Airbnb, dual citizenship and where to pay taxes.

As a dual citizen who runs an airbnb service is it possible to select to pay tax in the jurisdiction that offers the best tax incentives? If opening an airbnb account in country A, but then hosting people in a property that is located in country B, then having the funds transfered to a bank account in country A, will country B ask me to pay tax if I decide to pay the tax in country A by saying that I offer some kind of service through airbnb? The exact property address has not been disclosed on airbnb, just the street name. For me, it is much more benificial to pay the tax on the income in country A. I would like to do this activity and make it "legal". Has anybody done this? I do have intentions to pay the taxes. I just want to pay the least tax possible. Any experiences and help will be appreciated. Thanks.

 

no
You would be taxed in Australia, but subject to any double taxation agreement. You might be taxed in other countries as well - more than 1 potentially.

 

Do you know how the ATo would get my details? Is it through the citizenship that is provided to airbnb or is it due to the country location of the property? Thanks

 

If you’re an Australian resident for tax purposes then you pay tax in Australian on foreign income (and get an offset for foreign tax paid to a country that Australia has double taxation agreement with). Not sure if there’s a way out of that aside from lying on your tax return.

 

Yes there is a double tax agreement with the country so if I pay the tax in one country I will not need to pay it in the other. I am prepared to live in the country that has the better tax system as it would save me a large amount of money if I could do it. If I spend 180 days outside of australia I will not be a resident for tax purposes. I organize all of the airbnb services from online. I'm trying to workout how to do it without lying on the tax return. I don't want it to bite me later.

 

Your understanding is not correct. Best get some specific tax advice.

 

There’s more to not being an Australian resident for tax purposes than being in the country for less than 180 days. As other poster said it’s best to get some proper advice.

 

If you can afford to live away for 180 days in order to do this......then we are talking a lot of money from this scheme you are trying to pull off. I can hear the ATO knocking at your door.

 

• If a property is located in Australia then tax applies to rental income in Australia FIRST regardless of the tax residency of the owner/s. Whether the income is banked, received here or not. If they are also subject to tax in another country (eg USA as you are a dual citizen) then that country will also tax the same income. A credit may or may not be given in full by the foreign country. The DTA doesnt give a choice to how this process works.
• A person ordinarily resident in Australia can depart and still be considered a tax resident. Tax residency isnt as simple as boarding a flight (not that this is now simple!)
• Tax residency isnt a choice.
• Australian tax rates will be determined by the tax residency of the owner/s. If non-resident there is no threshold and tax applies to each dollar of net income.
• If an Australian tax resident has property or any other income anywhere in the world it will be taxed in Australia. It may also be taxed in the country of physical residence, and if a dual tax agreement exists credit may be given in the country of residence for AU tax paid. Note that a DTA does not mean tax isnt payable twice. Many issues can limit of exclude the tax credit being applied

Determining your tax residency is step one. This will ensure no evasion or avoidance occurs which seems the point of the OP question. Getting it wrong means you are permanently liable for the unpaid tax and penalties. It would grow.

There are many ways the ATO match airbnb or any other platform income to returns lodged. And they do receive the address...There are data providers already that you can buy the same data from that includes the actual addresses based on platform data. Its not as hidden as you think. State OSR also datamatch to ensure land tax and absentee land tax surcharges etc (!) are assessed. State OSR has airbnb information too. State OSR also is given Commonwealth tax data (anonomised) to assist its land tax collection efforts