SMSF trustees can use a residential property owned by their SMSF to provide host services on platforms, such as Airbnb.
Things to consider before using a property as Airbnb or Bed and Breakfast:
- check your investment strategy to make sure it allows the host services.
- make sure the existing building insurance policy allows Airbnb host services.
Things to consider after property being used as Airbnb:
- make sure no related parties can use the property as their accommodation.
- the SMSF trustees can not be remunerated for daily management or any other services.
- keep adequate record for when, how long and to whom the host services were provided.
Airbnb taxation treatment in an SMSF:
- net income will be tax at 15% for accumulation funds or funds in transition to retirement phase.
- net income will be exempt for account based pension funds.
- GST registration is normally not required.
- GST is required if the following are met: 1. the turnover is more than $75,000 2. Airbnb meets the definition of “commercial residential premises’ in section 195-1. (ATO ruling GSTR 2012/6).
Airbnb expenses can be paid from the SMSF:
- Motor vehicle expenses: No, car expenses can not be paid from the SMSF as the name of the car registration is not under the SMSF name.
- Phone bills: No, the phone bill should not be under an SMSF account name.
- Linens (costs of laundry): Yes, invoices must be issued to the SMSF.
- Toiletries for the guests (such as soap, shampoo and conditioner): Yes, but invoices must be issued to the SMSF.
- Food (such as welcome drinks for the guests, etc): Yes, but the invoices need to be issued to the SMSF. It is recommended to buy food and drinks from an Airbnb products provider.
- Cleaning services: Yes if the property is cleaned by non-related parties. Any cleaning services done by SMSF members/trustees or their relatives must not be paid by the SMSF.
The property used for host services normally is managed by the trustees. The following rules must not be breached:
- in house asset rules: no members and their associate can use the property for any purposes.
- sole propose test: trustees should be aware of the risks of operating Airbnb services and should not conduct a rental business in the SMSF.
Should you have any questions, please feel free to contact us for clarification.