Holmans was proud to be a featured contributor in ARAMA’s recent “Meet the Professionals” webinar. The session brought together leading experts from finance, law, valuation, accounting and management rights sales to discuss the current state of the industry and provide practical advice for operators looking to strengthen, grow and maximise the value of their management rights business.

The webinar explored key topics including business valuations, finance trends, taxation, compliance obligations, agreement top-ups, letting pool protection and preparing a management rights business for future sale. Below is a summary of the key insights shared during the session, including commentary from Holmans Director and management rights taxation specialist, Lel Parnis.

Watch the Full Webinar

Missed the live session? You can watch the full ARAMA webinar right here:

ARAMA is the peak industry body representing management rights owners and operators throughout Australia. Members gain access to industry advocacy, education, training, compliance resources and regular industry updates designed to help operators build stronger and more profitable businesses.

To learn more about ARAMA membership, training programs and upcoming industry events, visit the ARAMA website.

Market conditions remain positive despite some softening

While transaction volumes have eased slightly across many regions due to higher interest rates, demand for quality management rights businesses remains strong.

Multipliers have softened in some areas compared to previous years, however well-presented businesses with strong fundamentals continue to attract buyer interest.

A key factor influencing business value is the return on investment available to buyers. As property prices and borrowing costs have increased, buyers are paying closer attention to business performance, agreement terms and overall profitability.

Top-ups remain one of the most important value drivers

One topic repeatedly raised by valuers, brokers and lawyers was the importance of keeping agreements topped up.

A top-up extends the term of management rights agreements, helping maintain both business value and marketability.

Businesses with longer agreement terms continue to attract stronger buyer interest, while businesses with shorter remaining terms may face additional scrutiny from purchasers, financiers and advisers.

Operators should:

• Understand their current agreement terms.
• Track key option and renewal dates.
• Plan top-ups well in advance.
• Treat top-ups as an ongoing business strategy rather than a last-minute exercise.

Finance approval timeframes are increasing

Finance approvals are taking longer than many operators may be accustomed to. What was once commonly a 30-day process can now extend to 50 or 60 days due to increased lender requirements and more extensive due diligence processes.

Interest rates also continue to impact borrowing capacity, particularly for buyers seeking to leverage equity from residential property.

Banks remain supportive of management rights lending, however buyers may need to provide more information and demonstrate stronger servicing capacity than in previous years.

For vendors, this means allowing realistic settlement timeframes and understanding that finance-related extensions are becoming more common.

Tax planning remains critical

Many management rights businesses have enjoyed a relatively strong financial year despite broader economic uncertainty.

While traditional tax minimisation opportunities have reduced over time, strategic tax planning remains essential.

Importantly, operators should focus on:

• Understanding future tax liabilities.
• Managing cash flow.
• Planning superannuation contributions.
• Reviewing business structures where appropriate.
• Seeking advice before making major decisions.

With significant tax proposals announced in recent budgets, operators should avoid making rushed decisions until further details become available.

Review your fees and charges regularly

For many operators, annual reviews of fees and charges can be an overlooked opportunity.

Where agreements allow, operators should review CPI-linked increases and ensure charges keep pace with rising operating costs.

This is particularly important given recent increases in wage costs, contractor expenses and supplier charges.

Regular fee reviews not only support profitability but also demonstrate sound business management to future purchasers.

Prepare now for changes to credit card surcharge rules

One significant issue raised during the webinar was the upcoming removal of merchant surcharge recovery for many businesses.

Operators currently generating income through guest credit card surcharges should assess the financial impact well before implementation and consider alternative strategies to recover costs or improve operational efficiencies.

Possible actions include:

• Reviewing merchant service providers.
• Negotiating lower transaction fees.
• Encouraging alternative payment methods.
• Reviewing booking and administration fee structures.

Stay on top of compliance obligations

Compliance remains a critical area of risk for management rights operators.

Industry experts highlighted several areas requiring ongoing attention:

• Real estate licence renewals.
• Corporate licence renewals.
• Trust account compliance.
• CPD obligations.
• Form 6 documentation.
• Letting agreement reviews.
• Cancellation fee authorisations.

Missing documentation or outdated agreements can create issues during audits, financing applications and business sales.

Strong relationships remain a competitive advantage

Understanding your agreements and maintaining positive relationships with committees and owners remains essential.

Operators should regularly review their caretaking and letting agreements, understand their obligations, and ensure expectations are aligned with those of the committee.

Likewise, maintaining strong relationships with owners can help protect and grow the letting pool, improve retention and support future business value.

Run your business as if you were selling tomorrow

Perhaps the strongest message from the webinar was that operators should manage their business as though they are preparing it for sale every day, regardless of when they actually intend to exit.

This means:

• Keeping agreements current.
• Maintaining accurate documentation.
• Reviewing fees and charges annually.
• Monitoring profitability.
• Staying compliant.
• Protecting and growing the letting pool.
• Building positive relationships with owners and committees.
• Seeking specialist advice early.

A well-managed business is not only more attractive to future buyers, it is also likely to be more profitable and enjoyable to operate in the meantime.

Need advice?

Management rights is a highly specialised industry. Whether you’re planning for growth, reviewing your tax position, preparing for a future sale or simply looking to improve profitability, obtaining advice from professionals who understand the management rights sector can make a significant difference.

At Holmans, we work with management rights operators across Australia, providing specialist accounting, taxation, audit and business advisory services tailored to the unique needs of the industry.

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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Thinking about entering the management rights industry? A free upcoming Brisbane event is set to provide valuable insights for both first-time buyers and experienced operators looking to better understand the current market.

Discover Management Rights Brisbane: 360° Insights for Every Buyer

This free industry event brings together some of Queensland’s most respected management rights specialists for an informative morning session covering finance, legal considerations, compliance, valuations, market conditions and buyer expectations.

Holmans is proud to be part of the expert panel, with Chantel Duplessis presenting on accounting and taxation considerations within the management rights industry. Chantel will provide practical insights into financial structures, taxation obligations and key accounting factors buyers should understand before purchasing a management rights business.

What Attendees Will Learn

• Current management rights market conditions and buyer expectations
• Finance, accounting and taxation considerations
• Legal, compliance and valuation insights
• How to better understand management rights business structures
• Key considerations when assessing opportunities
• Exclusive Brisbane listings presented publicly for the first time

Expert Industry Panel

• Trent Pevy – Pevy Lawyers
• Chantel Duplessis – Holmans Accountants
• Cameron Wicking – Mike Phipps Finance
• Mike O’Farrell – MLR Services
• Trevor Rawnsley – ARAMA
• Victor James – Validum

Prize Draw

Every registered attendee will go into the draw to win 2 x MRITP Course places with ARAMA, providing valuable industry training for those considering a future in management rights.

Event Details

• Date: Saturday 30 May 2026
• Time: 9:00 AM – 11:30 AM AEST
• Venue: Full Moon Hotel Sandgate
• Address: 118 Eagle Terrace, Sandgate QLD 4017
• Cost: Completely Free
• Refreshments: Morning Tea Provided
• Parking: Ample Parking Available

Whether you are just beginning to explore management rights or actively searching for the right opportunity, this event offers valuable insights from some of the industry’s leading professionals.

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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Thinking about entering the management rights industry?

The upcoming Management Rights Made Easy Seminar on the Gold Coast is designed to provide an expert introduction to one of Australia’s most established accommodation and property investment sectors.

Hosted by ResortBrokers, the seminar will bring together leading specialists across sales, finance, accounting, legal, and training to help prospective buyers better understand how management rights businesses work and what to consider before entering the industry.

Seminar details:

• Date: Saturday 6 June 2026
• Time: 9:00am – 12:00pm
• Location: RACV Royal Pines, Gold Coast
• Address: Ross Street, Benowa QLD 4217

Fully catered morning tea will be provided, with limited spaces available.

Why management rights continue to attract buyers

Management rights businesses continue to attract strong interest from Australians looking for a combination of business ownership, lifestyle flexibility, and investment potential.

These businesses can provide:

• Strong recurring income streams
• Long-term agreements
• The opportunity to live onsite
• Lifestyle benefits in desirable locations
• Established operational systems
• Potential for long-term growth

For many buyers, management rights offer an appealing pathway into business ownership while living in sought-after regions such as the Gold Coast.

What attendees will learn

The seminar is designed to provide practical insights into the management rights industry, including:

• What management rights are and how they operate
• Why they are often considered secure, low-risk businesses
• The differences between holiday and permanent complexes
• Current opportunities in the Gold Coast market
• Finance structures and lending considerations
• Business structuring and taxation considerations
• Legal due diligence and contract pitfalls
• Training and licensing requirements

Meet the expert panel

ResortBrokers

Todd Warner, Clint Amos, and Nathan Bock are ResortBrokers’ Gold Coast management rights sales specialists. As market leaders in management rights sales, the team has handled numerous transactions across both holiday and permanent complexes.

The ResortBrokers team will provide current market insights and discuss where they believe the strongest investment opportunities currently exist.

Mike Phipps Finance

With more than 30 years of experience in accommodation industry finance, Mike Phipps Finance is recognised as one of Australia’s leading finance specialists in the sector.

Paul Grant will discuss the current state of the management rights industry, available finance options, and insights into lending considerations specific to management rights businesses.

Holmans Accountants

Holmans has conducted income verification reports for buyers on hundreds of management rights businesses across Australia.

Lel Parnis will provide practical insights into analysing profit and loss statements, understanding business performance, and structuring a management rights business effectively from an accounting and taxation perspective.

Pevy Lawyers

Pevy Lawyers acts for a significant number of new entrants into the management rights industry.

Amy McKee will discuss the importance of specialist due diligence when purchasing a management rights business, along with key pitfalls buyers should avoid throughout the contract and settlement process.

Validum Group

Victor James Pisanos from Validum Institute will provide information around training and licensing pathways within the real estate and property management industry.

Established in 2016, Validum Institute delivers online and blended learning courses across property services, sales, and property management.

An opportunity to learn from industry specialists

For anyone considering entering the management rights industry, seminars such as this can provide valuable real-world insights before making a major financial commitment.

Understanding the financial, legal, operational, and market aspects of management rights is an important part of making informed business decisions.

At Holmans, we continue to work closely with management rights buyers and operators across Australia, helping clients better understand financial performance, taxation considerations, and business structuring opportunities within the industry.

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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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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Holmans Celebrates at the 2025 ARAMA TOP Awards

On Friday, 12 September, the Australian Resident Accommodation Managers Association (ARAMA) hosted their annual TOP Awards night at The Star Brisbane. The evening was a celebration of excellence, connection, and recognition for the outstanding performers and contributors within the management rights industry.

This year’s event saw record-breaking participation, with the highest ever number of nominees, votes, finalists, and attendees. It marked the third time in six years that the event sold out, reinforcing just how important the TOP Awards have become for the industry.

A Night to Remember

From the moment guests arrived, there was a palpable sense of excitement. The evening was elegantly hosted by Kimberley Busteed, whose warmth and professionalism set the perfect tone for the night. Entertainment came in the form of three talented magicians, adding surprise and delight throughout the celebration.

A highlight of the evening was the attendance of Queensland Premier David Crisafulli, a long-time supporter of ARAMA and the management rights sector. His presence was a ringing endorsement of the industry’s importance, having attended the very first TOP Awards back in 2019 when he was the Shadow Tourism Minister.

“It was an evening of connection, celebration and recognition for The Outstanding Performers across our industry.”

Holmans’ Double Recognition

I was incredibly proud to see Holmans receive double recognition at this year’s awards.

• Service Provider of the Year — Holmans was named a finalist, a reflection of our team’s dedication to supporting and championing the management rights sector.
• Life Membership Award — I was truly humbled to be awarded Life Membership for my contributions to ARAMA and its members over the past 25 years.

Being acknowledged in this way is a career highlight and a testament to the wonderful people I’ve had the privilege of working with over the years — both at Holmans and within the wider industry.

“A huge thank you to ARAMA for the double recognition at Friday night’s 2025 TOP Awards! I’m greatly honoured to be acknowledged by ARAMA, which does so much to champion the management rights industry that we’re proud to be a part of.

To our clients — thank you for entrusting us with your business. We’ll never take it for granted and will continue to give you our all.”

Looking Ahead

As I reflect on the night’s celebrations, I’m filled with gratitude and excitement for the future. The ARAMA TOP Awards have become a vital and positive fixture in the management rights industry, and I’m proud that Holmans plays a role in this incredible community.

Congratulations to all the winners, nominees, and finalists who continue to raise the bar and make our industry stronger every year.

I look forward to coming together again in 2026 for another evening of connection, celebration, and recognition at the ARAMA TOP Awards.

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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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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As the accommodation industry continues to evolve with increasing reliance on Online Travel Agents (OTAs) such as Booking.com and Expedia, it’s important to stay up to date with changes to the GST legislation that affect how commissions are taxed.

While major changes to GST treatment for foreign OTAs were introduced back in 2017 and refined further in 2019, questions still arise today around how accommodation providers should respond when asked: “Is your accommodation registered for GST purposes in Australia?”

The Background

From 1 July 2017, the Australian Government introduced GST rules that required foreign-based OTAs to charge GST on commissions unless they operated under an “agent model” and the accommodation provider was responsible for GST.

Why was this introduced

The ATO introduced these GST rules because, before 1 July 2017, many foreign-based online travel agents (OTAs) and digital platforms were selling services to Australian consumers without charging GST. This created an uneven playing field compared to Australian based businesses, who had to charge GST on the same type of services.

The change was part of a broader move to apply GST fairly in the digital economy. The aim was to ensure that:

• GST is collected on sales to Australian consumers (particularly those who are not GST registered and therefore can’t claim input tax credits), even when the supplier is based overseas.
• Foreign suppliers are treated in the same way as Australian suppliers so local businesses aren’t disadvantaged.
• The tax base is protected in a growing part of the economy, where more and more purchases were happening online via offshore platforms.

In other words, the main driver was to make sure that GST was charged on sales to Australian end consumers who aren’t themselves registered for GST, rather than letting those transactions fall through the cracks simply because the seller was offshore (which increases ATO revenues).

This was clarified in 2019, where the ATO confirmed that foreign digital platforms must register for GST if their sales to Australian consumers exceed $75,000 annually unless they operate purely as agents. Under the GST legislation, where acting as agent for GST purposes, the agent generally does NOT report GST on the costs incurred on behalf of the principal (unit owners in this case) nor on recovered income therefrom.

As of 2025, Booking.com continues to operate under an agent model in Australia. This means that for most providers, there is no GST added to commissions provided you are GST-registered and handle GST obligations on your end.

How to Respond to Booking.com or Expedia GST Question

Booking.com routinely asks: “Is your accommodation registered for GST purposes in Australia?” This is to determine how GST should be treated on the commissions they charge.

Hotel/Motel Operators

If you operate the hotel or motel as the principal (meaning you are the actual business supplying the accommodation to guests), then you are the one who is legally making the taxable supply and if your business is registered for GST (i.e., you have an ABN and include GST on guest invoices), then:

• Answer “Yes” to the GST registration question.
• Booking.com will not add GST to their commission invoices.
• You remain responsible for accounting for GST on the income you receive.

Management Rights Operators

If you are a Management Rights Operator acting on behalf of unit owners and the accommodation is not registered for GST, then:

• Answer “No” to the GST registration question.
• Booking.com may charge 10% GST on their commissions, which can be claimed back via the unit owner’s BAS (if applicable).

If you are acting purely as an agent on behalf of property owners, then even where some owners are registered for GST, the supply of residential accommodation is treated as input taxed for GST purposes. Which is why the correct response to the GST registration question is “No.”

This means:

• No GST is applied to the accommodation income,
• Owners generally do not report GST on that income, and
• Owners cannot claim GST credits on related expenses.

In other words, an input taxed supply is one where GST is not charged on the income, but equally, any GST incurred on associated costs is not creditable.

Practical Considerations for Accommodation Providers

To manage these changes effectively, consider the following:

• Ensure your response to OTA GST registration questions is accurate and reflects your GST status.
• Review your invoicing procedures to ensure GST is correctly applied and reported on guest revenue and commission payments.
• If you operate a trust account, ensure your software is correctly calculating and accounting for GST on OTA commissions.
• Keep your unit owners informed of any changes that affect their net returns, especially where GST on commissions may reduce monthly distributions.
• Ensure you are authorised to charge agents commission on your schedule of charges

Recommended Note for Unit Owner Communication

For Management Rights Operators, here is an example paragraph you may wish to include in your next financial statement or owner newsletter:

“As part of recent GST requirements, Online Travel Agents such as Booking.com may now include GST on their commission charges. While we will continue to manage and remit these payments on your behalf, please be aware this may slightly affect your monthly returns. There is no additional benefit to our management company from these changes – this is simply the result of updated legislation. Please contact us if you have any queries.”

Need Help?

If you’re unsure how these changes apply to your accommodation business or require assistance updating your trust accounting or BAS processes, Holmans is here to help. We specialise in the accommodation and tourism sector and can guide you through all compliance requirements.

Contact:
Tony Rossiter – trossiter@holmans.com.au
Lel Parnis – lparnis@holmans.com.au

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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A Significant Tax Change Ahead

From 1 July 2025, interest charges on unpaid tax debts — including the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) — will no longer be tax deductible.

This marks a major shift for both individuals and businesses who have previously been able to claim these interest charges as tax deductions, effectively reducing the cost of late tax payments. The change is being implemented under the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share) Act 2023.

Read the ATO’s official announcement

Who Does This Affect?

Individuals

• Interest charges on unpaid personal tax will no longer be deductible.
• Loans used to pay off personal tax debts remain non-deductible, as always.

Businesses (Companies, Trusts, Sole Traders)

• ATO interest on unpaid business tax will also lose deductibility from 1 July 2025.
• Interest on commercial loans used to repay business tax debts will remain deductible, provided the loan is directly connected to income-producing activities.

What’s the Financial Impact?

The ATO’s interest rates are not trivial — the current GIC is over 11% per annum, and it compounds daily.

For example, a business with a $60,000 tax debt accruing $6,600 in GIC annually would previously have reduced its taxable income by claiming the interest. From 1 July 2025, this is no longer an option. That $6,600 becomes a direct, non-deductible hit to the bottom line.

ATO Interest Rates (Current GIC and SIC)

Strategic Steps You Can Take Now

This change is an opportunity to get ahead of your tax obligations. Here are three practical strategies:

1. Clear or Reduce Existing ATO Debts

Pay down tax debts before 1 July 2025 to retain the deductibility of any interest incurred before the rule change.

2. Consider Refinancing Through Commercial Lenders

For businesses, replacing ATO debt with a bank loan may allow the interest to remain deductible — but only if the purpose of the debt is clearly linked to business income production.

3. Review Cash Flow and Payment Arrangements

Speak with your accountant to revise existing ATO payment plans, ensure timely lodgement of BAS and tax returns, and assess the tax efficiency of how you’re managing liabilities.

What’s the Purpose of This Policy?

The government’s goal is to discourage reliance on the ATO as a source of informal financing. By removing deductibility, they’re encouraging more timely tax payments — and aiming to level the playing field between taxpayers who meet obligations on time and those who delay.

Further information on policy intent (ATO)

Final Thoughts

This is more than just a legislative tweak — it’s a fundamental change to the way tax debt is treated from a financial planning perspective.

At Holmans, we’re already working with clients to assess the impact and adjust their strategies accordingly. If you carry ATO debt or expect to, this is the time to act.

Contact your Holmans advisor as early as possible to review your options and avoid unnecessary tax costs in the new financial year.

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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