GST charges on long term accommodation

Posted by: Louise Pope
Date: 17 February 2014

As always, there are exceptions to the rules.  When the accommodation is in a hotel, motel, other commercial dwelling, hospital or residential establishment, there will be some GST content.

If you operate a hotel, motel, or other commercial dwelling, and have customers that stay for longer than four weeks the GST content (relating to domestic goods or services) is calculated in two different ways:

• Four-week rule for commercial dwellings

• Four-week rule for residential establishments

Commercial dwellings

GST is charged on the full value of accommodation in hotels, motels and other commercial dwellings for the first four weeks' stay.

After four weeks, charge GST only on 60% of the value of the domestic goods or services. These are usually the right to occupy the premises and any of the following if they are included in that right:

• cleaning and maintenance

• electricity, gas, air-conditioning or heating

• telephone (not tolls), television, radio or similar chattels

Residential establishments

Providing there is an agreement in place that the stay is for more than four weeks, then GST is charged on 60% of the value of domestic goods or services from the start of the stay.

Resthomes, private hospitals

There are separate rates for Resthomes and Private Hospitals and these can be obtained from the IRD website.

If you think this might apply to you then call your advisor or give us a call.

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