Private ruling: GST and commercial residential premises
Published: October 2014

Ruling: Q1: Are you making a taxable supply when you let accommodation apartments to guests? | A1: No A supply is not a taxable supply to the extent it is GST-free or input taxed. Given the facts provided it is considered that your supplies of accommodation in apartments you lease from the owners (and sub-let to guests) are input taxed supplies of residential premises under section 40-35 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The premises are not considered to be a taxable supply of accommodation in 'commercial residential premises' as defined in section 195-1 of the GST Act. 'Commercial residential premises' include a hotel, motel, inn, hostel or boarding house or anything similar. The premises in question do not possess the characteristics of such premises, as outlined in paragraph 12 of Goods and Services Tax Ruling GSTR 2012/6, to be classified as a hotel, motel, inn, hostel or boarding house, or anything similar for GST purposes.

Relevant facts and circumstances: You are registered for GST. You carry on an enterprise of providing holiday rental accommodation. Your business involves providing management services to numerous owners of self-contained residential apartments across a number of locations. You charge a management fee which is deducted from the gross rental received (together with any expenses). The balance is paid to the apartment owners. You do not require these transactions to be considered in this private ruling. Due to a number of your client's preference for a guaranteed income stream, you entered into leases of X properties and sub-let these apartments in your own right (not as an agent). One apartment is situated in a complex (Complex A) of approximately X apartments and the other apartments are in a complex (Complex B) of approximately Y apartments. All apartments are owned by separate owners and leased under separate lease agreements. Complex A The leased apartment is fully furnished and contains one bedroom, one bathroom (ensuite), dining room/lounge room, kitchen and laundry. You also manage other apartments at this location as agent of the owners. Complex B The leased apartments are fully furnished and contain three bedrooms, two bathrooms, lounge/dining room, kitchen and laundry. You also manage another apartment at this location as agent for the owner. Neither complex has a reception area or restaurant/bar nor do you provide any type of food or room service. However as some guests arrive in the evenings, you do provide breakfast ingredients (milk, bread, orange juice and cereal packets) for the guest's first morning. Guests can self-check-in as the complexes have locked boxes or key codes on doors. You will meet guests on site if requested. Guests are provided with your contact details (welcome letter and business card) in case of emergencies or reporting faults. The complexes are residential apartment buildings and do not have any other facilities such as a swimming pool, gym, commercial kitchen, etc. You do provide linen which is in the apartments on the guest's arrival. The occupant is responsible for laundering the linen during their stay. The apartments are cleaned on departure. You do not offer any guest services. You can advise guests on places to eat and general tourism information and direct guests to the tourism information centre for further information and bookings. You do provide Foxtel and internet is available. Typically, guests stay between 4 and 21 days however are able to stay a maximum of 90 days. No lease agreements are entered into and you do not include a GST component in the tariff. You have remitted GST on these supplies on your Business activity statements (BAS).

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 | Section 40-35 | Section 195-1