We understand that navigating the details of the upcoming 7.5% Short Stay Levy, set to take effect on 1 January, may be challenging. To assist you in managing this change and making informed decisions for your business, our partners at the Victorian Tourism Industry Council (VTIC) have provided us with some insights.
VTIC plays a vital role in advocating for the tourism industry across Victoria. If your business isn’t already a member, we strongly encourage you to learn more about their advocacy work and the valuable support they offer here.
The Short Stay Levy will undoubtedly be a significant challenge for the industry in the coming year, and staying connected with our team at Tourism Midwest Victoria, along with VTIC will be essential to ensure you receive timely updates and critical information.
If you have any questions about the new levy, please don’t hesitate to reach out to our team at development@tourismmidwestvic.com.au or for more information, visit sro.vic.gov.au
The following information has been provided by the Victorian Tourism Industry Council:
With new guidelines being published on the State Revenue Office (SRO) website just last week, it has become evident that there is the potential for operators to be charged 7.5% on the 7.5% you collect from your guest. Let’s explain how this can happen….
As you prepare your invoice for the customer, you might expect that you will list your accommodation cost, your cleaning fee, your admin fees, then outline 10% GST and 7.5% Short Stay Levy to arrive at a total due from the customer.
You might think that you should itemise this in the way you do your GST and then the amount collected would merely be forwarded to the SRO.
In structuring your invoice this way, however, the legislation allows for the SRO to calculate the levy owed on the full amount you have collected – including the 7.5% you may have separately itemised — hence you will be charged 7.5% on the 7.5% you’ve collected.
VTIC has sought independent advice on this interpretation and confirmed it with the SRO; that under the legislation, the 7.5% tax can be applied to the 7.5% you have separately itemised.
If you are hoping to cover your costs for this additional levy being applied to your bookings, a potential way to achieve that outcome is to present a consolidated amount for all fees and charges, prior to GST. We understand an uplift to your costs of 8.11% is required so that you are not out-of-pocket once the levy is applied.
The advice VTIC has received has indicated that….
Under the legislation, there is no requirement to specifically itemise the Short Stay Levy as a separate charge.
In the event that the amount payable for a short stay booking specifically itemises the Levy as a separate/additional charge, then that itemised amount will also be included in the calculation of the ‘total booking fee’ and will be subject to the levy.
In the spirit of transparency, you may wish to consider outlining on your website that a slight increase in fees and charges has occurred with respect to the additional Short Stay Levy that is now applicable in the state of Victoria. This is not a mandatory requirement under the specific legislation but is something you may wish to consider.
VTIC have also been made aware by several of its members that there is some ambiguity around whether certain types of accommodation will be subject to the levy. Again, the current advice VTIC have at hand indicates that…
Businesses who are located on farms or in natural settings and who are operating as commercial accommodation, e.g., 6 x villas, may be caught up in the ambiguity of accommodation types subject to the levy.
Given the length of time it will take to process rulings for exemption from eligibility, and in order to protect yourself during any period of evaluation, operators should consider increasing costs to cover for the imposition of the levy while applying for a private ruling, which can take up to 90 days to process a determination.
You can use this link to seek a private ruling from SRO if you believe your property type may be exempt – https://www.sro.vic.gov.au/request-private-ruling
As is always the case, this information has been provided here as ‘general guidance’ based on our current understanding of matters, which may or may not be appropriate for your specific circumstance. You should seek specific advice from your tax consultant and/or your legal advisor particular to your situation.
VTIC will be looking at engaging with our legal advisor to conduct a webinar early in the new year around this critical issue. The questions, concerns and confusion surrounding the hasty implementation of this levy has created significant stress at a time when the industry is gearing up for its busiest period of the year. We will do everything we can to help guide you in your thinking about how best to manage this implementation.
If you are not a current member of VTIC and reading this message that may well have been forwarded by an operator who is connected to our organisation, VTIC strongly suggests that you consider becoming part of their network.