Private ruling: GST and the supply of property used to provide accommodation to members
Date of advice: 14 June 2017
Published: August 2017

Ruling: Q1: Is the acquisition of the properties a creditable acquisition as defined in section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No, the acquisition of the properties is not a creditable acquisition as defined in section 11-5 of the GST Act. A creditable acquisition is defined in section 11-15 of the GST Act as follows: You make a creditable acquisition if: (a) you acquire anything solely or partly for a *creditable purpose; and (b) the supply of the thing to you is a *taxable supply; and (c) you provide, or are liable to provide, *consideration for the supply; and (d) you are *registered, or *required to be registered. (terms marked with asterisks (*) are defined in section 195-1 of the GST Act) The question at issue here is whether the acquisition by you met paragraph 11-15(b) of the GST Act. In other words, whether, the supply of the property by the vendor to you was a taxable supply. A taxable supply is defined in section 9-5 of the GST Act as follows: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with the indirect tax zone; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. Of relevant to this case is whether the sale of the property was an input taxed supply. Pursuant to section 40-65 of the GST Act, the supply of residential premises is an input taxed supply. We agree with your contention that the structures on the lots and the surrounding land (that makes up the property) come within the meaning of residential premises as defined in the GST Act. The sale is not a GST-free supply under section 38-250 or any other GST-free provision of the GST Act. Accordingly the supply of the property is not a taxable supply. Given that the supply of the property does not meet paragraph 11-15(b) of the GST Act, the acquisition of the property is not a creditable acquisition by you.

Relevant facts and circumstances: You carry on an enterprise and are registered for the goods and services tax (GST). You have entered into a contract with a vendor to purchase properties located on a number of adjacent blocks of land under a single contract. This amount is more than 50% of the GST inclusive market value of the property. The property consists of several contiguous lots. Some of these lots contain structures (houses) that have been used by the vendor to provide holiday accommodation to its’ associates. The vendor is registered for GST. The vendor has not earned any income from the houses or any other income from the property. The vendor has not claimed any input tax credits in relation to any part of the property nor carried on any other enterprise other than providing holiday accommodation to its’ associates. The property is boarded by a single fence which includes a gate in one of the lots to provide vehicle access. There are no barriers or separating structures between any of the lots or any part of the Lots. The property is located in a residential zone.

Relevant legislative provisions: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 9-5 | Section 11-15 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999