharge changes mean that by 31 October 2026, businesses operating in Australia will need to be prepared for a significant shift in how card payment costs are managed, with reforms aimed at restricting or effectively removing many credit card surcharges as a separate charge to consumers.

For management rights operators, this is more than just a compliance issue, it is a commercial challenge that may impact profitability, pricing strategies, and owner relations.

Why Are These Changes Happening?

The push to remove or limit card surcharges comes from increasing public and regulatory concern over “hidden fees” at checkout.

Consumers have become frustrated by advertised prices that rise at the point of payment due to additional charges. Regulators and policymakers have argued that payment by card is now the norm, not an optional luxury and therefore should be treated as part of the cost of doing business.

The reforms are designed to:

• improve pricing transparency;
• reduce unexpected costs for consumers;
• encourage fair competition; and
• simplify purchasing decisions

In practical terms, the expectation is that businesses should incorporate payment acceptance costs into their overall pricing structure, rather than presenting them as an add-on at the end of the transaction. For more detail on current surcharging rules and compliance, refer to the ACCC guidance on card surcharges.

Why This Matters to Management Rights Operators

Management rights businesses sit in a unique position.

Operators often manage both:

• short-term accommodation income (letting pool, online bookings, direct reservations); and
• agency-style relationships with lot owners (commissions, administration fees, reimbursements).

These two streams are treated differently from a commercial and legal perspective.

For guest-facing accommodation transactions, surcharge restrictions will likely apply in full. This means operators may no longer be able to add a separate credit card fee to booking invoices in the same way they historically have.

For owner-facing charges, however, the position can be materially different. Where fees are charged under an agency agreement i.e your Form 6 and Addendum, those charges are governed by contract and agreement, and not bound by the same restrictions applied directly to guests. In the context of these credit card surcharge changes, provided the agreement allows for reimbursement of transaction costs or is amended to do so and more importantly agreed by the owner in writing, there may be scope to recover these expenses from owners rather than guests.

The Commercial Impact

For many operators, merchant fees are significant. Between online travel agents, direct website bookings, EFTPOS terminals, and virtual card processing, payment acceptance costs are a substantial business expense and removing the ability to recover the cost from guests will negatively impact business profitability and business value. This is particularly the case in high-volume Corporate and holiday complexes.

If these costs can no longer be separately charged to guests, operators may face reduced net profits and increased pressure on commission structures

This is especially relevant in competitive tourism markets where raising advertised room rates may not always be commercially feasible.

The Sales Perspective: Why This Matters to Business Value

There is also an important sales consideration that management rights operators should not overlook. When a business is being prepared for sale, accountants and valuers will often review the adjusted profit and loss statement to determine the maintainable earnings of the business. These earnings form the basis of valuation and ultimately influence the sale price. If your business is currently charging guests a separate credit card surcharge, that income may appear in your Adjusted Profit & Loss as an identifiable revenue stream. However, once surcharge restrictions take effect, that income may no longer be considered sustainable to a purchaser. As a result, when preparing the adjusted profit and loss for sale, this surcharge income is likely to be excluded from the maintainable earnings calculation.

That exclusion can directly reduce the net profit of the business and because management rights businesses are typically valued on a multiplier of earnings, even a modest reduction in profit can have a significant impact on sale price. For example, if surcharge income contributes $20,000 annually and the business sells on a multiplier of 4.5x, the loss of that income could reduce business value by $90,000. This is why implementing a replacement strategy is critical.

If operators can transition those costs into another sustainable and contractually supported revenue source before sale, that income becomes more defensible as part of the ongoing earnings of the business. From a buyer’s perspective, the question is not whether the business was once able to generate surcharge income, but whether the earnings are repeatable under future operating conditions, particularly in light of these credit card surcharge changes. Without a clear strategy, surcharge revenue may be viewed as obsolete income and stripped out of valuation calculations.

In short, failing to adapt does not just affect day-to-day profitability, it can materially reduce the capital value of your business when it comes time to sell.

Options to Negate the Financial Impact of Credit Card Surcharge Changes

While the reforms may remove one revenue recovery mechanism, they do not eliminate all strategic options.

1. Build Costs into Room Rates

The most straightforward response is to incorporate merchant fees into advertised accommodation pricing. This spreads the cost across all guests rather than isolating it as a separate charge. While this may slightly increase accommodation tariff, it ensures compliance and may preserves margins without impacting the owners.

The downside is that it may reduce competitiveness in room pricing, if neighbouring operators absorb the cost differently.

If you increase room rates as part of this strategy, it is important to advise owners of the change and the reasoning behind it. As accommodation income belongs to the owner, and if an operator absorbs part of the accommodation tariff as a “merchant cost”, this directly impacts the owner from an Office of Fair Trading perspective and the owners should be properly notified of this stategry. From an Office of Fair Trading perspective, transparency is essential. Keeping owners informed helps demonstrate that the strategy is a compliant business response to regulatory change, rather than an undisclosed reduction in owner returns. Clear communication also reduces the risk of future disputes and supports the operator’s position as acting in good faith as agent.

2. Renegotiate Merchant Agreements

Many businesses accept their merchant fees as fixed, but providers often have flexibility, particularly where transaction volumes are high.

Operators should review:

• interchange rates;
• gateway fees;
• international card charges; and
• OTA virtual card costs.

Reducing processing costs at the source may offset much of the impact without changing pricing.

3. Recover Costs Through Owner Charges

This is where management rights businesses may have a unique advantage. Because the operator acts as agent for lot owners, and the relationship is governed by contract rather than consumer-facing payment law, transaction-related costs may be recoverable from owners in response to credit card surcharge changes, provided the documentation with owners supports it and the owners have signed and agreed to the charges.

Potential approaches include:

• introducing an administration or processing fee percentage to owners
• adjusting commission structures to reflect payment handling costs

This approach shifts the burden away from guests and the operator, and onto the parties who ultimately benefit from the bookings.

Importantly, this must be carefully documented, disclosed and agreed to avoid disputes.

4. Encourage Lower-Cost Payment Methods

Operators can reduce card reliance by promoting:

• direct bank transfer
• debit card over credit card
• BPAY or account-to-account payment systems; or
• alternative booking platforms with lower merchant costs.
• Reverting to a bank merchant facility

Even modest changes in payment mix can materially reduce processing expenses over time.

What Operators Should Do Now in Response to Credit Card Surcharge Changes

With the 31 October 2026 deadline approaching, operators should act early.

Key steps include:

• reviewing all guest-facing surcharge practices
• review and assess merchant fee costs;
• obtaining management rights specialist legal or management rights accountant for advice on owner agreement wording;
• updating Addendums and Schedule of Charges with the owners if required; and
• modelling the financial impact of alternative recovery strategies.

The businesses that adapt early will be in the strongest position to maintain profitability without breaching evolving payment regulations.

Final Thoughts

For management rights operators, the key is to review your current structure and identify how these additional costs will be managed in light of credit card surcharge changes. In practice, this will usually mean either on-charging appropriate costs to owners or adjusting pricing and operations where that is not possible.

The important part is to make informed decisions, communicate any changes clearly to owners, and ensure any recovery of costs is done within regulatory requirements and existing contractual arrangements.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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The Federal Government is moving ahead with Tranche 2 reforms to Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006, expanding the regime to include new “gatekeeper” professions such as real estate agents, lawyers, accountants, and trust-service providers.

These reforms are scheduled to take effect from 1 July 2026 and will require real estate professionals to conduct customer due diligence, report suspicious transactions, and combat financial crime.

What is covered under “real estate services”?

Under the legislation, a designated service includes:

• Brokering the sale, purchase, or transfer of real estate on behalf of a client (for example, acting as a sales agent or buyers’ agent).
• Property developers selling real estate directly to purchasers.
• Assisting in the planning or execution of a real estate sale or transfer (such as settlement or transfer of title).

In other words, if your business is involved in the sale or purchase of property, you’ll likely fall within the new Tranche 2 regime.

Activities that do not involve the sale or transfer of ownership—such as property management, residential leasing, and holiday letting—are expected to remain outside the scope of the reforms.

What this means for real estate agents

Once the reforms commence, real estate agencies that provide designated services will become “reporting entities” under the AML/CTF Act and will be required to:

1. Enrol with AUSTRAC. You must enrol your business with AUSTRAC within 28 days of providing a regulated service. Enrolment for Tranche 2 entities will open on 31 March 2026. Enrol or register here.
2. Implement an AML/CTF Program that sets out how you will identify, mitigate, and manage money-laundering and terrorism-financing risks.
3. Perform customer due diligence (KYC) on vendors and buyers before providing services.
4. Report suspicious matters and certain transactions to AUSTRAC.
5. Maintain records of identification, transactions, and compliance activities.

Failure to comply could lead to significant penalties and regulatory action.

What about management rights operators?

For those in the management rights industry, most activities involve property management and short-term or permanent letting. These services do not involve property sales or transfers, and therefore are unlikely to be captured under Tranche 2.

However, if you are a manager who also acts as a selling agent (for example, selling units in your complex or referring buyers for commission), those specific activities may bring you within the new regime.

What you should do now

Although the start date is still a while away, preparation should begin early. We recommend that real estate businesses:

• Review your service offerings to confirm whether you are involved in any “designated services” under the reforms.
  • Use a decision tool to determine if you may be regulated — check your status here.
• Assess your existing processes for verifying clients’ identities and recording transactions.
• Start building an AML/CTF Program appropriate to your size and risk profile.
• Train your team on identifying and reporting suspicious activity.
• Stay informed as the final legislation and AUSTRAC guidance are released.
• Enrol or register with AUSTRAC (enrolment for Tranche 2 entities opens on 31 March 2026).

For real estate agents who sell property, AML/CTF obligations are coming and compliance will soon become a normal part of doing business. While the new rules are still being finalised, early awareness and preparation will make the transition far smoother.

For more information, see AUSTRAC’s summary of obligations for the reforms: read the AUSTRAC guidance.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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Selling a management rights business is not something most people do often, and the process can feel overwhelming if you don’t know what to expect. There are many moving parts – from getting your agreements in order to preparing financials and navigating legal and body corporate approvals. Understanding the overall process upfront will make things smoother and help you avoid costly mistakes, while maximising the value of your sale.

The Sales Process – At a Glance

• Engage a Broker: Your broker will market the business, identify buyers and guide you through the sale process.
• Adjusted Profit & Loss Report: Your accountant prepares this key report to show the maintainable earnings of the business. Buyers and banks rely heavily on this figure.
• Offers Submitted: Interested buyers make formal offers.
• Offer Accepted: You agree to proceed with the chosen buyer.
• Contracts Signed: Contracts are prepared and executed.
• Financial Verification: The accountant confirms the adjusted P&L and net profit, usually within 14 days of contract signing. Providing full access to records and trust software makes this smoother.
• Legal Due Diligence: The lawyer reviews agreements, approvals and compliance, generally within 21 days.
• Finance Approval: Buyers usually have 28 days to secure finance, supported by the accountant’s and lawyer’s reports.
• Body Corporate Consent: The body corporate must consent to the assignment of agreements.
• Settlement: Once all conditions are met, the business is handed over to the new owner.

Steps to Take Before You List

• Letting Appointments: Ensure all are signed and correct, and keep soft copies ready for handover.
• Caretaking & Letting Agreements: Review agreements with the body corporate and top up where possible. More years generally increase value.
• Schedule of Charges: Confirm you are authorised to charge all fees. Unauthorised income may be excluded from your net profit calculation.

Why Financials Are Critical

One of the most important parts of this whole process is the financials and the numbers. While buyers will look at many aspects of your business, agreements, charges, and body corporate consent, the Adjusted Profit & Loss is the key report that underpins the value of your business. It connects directly into the sales process because your broker will market the business based on the net profit, the buyer’s accountants will verify the adjusted profit & loss, and the buyer’s bank will rely on it for finance approval.

What Is an Adjusted Profit & Loss Report and Why Is It Important?

Many sellers get confused between their Tax Profit & Loss and the Adjusted Profit & Loss. On the surface they look similar, but they serve a different purpose.

A tax Profit & Loss is prepared primarily to determine net income upon which income tax is payable. A profit & loss report prepared for tax purposes may include non-cash items (like depreciation, amortisation and provision for leave), as well as discretionary expenses that an operator may incur to facilitate their preferred work/life balance. If taxable income or net profit from a bookkeeping system profit and loss is used as the basis to determine sale price, you would likely significantly undervalue your business.

An Adjusted Profit & Loss for sale purposes is prepared to demonstrate the actual trading profit for a recent 12-month period with standard adjustments to exclude one-off and ‘discretionary’ items, including finance costs, which a purchaser could expect to replicate. It removes those one-off or discretionary items to show the true, maintainable profit of the business for a potential buyer. This report intends to demonstrate a potentially sustainable net profit of the business based on a prior period, which is the key number that buyers, brokers, and banks will use when assessing value.

These adjustments are fairly standard in the management rights industry, but the exact treatment can be complex and is often closely reviewed by buyers, brokers, and verifying accountants, so it is important to get it right and to use industry professionals familiar with the process.

Standard Adjustments May Include:

• Agents’ commission if recovered at cost
• Non-recurring and discretionary income (commissions from residential sales, one-off body corporate projects, unauthorised income, one-off refurbishment income commissions)
• Depreciation
• Finance and interest costs
• Private motor vehicle costs
• Donations
• Personal accounting fees
• Personal travel costs
• Personal manager’s unit expenses
• Capital purchases
• Filing fees
• Labour that could be performed by a competent two-person management team (note: this is highly scrutinised. You must be able to demonstrate to a verifying accountant or buyer that the workload can reasonably be managed by such a team. Any labour adjustment will be carefully reviewed.)

When preparing an Adjusted Profit & Loss, it’s not just about making adjustments. We also review the accounts and trust account information in detail to ensure the profit aligns with industry benchmarks and expectations. This gives buyers, brokers, and financiers confidence that the business is performing at a sustainable level and helps avoid challenges during financial verification.

Why Use an Industry Specialist Accountant?

It’s important that your adjusted Profit & Loss is prepared by an industry specialist accountant. They not only understand the unique benchmarks in the management rights industry, but also know the standard adjustments that should (and should not) be made. A general accountant may overlook these nuances, which can lead to either overstating or understating the net profit and ultimately affect the value of your business. Because management rights are sold as a multiple of net profit, even small differences in the adjusted profit and loss can have a major effect on the sale price.

Having an industry specialist ensures the figures are credible, defensible during financial verification, and aligned with what buyers, brokers, and banks expect.

Final Thoughts

Selling your management rights business is a big decision, and having the right people and reports in place makes all the difference. By preparing early, keeping your agreements and charges in order, and ensuring your Adjusted Profit & Loss is accurate, you will make the process smoother and maximise your business’s value. With the right guidance from an industry specialist accountant, broker, and lawyer, you can go into the sale with confidence and achieve the best outcome for your hard work.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.

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