Are Airbnb listings classified as an active asset/business?

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LAC2023

(Initiate)Initiate

13 Dec 2023

I am keen to know if the whole operation of hosting on Airbnb is classified as an active business. By operation, I mean the entire cycle of Listing, booking arrangements, communicating with the guests, providing clean linen/towels, engaging cleaners, inspecting the property for the next guests, bookkeeping, etc. All the activities will be continuous and repeated to make a profit.

Note: The listed properties are commercial residential units (ex-hotel buildings) and will be solely used for renting out, not for residence or shared residence.

Renting out of a residential property is a passive income, and understandably so. However, hosting on Airbnb, especially managing more than one property, consumes time and labour. It is not passive.

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Taxduck

(Taxicorn)Taxicorn

13 Dec 2023

The ATO view is that short term rental is usually rental income not business. However that does not preclude the fact that an activity is more business like rather than the receipt of passive income. The ATO is rather vague in distinguishing whether a rental property owner is in the business of renting or not. The link below provides some information but ultimately it is left up to the individual to self assess their own situation. (whether that self assessment decision is accepted by the ATO is another matter)

You can request a complex advice request if you wish. Link for that is here. https://www.ato.gov.au/about-ato/ato-advice-and-guidance/ato-advice-products-rulings/early-engagement-for-advice/individuals-complex-advice-request

Other link: https://www.ato.gov.au/individuals-and-families/investments-and-assets/residential-rental-properties/rental-property-as-investment-or-business