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.

RECENT NEWS

CATEGORIES

AUTHOR

Holmans Noosa: (07) 5430 7600 or email info@holmans.com.au
Holmans Maroochydore: (07) 5451 6888 or email infohm@holmans.com.au