Whether an activity constitutes the carrying on of a business is a question of fact to be decided on a case by case basis. In this case, the AAT has held that a taxpayer who provided rooms for rent through the Airbnb platform was not carrying on a business as required by the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 and thus was not eligible to receive JobKeeper payments as a business participant.

The facts

The taxpayer used the Airbnb platform to source bookings from paying guests who wished to stay in her home on the Sunshine Coast, Queensland. Guests did not rent out the entire house, or a self-contained part of it, but rather spare bedrooms within the house that she and her husband resided in.

The property listing proved to be popular and consistently enjoyed good occupancy rates until COVID-19 struck. Figures lifted from the Airbnb platform showed the taxpayer had taken a total of 796 bookings and hosted 1637 guests, over 1034 booked nights, between 2016 when the property was first listed and 31 March 2021. The number of nights booked declined significantly in the 2020 year. However, the taxpayer was unable to produce conventional accounting records, including profit and loss statements that might give a clearer sense of the profits made over the course of that time.

The taxpayer estimated she spent up to 18 hours a week on activities associated with the Airbnb guests. She reported the money she made from the Airbnb listing in her income tax returns as “rental income” rather than income from a business and claimed deductions relating to the property against that rental income. The taxpayer also had part-time jobs that generated the greater part of her taxable income.

The taxpayer considered that she was entitled to the JobKeeper payment as a business participant due to the decline in bookings and revenue for her Airbnb listing brought about by COVID-19. When the Commissioner thought otherwise, the taxpayer sought review of the Commissioner’s objection decision.

In issue was whether the taxpayer was conducting a “business” when she accepted paying guests through the Airbnb platform in order to satisfy the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020, and whether she was supplying “commercial residential premises” to her guests in order to have experienced a decline in projected turnover (as required by ss 7(2) and 8 of the Rules). If the taxpayer was making input taxed supplies of residential accommodation, as opposed to taxable supplies of commercial residential premises, she would not have experienced the required decline in projected GST turnover.

The decision

In affirming the decision under review, the AAT said that, on balance, the taxpayer had not established that she was carrying on a business at the relevant time. Although there were indicia that pointed to her carrying on a business, the taxpayer in this case was ultimately taking paying guests into her own home that she shared with her husband. In doing so, she was merely repurposing a spare room along with other domestic facilities in that home to make some extra money on the side.

Although not necessary to decide, the AAT went on to consider whether the taxpayer experienced a decline in projected GST turnover. It said that, while the bundle of services the taxpayer was supplying was similar in some ways to the services and features of hotels, motels, inns, hostels and boarding houses, the physical configuration and layout and the absence of multiple occupancies was a key and overwhelming distinction that set aside her premises.

There was no getting past the fact her premises were configured as a private home into which she invited single parties of guests. The taxpayer was not supplying commercial residential premises, which meant the supply of residential premises was input taxed. The revenue generated in connection with those supplies did not form part of the taxpayer’s projected GST turnover.

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