Short Stay Operators take note – “Airbnb Tax” coming 1 January 2025

What is the Short Stay Levy?

From 1 January 2025, many short stay accommodation providers in Victoria will be subject to a short stay levy (Levy), often referred to as the ‘Airbnb Tax’.

The Levy is a flat 7.5% of the total booking fees paid, including charges such as cleaning fee and GST, where applicable. The total booking fee does not include credit card surcharges.

It applies to all bookings made after on or after 1 January 2025 – bookings made on or before 31 December 2024, even if for a stay in 2025, will not be subject to the Levy.

When does the Levy apply?

The Levy will apply to all accommodations offered for short staying including entire houses or apartments, a private room in a house (if the room is not in a person’s primary residence), a granny flat or a tiny home parked on land.

The Levy will not apply to a short stay in a property that is someone’s Principal Place of Residence.  This includes renting out a room or if you temporarily list your home for short stay bookings while you’re away on holidays.

The Levy also does not apply to commercial residential properties such as hotels or motels or specialised housing facilities such as temporary crisis accommodation or student housing.

What is a “short stay”?

A short stay is any stay less than 28 consecutive days.

If you accept a booking for 28 consecutive days or more, this is not considered a short stay and you do not have to pay for the Levy.

How is the Levy collected?

The Levy is collected by the State Revenue Office (SRO). Where a booking is made via a booking platform – such as Stayz or Airbnb – the Levy will be paid by the booking platform.  Where the booking is accepted without a platform the Levy must be paid by the property owner or tenant.

What do you need to do?

If you accept short stay booking without a booking platform, you need to register as a short stay accommodation provider with the SRO.

If you collect booking fees greater than $75,000 per calendar year (collectively over all your short stay properties) you must lodge and pay the Levy quarterly. The quarterly periods begin on 1 January, 1 April, 1 July and 1 October each year. This means you must lodge your first return and pay the Levy by 30 April 2025.

If you collect booking fees of $75,000 or less per year you must lodge and pay the levy annually. This means you will not be required to lodge your first return and pay the levy until 30 January 2026.

Bookings are for bookings completed in the calendar year.

Imposition of the Levy

Liability for the Levy arises on the date that a short stay is completed. This is the date in which a person is required under the terms of the booking to vacate the accommodation, regardless of whether the person vacates the accommodation earlier, or does not occupy the accommodation at all during the booking period.

However, the Levy is not imposed if the booking is cancelled and the total booking fee is waived, credited, or refunded. Any non-refunded fee will attract the Levy.

What happens if the Levy is not paid?

Failure to lodge a return and pay the Levy by the relevant due date will result in a tax default, attracting penalties and interest.

What is the purpose of the Levy?

The intention of the Levy is twofold: First, it will raise revenue for Homes Victoria to fund social and affordable housing, with 25% of funds being invested in regional Victoria. Second, it will encourage property owners to switch from short term rentals to long term rentals, assisting with the current housing shortage.

Criticism of the Levy

Despite its purported good intentions, the Levy has sparked a significant debate.

Shadow Treasurer Brad Rowswell stated: “This tax will not solve the housing crisis in Victoria” and that “There is no evidence to support that a tax on short- stays will actually boost the supply of long-term rentals.”

On the other hand, Member for Frankston Paul Edbrooke said there are 63,000 short stay accommodation places in Victoria, with almost half in regional Victoria and the new regime would help make more homes available for people to live in.

“We have had to, as a government, look at how we provide housing for our communities, and it is not all about how many houses we are going to build; it is about how we free up accommodation that is sitting there right now and is vacant”.

Member for Monbulk, Daniela Da Martino, said short stay accommodation was contributing to labour shortages in Victoria, particularly in the outer parts of her electorate, as business are struggling to attract workers because there is nowhere for the workforces to rent long term, but there is a “slew of Airbnbs”.

However, Victorian Tourism Industry Council chief Felicia Mariani says the Levy will be devastating for local tourism, particularly in regional areas, and Housing Industry Australia chief economist Tim Reardon said the Levy would not improve housing supply and described is as “an own goal that will further reduce housing supply and place more pressure on public housing stock”.

It appears that the Victorian Opposition agrees with the criticisms of the Levy, as it has pledged to repeal the Levy if elected in 2026.

How can Brand Partners assist you?

If you require assistance in understanding your obligations in regard to the Levy, please call our team today on (03) 9602 5800.