Private ruling: Goods and services tax and the supply of accommodation at a unit park
Date of advice: 7 May 2020
Published: June 2020
Ruling period: 26 February 20XX to 30 June 20XX
Date scheme commenced: 26 February 20XX

Ruling: Q1: Is the supply of accommodation by you in a unit park a taxable supply in accordance with section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, your supply of accommodation at the unit park is a taxable supply and you are liable for GST on your supply. However, your GST liability in relation to any long-term commercial accommodation you supply may be subject to concessional GST treatment in accordance with sections 87-10 and 87-25 of the GST Act. Refer to Reasons for Decisions for a detailed explanation.

Relevant facts and circumstances: You are registered for GST. You own a unit park. You are a member of a GST group for reporting GST and the GST group representative is Entity A. You are the operator of the unit park and rent the units/villas located in the unit park directly to your guests. The unit park comprises of 1, 2, 3 and 4 bedroom units/villas set on approximately X hectares of land. The units/villas are fully self-contained with fully equipped kitchens, fridges, air conditioners, sewer connection, smart televisions, Wi-Fi and dishwashers. They are built 600mm above the ground and are built out of timber, iron and hardy plank. You provide all the cleaning and maintenance of the units/villas in the unit park. Daily housekeeping is available depending on the length of stay. In an email dated XX XX XXXX requesting for further information, we advised you that long term accommodation for the purposes of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) was accommodation provided for a continuous period of 28 days or more. Based on this you estimated about one third of the units/villas in the unit park are rented on a long term basis. The unit park is advertised and is open for bookings on the internet. Photos from the advertisement of the unit park are available on the internet. The bookings website advertise and the photos show the unit park as having several units/villas located on the property and common facilities like a swimming pool, a pond/dam, outdoor picnic tables and chairs under cover, common barbeque facilities/camp kitchen under cover and common outdoor bathroom and/or toilet facilities

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999: Section 9-5 | Section 9-40 | Section 40-35 | Section 87-5 | Section 87-10 | Section 87-15 | Section 87-20 | Section 87-25 | Section 195-1

Reasons for decision: Detailed Reasoning - Taxable supply: Section 9-40 of the GST Act provides that you must pay the GST payable on any taxable supply that you make. Section 9-5 of the GST Act provides that you make a taxable supply if you make the supply for consideration, the supply is made in the course or furtherance of an enterprise that you carry on, the supply is connected with the indirect zone and you are registered or required to be registered for GST. A supply is not a taxable supply to the extent that it is GST-free or input taxed. Your supply of accommodation in the unit park is made for consideration, is made in the course or furtherance of an enterprise that you carry on, the unit park is located in Australia and you are registered for GST. There are no provisions in the GST Act that would make your supply of accommodation in the unit park GST-free. It therefore remains to be determined if your supply of accommodation in the unit park is input taxed in accordance with the GST Act. Section 40-35 of the GST Act deals with the input taxed supply of residential rent and states: Residential rent (1) Asupply of premises that is by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) isinput taxed if: (a) thesupply is of * residential premises(other than asupplyof * commercial residential premises or asupply of accommodation incommercial residential premisesprovided to anindividualby the entity that owns or controls thecommercial residential premises); or (b) thesupply is of * commercial accommodationand Division 87 (which is aboutlong-term accommodation in commercialpremises) wouldapply to the supply but for a choice made by the supplier under section 87-25. Therefore, paragraph 40-35(1)(a) of the GST Act exclude the supply of accommodation in commercial residential premises from being input taxed. However, paragraph 40-35(1)(b) of the GST Act allows the supplier to choose to treat long-term commercial accommodation, subject to Division 87 of the GST Act, as an input taxed supply. Section 195-1 of the GST Act defines commercial residential premises to include, amongst other things, a caravan park or a camping ground or any residential premises similar to a caravan park or a camping ground. Goods and Services Tax Ruling 2012/6 Goods and services tax : commercial residential premises (GSTR 2012/6) consider how the GST Act applies to supplies of commercial residential premises. Paragraph 8 of GSTR 2012/6 states: 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 109 to 110A and paragraph 213 of GSTR 2012/6 explain the ATO view in relation to what constitutes a caravan park and state as follows: 109. The terms 'caravan park' and 'camping ground' are not defined in the GST Act and take their ordinary meanings in context. 110. Occupants of a caravan park or camping ground may stay in a caravan, a moveable home, a permanent cabin or villa, or a tent provided by the operator on site. Alternatively, guests may park their own caravan, motor home, camper trailer or the like on a site or pitch their own tent on a site. Sites may be powered or un-powered. Accommodation in a caravan park or camping ground is held out to the public as accommodation for travellers although long-term accommodation may also be provided to occupants. Caravan parks and camping grounds are operated on a commercial basis or in a business-like manner. 110A. 'Home parks' in which sites for moveable homes are rented and the homes themselves either rented or occupied by their owners are commercial residential premises under paragraph (f) of the definition, as they are similar to caravan parks. 213. Occupants of a caravan park or camping ground may stay in a caravan, a moveable home, a permanent cabin or villa, or a tent provided by the operator on site. Alternatively, guests may park their own caravan, motor home, camper trailer or the like on a site, or pitch their own tent on a site. Sites may be powered or un-powered. Accommodation in a caravan park or camping ground is held out to the public for travellers' accommodation although long-term accommodation may also be provided to occupants. Caravan parks and camping grounds are operated on a commercial basis or in a business-like manner. Given that the ATO view of a caravan park or similar accommodation is not limited to caravans but includes villas, cabins and 'Home parks', we consider the unit park to be a caravan park or similar accommodation for GST purposes. Accordingly, the unit park meets the definition of commercial residential premises in accordance with section 195-1 of the GST Act and the supply of commercial accommodation by you in the unit park is a taxable supply. | Detailed Reasoning - GST Liability: Commercial accommodation means the right to occupy the whole or any part of commercial residential premises, and includes (if provided as part of the right to occupy) the supply of cleaning and maintenance, electricity, gas, air-conditioning or heating, as well as telephone, television, radio or similar things (section 87-15 of the GST Act). Any service that is provided separately to that which is supplied as part of the tariff is unlikely to be within the meaning of commercial accommodation. For example, separately metered electricity, mini bar items, personal laundry or dry cleaning charges, meals and phone calls are separate supplies. These items will not attract any GST concessions and the full GST rate will apply. The GST liability for your taxable supply of commercial accommodation in the unit park will depend on whether you provide short-term, long-term or predominantly long-term accommodation. Paragraph 138 of GSTR 2012/6 states: 138. Supplies of commercial residential premises are subject to GST under the basic rules. The value of a supply of long-term accommodation in commercial residential premises is altered by the operation of Division 87. GST Bulletin GSTB 2001/2 Accommodation in caravan parks and camping grounds (GSTB 2001/2) provides further detailed explanation of the GST liability in relation to short-term, long-term or predominantly long-term accommodation. In relation to short term accommodation GSTB 2001/2 states: | Detailed Reasoning - Short term stays: ...short-term stays are those that are for periods of 27 days or less. Every short-term stay you provide is taxed at the normal GST rate of 10% of its value. It does not matter how many of your stays fall into this category. Therefore you are liable for GST of one-eleventh of the price you charge for all your supplies of short-term commercial accommodation in the unit park. In relation to long term accommodation, GSTB 2001/2 states: | Detailed Reasoning - Long term stays: Long term stays for the purposes of the GST Act and this Bulletin are those that are for 28 days or more. Section 87-20 of the GST Act defines long-term accommodation as commercial accommodation (explained in section 87-15) provided to an individual for a continuous period of 28 days or more, in the same premises to: (a)that individual alone; or (b)that individual, together with one or more other individuals who: (i) are also provided with that commercial accommodation; and (ii) are not provided with it at their own expense (whether incurred directly or indirectly). ... With your long-term stays you have a choice on how to apply the GST. Your choice depends on whether you provide predominantly long-term accommodation or not. A further alternative is to treat such long-term accommodation as residential rental under Division 40. If you make a choice to not use the concessional treatment in Division 87 your long-term stays must be input taxed under Division 40. Each of these alternatives are explained below. | Detailed Reasoning - Predominantly long-term accommodation (section 87-5 of the GST Act): For the purposes of the GST Act, predominantly long-term accommodation applies where 70% or more of your stays are made for a continuous period of 28 days or more (subsection 87-20(3)). You have told us that you provide only a third of your accommodation at the unit park as long-term commercial accommodation. You are therefore not making supplies of predominantly long-term accommodation and hence section 87-5 of the GST Act does not apply to you. | Detailed Reasoning - Not predominantly long-term accommodation (section 87-10 of the GST Act): As less than 70% of your stays are made for a continuous period of 28 days or more, you do not provide predominantly long-term accommodation at the unit park. Section 87-10 of the GST Act may apply to your supplies of long-term commercial accommodation at the unit park. Section 87-10 of the GST Act requires you to charge GST for your supply of long-term commercial accommodation as follows: · the full value of the supply for the first 27 days of continuous accommodation of long-term guests, plus · a reduced value (that is, 50% of the GST-inclusive price of the accommodation) from the 28th day of the stay. Issue 20 of the Tourism and Hospitality Industry Partnership - issue register provides an example of this as follows: | Detailed Reasoning - Example 3 - premises is not predominantly for long-term accommodation: Ralph accepts a temporary work transfer to Adelaide and books into Marble Heights for two months. Marble Heights charges $220 ($200 plus $20 GST) per night for a room. Less than 70% of their guests stay for 28 days or more. For the first 27 days, Ralph will be charged at the normal rate of $220 per night. From day 28 onwards, GST will be calculated on half the GST inclusive price. Half $220 is $110. The concessional GST amount is 10% of $110; that is $11. So Ralph will be charged: · $220 per night for the first 27 days · $211 per night for the rest of his stay. Note, generally the GST concessions apply to both the supply of the accommodation and incidental supplies, such as electricity, gas, cleaning and maintenance, Wi-Fi etcetera which is included as part of the tariff. If however, the fees for services are charged separately, for example, for phone calls, mini-bar items, meals, personal laundry or in-house entertainment, you must charge GST on your supply of these services at the normal rate. | Detailed Reasoning - Alternative treatment of long-term accommodation: Section 87-25 of the GST Act provides an alternative treatment and allows you the option to choose to treat all your long-term accommodation as input taxed in the same way as residential rent. GSTB 2001/2 states: | Detailed Reasoning - Input taxed supplies (Division 40): If you choose not to apply the reduced value to your eligible long-term stays, these supplies of long-term stays must be input taxed. This means you do not charge GST, but you cannot claim back any GST included in your business inputs that relate to these supplies. However, you may still claim GST included in your business inputs that are for short-term stays. If you choose to input tax your supplies of long-term stays: (a) your choice of treatment applies to all these stays. You cannot change your choice for 12 months; (b) you must apportion your business input tax credits between those supplies and other taxable supplies you make which could include taxable short-term stays. Goods and Services Tax Ruling GSTR 2000/15 provides details of apportionment methods that may be used; (c) you will have to review your claim for input tax credits if the actual usage of your business inputs with a value of more than $1000 varies from the estimated usage you have worked out using your apportionment basis (see Division 129 and Goods and Services Tax Ruling GSTR 2000/24). (Note: GSTR 2000/15 has been replaced by GSTR 2006/4.) Therefore under this option, as you don't pay any GST on your supply of long-term accommodation, you don't report purchases (that is you cannot claim GST credits) used to supply the long-term commercial accommodation. GST Bulletin GSTB 2001/3 Simplified calculation of input tax for caravan park operators (GSTB 2001/3) provides further details of how to use simplified methods to apportion input tax credits where you decide to input tax your supplies of long-term accommodation.