The ACT Government levy is targeted at short-term rental accommodation companies, but many believe providers and guests will ultimately be the ones who pay. Photo: Airbnb.
Booking service providers – who make, arrange or facilitate short-term rental accommodation – will have to pay an extra 5 per cent tax on bookings in the Territory.
But time will tell from whose pocket the money will flow.
The levy was originally flagged as a new source of general revenue for the Territory in the 2024-25 Budget.
“This bill will raise revenue to support essential services that the government provides for Canberrans, including health, education, transport, tourism and housing,” Treasurer Chris Steel said.
“This will help to provide a sustainable revenue source to fund the services that Canberrans rely on.”
The levy will apply to short-term rental accommodation bookings of less than 28 days in Canberra, where the booking was made, arranged or facilitated by a booking service (such as Airbnb and Stayz), and where the accommodation itself is a self-contained dwelling or building.
But there’s no guarantee the short-term booking companies will be the ones who ultimately pay the levy.
Property Council of Australia ACT and Capital Region executive director Ashlee Berry said she assumed the guests would ultimately bear the cost.
“Ultimately [the cost] will be passed on, there is no doubt,” she said.
“They’re running a business – be it Airbnb or the people letting the property – and they will have to cover those costs.”
Shadow Treasurer Ed Cocks was firm in his belief that this would not be a tax on multinational short-term booking operators.
“The cost and burden will fall squarely on small local providers … [and] passed on to consumers,” he said.
“This tax hits ordinary people on both sides of the booking.”
Mr Steel previously voiced his expectation that the levy would also have a “modest impact on long-term rentals being available to local renters, rather than short-term visitors.”
Time will tell if this aim will be realised, but current sentiment appears to be that there will be little to no impact.
Real Estate Institute ACT CEO Maria Edwards said there could be a “modest uplift” in rental stock if some short-stay property owners chose to exit platforms (like Airbnb) if their short-term returns were diminished.
However, she felt it could also have the opposite effect on the number of rental properties available.
“What is critical to consider is that the ACT is already one of the most expensive jurisdictions in the country for residential property investment,” Ms Edwards said.
“Additional taxes, however modest, add to the cost burden and may influence investor sentiment when weighing up where to direct their next purchase.
“The risk is that while short-term revenue may be gained, we inadvertently deter long-term investment in projects that underpin housing supply and affordability.”
Other jurisdictions have similar levies, such as Victoria and Tasmania.
Revenue from Tasmania’s levy helps fund a policy to remove stamp duty for first-home buyers in the state, while Victoria’s goes to its housing agency, Homes Victoria.
The ACT’s will go into the government’s consolidated revenue.
ACT Greens leader Shane Rattenbury said the money raised from this levy would be “quite insignificant” to the Budget bottom line, let alone be enough to address issues such as a shortage of public housing in the ACT.
“The Greens aren’t opposed to the levy per se, I just think we need to see it for what it is,” he said.
“[The legislation] does provide some opportunities to raise revenue, but I don’t think it raises enough revenue where the government can then start to, for example, more seriously invest in public housing.”
Mr Cocks was more direct.
“There are times when taxes can form part of genuine reform, or they can address a specific issue where levies are targeted to clear outcomes,” he said.
“That’s not what this is … this tax does nothing for renters, nothing for home buyers.”
Ms Berry said it would also “barely move the needle” on housing affordability, and that it was a “missed opportunity” not to at least earmark the levy revenue solely for housing.
“Charging visitors might seem more appealing but it doesn’t tackle the root problems that are causing our housing crisis,” she said.
“We need firm planning reforms, not tinkering around the edges.”
The levy will take effect from 1 July 2025.
