Private ruling: GST - sale of real property
Date of advice: 25 July 2025
Published: 29 September 2025
Ruling period: Year ending 30 June 20XX
Date scheme commenced: The date this ruling was issued

Ruling: Q1: Is the supply of x units (the units) leased as short-stay accommodation on the property considered commercial residential premises (CRP) and a taxable supply of property in accordance with section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. The supply of the units is not considered CRP and is not a taxable supply in accordance with section 9-5 of the GST Act. | Q2: If the units are CRP, is the sale of one or all of the units a taxable supply in accordance with section 9-5 of the GST Act if: a. Sale is within 5 years after construction b. Sale is after 5 years after construction | A2: We have determined above in Question 1 that the supply of the units, leased as short-term accommodation, are residential premises and not CRP. | Q3: If the units are not CRP, will GST be payable on the sale on one or all of the units if: a. Sale is within 5 years after construction b. Sale is after 5 years after construction | A3: a. The proposed sale of one or all of the units would be a taxable supply of new residential premises in accordance with section 9-5. b. The proposed sale of one or all of the units would be an input taxed supply of residential premises under section 40-65(1). | Q4: If the partners were to move into one of the units and occupy that unit as their residence, will GST be payable on the sale of that unit: a. If occupancy occurred within 5 years after construction b. If occupancy occurred after 5 years after construction | A4: a. The sale of one the units that had been occupied within 5 years after construction would be a taxable supply of new residential premises in accordance with section 9-5. b. The sale of one of the units that had been occupied 5 years after construction would be an input taxed supply of residential premises under section 40-65(1).

Relevant facts and circumstances: The Partners have an Australian Business Number (ABN) and are registered for goods and services tax (GST) effective of 1 January 20YY. The partners purchased the property containing a single existing dwelling on 21 November 20YY for $XXX,XXX. Subsequently, the existing dwelling was demolished and the partners designed and constructed xx units (the units) on the property to hold as investments for the purpose of renting. The property is zoned XX and has been unchanged for xx years. Construction was completed and an occupancy certificate was issued on 9 April 20YY. Initially, xxxx was responsible for marketing, managing, cleaning and primary point of contact for tenants whilst the maintenance work was performed by xxxx. xxxx was recently diagnosed with cancer and the partners are now less involved with the units having outsourced the management, cleaning and maintenance and relying on the booking platform Airbnb. The units were only advertised for rent via the Airbnb platform. Rental income was first derived on 10 May 20YY, as this was the earliest that could've been rented after construction was completed. The units have been continuously rented on a short-stay basis, having been granted approval to operate as 'Short Stay Accommodation". Each unit is rented out as a whole to tenants. The partners provide linen, towels and toiletries and the units are all fully furnished. The partners do not provide food or meals. The units are cleaned on check out unless otherwise requested and no other services are provided to the tenants. Unit x consists of X bedrooms each with an ensuite, powder room, kitchen, dining and living room, laundry, alfresco area and carport. Units x & x consist of X bedrooms each with an ensuite, powder room, kitchen, dining and living room, laundry, alfresco area and carport. The partners did not issue the tenants a receipt or tax invoice when they received payment for the short-stay accommodation as guests were most often couples on private travel paying by credit card with no requirement for documentation. At the time of construction in the 20YY/YYFY, the partners were deciding on whether the properties would be CRP, referencing Goods and Services Tax Ruling GSTR 2012/6 Goods and services tax: commercial residential premises (GSTR 2012/6). The partners concluded that the development was likely to be CRP as: • The property satisfied 'common characteristics' as per GSTR 2012/6 • The original premises were demolished, and a development followed specifically to provide short term rental accommodation • Multiple occupancy • Managed, cleaned and maintained entirely in house • Although not fitting neatly into a 'hotel, motel, inn, hostel or boarding house', the fact that examples in ruling such as farm stay and bed and breakfast were found to be CRP raised uncertainty about relying on strict traditional classifications The partners have treated the supply of the units by way of rent as commercial residential premises (CRP). The partners have lodged their Business Activity Statements (BAS) for 1 January 20YY to 31 May 20YY claiming input tax credits in relation to construction costs and GST payable has been remitted to the ATO on the rental income you received from the tenants. In the future, the partners may sell one or all of the units.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-40 | A New Tax System (Goods and Services Tax) Act 1999 section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 section 40-35 | A New Tax System (Goods and Services Tax) Act 1999 section 40-65 | A New Tax System (Goods and Services Tax) Act 1999 section 40-75 | A New Tax System (Goods and Services Tax) Act 1999 Division 142 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Summary: Under section 9-5 states that you make a taxable supplyif: 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 Australia; 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. All the elements of section 9-5 must be satisfied for a supply to be a taxable supply. In this case, the partners will satisfy the requirements of paragraphs 9-5(a) to 9-5(d) as the units are leased out for consideration, the supply is in the course or furtherance of your leasing enterprise that the partners carry on, the supply of the units will be connected with Australia, as the units are located in Australia and the partners are registered for GST. There are no provisions of the GST Act under which your supply of the property in question is GST-free. Therefore, we need to determine whether the supply of the units leased as short-term accommodation is an input taxed supply. | Detailed Reasoning - Input taxed supplies: Subsection 40-35(1) provides that a supply of premises by lease, hire or license is input taxed if the supply is of residential premises (other than a supply of commercial residential premises or accommodation in commercial residential premises provided to an individual by the entity that owns or controls the commercial residential premises). Subsection 40-35(2) states that the supply is input taxed only to the extent the premises are to be used predominately for residential accommodation (regardless of the term of occupation). The term 'residential premises' is defined in section 195-1 to mean 'land or a building' that: • is occupied as a residence or for residential accommodation; or • is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation; o (regardless of the term of the occupation or intended occupation) and includes a floating home. Goods and Services Tax Ruling 2012/5 Goods and services tax: residential premises (GSTR 2012/5) provides the Commissioner's view on whether premises are considered residential premises. Paragraph 7 of GSTR 2012/5 explains that the physical characteristics of the premises will determine whether the property is residential premises for the purposes of subsection 40-35(1). It states that the definition of residential premises 'refers to premises that are designed, built or modified so as to be suitable to be occupied, and capable of being occupied, as a residence or for residential accommodation. This is demonstrated through the physical characteristics of the 'premises'. Paragraphs 9 and 15 of GSTR 2012/5 explain that a single test looking at the physical characteristics of the property will determine the premises' suitability and capability for residential accommodation. To satisfy the definition of residential premises, the premises must provide shelter and basic living facilities. From the facts and information provided, your supply of the units leased as short-stay accommodation satisfies the definition of 'residential premises' as the units provide shelter and basic living facilities such as bedrooms, bathrooms, kitchen, living areas and laundry. However, it is necessary to consider whether you are making a supply of accommodation in commercial residential premises. | Detailed Reasoning - Commercial residential premises: Commercial residential premises are defined in section 195-1 as: (a) a hotel, motel, inn, hostel or boarding house; (b) premises used to provide accommodation in connection with a school; (c) a ship that is mainly let out on hire in the ordinary course of a business of letting ships out on hire; (d) a ship that is mainly used for entertainment or transport in the ordinary course of a business of providing ships for entertainment or transport; (da) a marina at which one or more of the berths are occupied, or are to be occupied, by ships used as residences; (e) a caravan park or a camping ground; or (f) anything similar to residential premises described in paragraphs (a) to (e) Goods and Services Tax Ruling GSTR 2012/6 Goods and services tax: commercial residential premises (GSTR 2012/6) provides the Commissioner's view on the characteristics of commercial residential premises. Paragraph 8 of GSTR 2012/6 provides that a supply by way of sale or lease of commercial residential premises is a taxable supply. A supply of accommodation in commercial residential premises provided to an individual by the entity that owns or controls the commercial residential premises is also a taxable supply Paragraphs 10 and 11 of GSTR 2012/6 explains that the objective factors relevant to characterising premises under paragraph (a) or (f) of the definition include the overall physical character of the premises and how the premises are operated. The test to apply for paragraph (a) of the definition is whether the premises are a hotel, motel, inn, hostel or boarding house and the test for applying paragraph (f) is whether the premises are similar to these, in the sense that they have sufficient likeness or resemblance to any of those types of establishments. Paragraph 12 of GSTR 2012/6 lists the characteristics that are considered to be common to operating hotels, motels, inns, hostels and boarding houses that are relevant, though not determinative, to characterising premises as commercial residential premises: (a) commercial intention, (b) multiple occupancy, (c) holding out to the public, (d) accommodation is the main purpose, (e) central management, (f) management offers accommodation in its own right, (g) provision of, or arrangement for, services, and (h) occupants have the status of guests. Paragraph 41 of GSTR 2012/6 provides that ultimately, whether premises are commercial residential premises, is a matter of overall impression involving the weighing up of all relevant factors. Paragraph 95 to 98 of GSTR 2012/6 considers separately titled rooms, apartments, cottages or villas and explains that in order for premises to be commercial residential premises, the living accommodation areas must be accompanied by commercial infrastructure to support the commercial operation of the premises. Paragraph 95 of GSTR 2012/6 outlines that commercial infrastructure includes (but is not limited to) reception areas, dining and bar areas, meeting/function areas, kitchens, laundry facilities, storage areas and car parks. This commercial infrastructure is used to provide services to occupants. The units that you rent to guests satisfy the definition of residential premises as it provides shelter and basic living facilities; including multiple bathrooms/toilets, multiple bedrooms, kitchen, multiple living spaces and laundry. Regarding the question of whether the units are commercial residential premises, we note that while the units display some characteristics of commercial residential premises, the units do not display sufficient features of a hotel, motel, inn, hostel or boarding house to be characterised as commercial premises. Further, the units that you rent to guests are not similar to the dictionary definitions for a hotel, motel, inn, hostel and boarding house above, for the following reasons: • You do not provide food, alcoholic drinks and other services like a hotel - you only provide accommodation. • You do not provide lodging and food, etc. for travellers and others like an inn (small hotel) - you only provide accommodation. • In general, you do not provide a dwelling in which lodging is provided to paying residents who share common facilities such as a kitchen, laundry, living room, etc. like that provided by a boarding house - at any one time, you rent the entire units to a group of family members or friends, etc. in a single booking. • Your guests have the use of the entire units and prepare their own meals. You do not, for example, separately rent individual bedrooms in the units to people unknown to each other, who would then share the kitchen, living areas and laundry. As stated above, determining whether premises are commercial residential premises is a matter of overall impression and degree involving weighing up all relevant factors. Taking all of the above into consideration, we have concluded that the units leased as short-term accommodation at the property, is not the supply of commercial residential premises. Such supplies are thus input taxed supplies of residential premises and not taxable supplies. | Detailed Reasoning - Input tax credits: As the partners are making input taxed supplies of residential premises, they were not entitled to claim input tax credits (ITC) for any of the construction costs the partners incurred in relation to making that supply. Therefore, you should amend the relevant activity statements to remove any ITCs that have been claimed within the 4-year period of review. | Detailed Reasoning - Question 2: If the units are CRP, what GST is payable on the sale of one or all of the units in accordance with section 9-40 if: a. Sale is within 5 years after construction b. Sale is after 5 years after construction | Summary: We have determined above in Question 1, that your supply of your units leased as short-term accommodation are residential premises and not commercial residential premises. | Detailed Reasoning - If the units are not CRP, will GST be payable on the sale of one or all of the units if:: a. Sale is within 5 years after construction b. Sale is after 5 years after construction | Summary: a. The proposed sale of one or all of the units would be a taxable supply of new residential premises in accordance with section 9-5. b. The proposed sale of one or all of the units would be an input taxed supply of residential premises under section 40-65(1). | Detailed Reasoning - Detailed reasoning: Section 9-5 provides 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 Australia; and (d) you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. All the elements of section 9-5 must be satisfied for a supply to be a taxable supply. In this case, the partners will satisfy the requirements of paragraphs 9-5(a) to 9-5(d) as the units will be sold for consideration, the sale is in the course or furtherance of the leasing enterprise that the partners carry on, the sale of the units will be connected with Australia, as the units are located in Australia and the partners are registered for GST. Under subsection 40-65(1), a sale of residential property is input taxed to the extent that the property is residential premises to be used predominantly for residential accommodation. However, the sale of the residential property is not input taxed under subsection 40-65(2) to the extent that the residential premises are: (a) commercial residential premises; or (b) new residential premises other that those used for residential accommodation before 2 December 1998. In this case, we have determined in Question 1 that the units are residential premises to be used predominantly for residential accommodation and not commercial residential premises. Therefore, we now need to consider whether the supply of one or all of the units are new residential premises. Section 40-75 defines new residential premises. Subsection 40-75() states that residential premises are new residential premises if they: (a) have not previously been sold as residential premises (other than commercial residential premises) and have not previously been the subject of a long-term lease; or (b) have been created through substantial renovations of a building; or (c) have been built, or contain a building that has been built, to replace demolished premises on the same land. However, under subsection 40-75(2) the residential premises are not new residential premises if, for the period of at least 5 years since: (a) the premises first became residential premises; or (b) the premises were last substantially renovated; or (c) the premises were last built; the premises have only been used for making supplies that are input taxed because of paragraph 40-35(1)(a). We consider the 5 years must be a continuous period. A continuous period is not broken by short periods between tenancies where the premises are actively marketed for rent following the departure by a previous tenant. However, a continuous period would not include periods when the premises are used for a private purpose or left vacant with no attempt to lease, hire or licence. Furthermore, a continuous period would not include periods when the premises are held for sale or marketed for sale. In this case, you purchased the property on 21 November 20YY, which contained an existing dwelling. Shortly after purchasing, the existing dwelling was demolished and constructed the X units. The purpose of building the units on the property were to hold as investments for the purpose of renting. Construction of the units were completed, and occupancy certificate issued was 9 April 20YY. You have stated that all of the units have all been continuously rented out on a short-stay basis and you first derived rental income on the units on 10 May 20YY. Therefore, we consider the units will have only been used for making input taxed supplies of residential rent for a of at least 5 years in accordance with subsection 40-35(1) where the units have only been leased out on a continuous period until 9 May 20YY. | Detailed Reasoning - Sold within 5 years of construction: The proposed sale of the units within 5 years of construction is a supply of new residential premises in accordance with subsection with subsection 40-75(1) as: • the unit have not been previously sold as residential premises and not previously been the subject of a long-term lease; • the units had been built to replace the existing dwelling that was demolished on the property. Subsection 40-75(2) will not be satisfied as the period of only making input taxed supplies of residential accommodation in accordance with subsection 40-35(1) for at least 5 continuous years will have been broken. As such the proposed sale of one or all of the units would be a taxable supply of new residential premises in accordance with section 9-5. | Detailed Reasoning - Sold after 5 years of construction: The proposed sale of one or all of the units 5 years after construction is not a supply of new residential premises in accordance with subsection 40-75(2) where for the continuous period of at least 5 years since the units were last built, the units have only been used for making input taxed supplies of residential rental in accordance with section 40-35(1). As such the proposed sale of one or all of the units would be an input taxed supply of residential premises under section 40-65(1). | Detailed Reasoning - Question 4: If the partners were to move into one of the units and occupy that unit as their residence will GST be payable on the sale of that unit: a. If occupancy occurred within 5 years after construction b. If occupancy occurred after 5 years after construction | Summary: a. The sale of one the units that had been occupied within 5 years after construction would be a taxable supply of new residential premises in accordance with section 9-5. b. The sale of one of the units that had been occupied 5 years after construction would be an input taxed supply of residential premises under section 40-65(1). | Detailed Reasoning - Detailed reasoning: As per the reasoning for question 3, the 5-year period referred to in 40-75(2) must be a continuous period. A continuous period is not broken by short periods between tenancies where the premises are actively marketed for rent following the departure by a previous tenant. However, a continuous period would not include periods when the premises are used for a private purpose or left vacant with no attempt to lease, hire or licence. Furthermore, a continuous period would not include periods when the premises are held for sale or marketed for sale. In this case, you have stated that all of the units have all been continuously rented out on a short-stay basis and you first derived rental income on the units on 10 May 20YY. Therefore, we consider the units will have only been used for making input taxed supplies of residential rent for a of at least 5 years in accordance with subsection 40-35(1) where the units have only been leased out on a continuous period until 9 May 20YY. | Detailed Reasoning - If within 5 years after construction: If the partners were to move into one of the units and occupy it as their residence within 5 years of construction, the sale of that unit will be a supply of new residential premises in accordance with subsection with subsection 40-75(1) as: • the unit have not been previously sold as residential premises and not previously been the subject of a long-term lease; • the unit had been built to replace the existing dwelling that was demolished on the property. Subsection 40-75(2) will not be satisfied as the period of only making input taxed supplies of residential accommodation in accordance with subsection 40-35(1) for at least 5 continuous years will have been broken. As such the proposed sale of a unit would be a taxable supply of new residential premises in accordance with section 9-5. | Detailed Reasoning - If after 5 years after construction: If the partners were to move into one of the units, occupy as their residence after 5 years of construction, the proposed sale of that unit is not a supply of new residential premises. In accordance with subsection with subsection 40-75(2), the units have only been used for making input taxed supplies of residential rental for a continuous period of at least 5 years since the units were last built. As such the proposed sale of one or all of the units would be an input taxed supply of residential premises under section 40-65(1).