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Short stay accomodation Income tax treatment Mixed-Use Asset Rules Standard Tax Rules Shareholder Use of Property Airbnb Income Tax Apportionment of Expenses Close Company Property Use Inland Revenue Guidance QB 25/08 Private Use Adjustments Rental Income Taxation Holiday Home Rental Tax

 

Income Tax for a Close Company Provides Short-Stay Accommodation

In a recent Question asked (QB 25/08), Inland Revenue clarified the income tax treatment for close companies that provide short-stay accommodation through platforms such as Airbnb, Bookabach, Booking.com, or Holiday Houses.

Application of Tax Rules

The tax consequences depend on whether the mixed-use asset rules or the standard tax rules apply:

Mixed-Use Asset Rules

  • The company must return taxable income from renting out the property for short-stay accommodation.

  • Exempt income arises when the property is used by an associated person (such as a shareholder) or when rented for less than 80% of market value.

  • The rules also prescribe how expenses must be apportioned between private and income-earning use.

Standard Tax Rules

  • When the mixed-use asset rules do not apply, the company returns taxable rental income and may claim deductions for expenses directly related to earning that income.

Use by Shareholders or Employees

When shareholders or employees (including shareholder-employees) use the property without paying full market rent:

  • Shareholders are treated as receiving non-cash dividends.

  • Employees are treated as receiving employment income.

New Zealand Tax Accountant.