ATO ID 2003/977: GST and long-term accommodation supplied to staff in premises used to provide accommodation to tertiary students
Date of decision: 30 May 2002
Business line: Indirect Tax

Issue
Does the entity, a higher education institution that provides long-term accommodation to both staff and students in the same premises, include the number of students that it provides with accommodation in calculating whether the premises used for staff accommodation are 'predominantly for long-term accommodation', as defined in subsection 87-20(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Decision
No, the entity does not include the number of students that it provides with accommodation in calculating whether the premises used for staff accommodation are 'predominantly for long-term accommodation', as defined in subsection 87-20(3) of the GST Act.

Facts
The entity is a higher education institution. The entity supplies its staff with long-term accommodation. The entity also makes supplies of accommodation to its students. The supplies of accommodation to staff and students are in the same premises. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: Subsection 87-20(3) of the GST Act provides that commercial residential premises are 'predominantly for long-term accommodation' if at least 70 per cent of the individuals who are provided with commercial accommodation in the premises, are provided with such accommodation as long-term accommodation. In determining whether premises are 'predominantly for long-term accommodation' an entity includes all individuals that are provided with commercial accommodation in those premises. Therefore, if the supply to the students satisfies the definition of 'commercial accommodation', the students are included in determining whether the premises are 'predominantly for long-term accommodation'. 'Commercial accommodation' is defined in section 87-15 of the GST Act to mean the right to occupy the whole or part of 'commercial residential premises'. 'Commercial residential premises' is defined in section 195-1 of the GST Act. The definition specifically excludes premises to the extent that they are used to provide accommodation to students in connection with an education institution that is not a school. Section 195-1 of the GST Act defines a 'school' as an institution that supplies pre-school courses, primary courses, secondary courses or special education courses but not any other education course. Therefore, higher education institutions or technical and further education institutions are not schools for the purposes of the GST Act. The entity is a higher education institution and as such, is not a school. Therefore, to the extent that the entity uses its premises to provide accommodation to students, the premises are excluded from the definition of 'commercial residential premises' and the accommodation provided to students in those premises is not commercial accommodation. As the students are not provided with commercial accommodation in the entity's premises, they are not included in determining whether those premises are 'predominantly for long-term accommodation', as defined in subsection 87-20(3) of the GST Act. Note 1: If at least 70 per cent of the staff provided with commercial accommodation are staying long-term, that is, 28 days or more (subsection 87-20(1) of the GST Act), the premises used to provide that accommodation is 'predominantly for long-term accommodation' (subsection 87-20(3) of the GST Act). Where there are 2 or more individuals sharing a room who are charged separately, they are counted separately in calculating the 70 per cent figure (paragraph 154 of Goods and Services Tax Ruling GSTR 2000/20). Note 2: Where an entity provides long-term commercial accommodation in commercial residential premises that are predominantly for long term accommodation, the GST payable on the supply of that accommodation is calculated at a reduced rate in accordance with section 87-5 of the GST Act. Alternatively, section 87-25 of the GST Act provides that the supplier can choose not to apply Division 87 of the GST Act and, as a result, treat its supplies of long-term commercial accommodation as input taxed under paragraph 40-35(1)(b) of the GST Act.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 paragraph 40-35(1)(b) Division 87 section 87-5 section 87-15 subsection 87-20(1) subsection 87-20(3) section 87-25 section 195-1
Related public rulings and determinations: Goods and Services Tax Ruling GSTR 2000/20
Subject references: Goods and services tax Student accommodation GST residential rents GST long term accommodation GST commercial residential premises GST property & construction Student accommodation - tertiary