Private ruling: GST and supply of accommodation
Published: February 2015

Ruling: Q1: Are the supplies of accommodation an input taxed supply of residential premises pursuant to section 40-35 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes | Q2: Is the supply of car parking with the supply of accommodation a part of an input taxed supply of residential premises under section 40-35 of the GST Act? | A2: Yes | Q3: Is the supply of porta-cots and/or high chairs with the supply of accommodation a part of an input taxed supply of residential premises under section 40-35 of the GST Act? | A3: Yes

Relevant facts and circumstances: Entity A is the representative member of a GST group and Entity B (you) is a member of that group. You supply short term accommodation to members of the public (guests) from separate buildings. All of the buildings are separate from other buildings and on separate land title. Leasing arrangements You do not own any of the apartments, but are able to supply the apartments to the public by virtue of individual lease agreements you have with the separate apartment owners. You do not act as agent for the owners when making the supplies of accommodation to the public. You do not lease all of the apartments in the buildings from the apartment owner. The apartments rented by you are scattered throughout and across many buildings in many locations. You do not take over buildings or particular sections of buildings, like entire floors, or lines of apartments. You lease individual apartments from individual apartment owners who wish to rent out their apartment. You do not grant any rights to guests other than the rights that derive from leasing the individual apartments and the rights held by the owners in the owners' corporation. You do not acquire, or rent out, any common property or facilities for re&dash;letting out. Advertising and duration of stay The apartments are made available through various websites and travel agents. The apartments are advertised/available for short stays. Features of the apartments and the buildings All apartments are fully self-contained in buildings that were designed, constructed and sold as individual fully self-contained residential premises. These apartments were built exclusively to supply fully self&dash;contained, individually strata titled residential apartments. The apartments are all fully furnished and include washing and drying machines, cooking and kitchen appliances, entertainment equipment such as TVs, as well as bedding, furniture and décor. Common areas in the residential apartment complex consist of a number of different areas which including the building foyer/lobby, lift wells and adjoining floor corridor access, roof top spaces, driveways and car spaces and stair wells. There are no 'reception areas'. The lobby will sometimes, have a small concierge desk. These buildings will sometimes also have a swimming pool or gym which are common areas which are available for use by the occupants of the apartments and limited guests, These common areas can be accessed and used only under the rules of the owners' corporation, which apply equally to owner occupiers and renters. The buildings all have owners' corporations, the rules of which apply equally to each and every apartment, and to the occupiers of each and every one of the apartments (whether the occupiers are an owner or tenant). An entity that is related to you has the owners' corporation management rights over some of the buildings in which you have apartments. The business activity of providing management services to owners' corporations is not a service provided by you to any owners' corporation in any building. Offsite administration and services There are offsite offices where the administration of the accommodation is undertaken. Guests check-in at your offices to pick up the keys and then walk to the respective apartment that is provided for their stay. All guests are provided with keys due to the fact the buildings are restricted access to residents only. Payments are usually made by guests at the time of booking (via credit card if on-line) with guest details confirmed and credit card security taken at the time of check-in. The apartments are not cleaned or serviced daily. The cleaning occurs in seven day intervals (if a customer stays that long) or at the completion of a guest's stay. Additional cleaning is available at the cost of the guest. The common areas in all of the buildings do not have central or communal cooking, eating, dining, entertainment, business, conference, portage or laundry facilities. Guests can be provided with a range of services and facilities as part of their stay. These services are arranged through your office. Some of these facilities and services are provided by you. Most are supplied and provided directly by third party suppliers to the apartment occupant, and are paid for directly by the occupant. You will however, where appropriate, assist the guest to access some of those services. No mini bars or food is provided. No baggage handling or assistance is available. No trolleys or similar equipment is available for moving luggage. There is no 'room service', no central kitchens, no central restaurants and no provision of meals. There is no front desk or reception, and sometimes virtually no lobby. None of your staff or representatives are present in foyers of buildings. The concierge is an employee of the owners' corporation and is not your representative. The concierge will assist all occupiers of apartments in the building, whether owner/occupiers, or long term tenants renting direct from the owners of the apartments, or shorter&dash;term tenants placed in the apartments. The car spaces that you lease from the apartment owners are leased from the owner of the apartment to you together with and forming part of the total apartment lease. In all cases, the car spaces are located within the same building complex as the apartment from which the accommodation is supplied. If you supply a car space, porta-cot or a high chair to the guest in conjunction with the furnished accommodation, the guest pays a separate and additional charge for these items.

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

Reasons for decision: Summary: Under section 9-5 of the GST Act, 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. The issue in this case is whether your supply of accommodation is an input taxed supply under section 40-35. Input taxed means that GST is not payable on the supply and there is no entitlement to an input tax credit for anything acquired to make the supply. Under subsection 40-35(1), a supply of residential premises by way of lease, hire or licence (other than a supply of commercial residential premises or a supply of accommodation in commercial residential premises provided to an individual by an entity that owns or controls the commercial residential premises) is input taxed. Under subsection 40-35(2) of the GST Act, the supply will only be input taxed to the extent that the premises are to be used predominately for residential accommodation (regardless of the term of occupation). Section 195-1 defines residential premises as 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. We consider that the premises from which the accommodation is supplied, satisfies the definition of residential premises under section 195-1. However, if your supply of accommodation is a supply of accommodation in 'commercial residential premises', provided to an individual by an entity that owns or controls the 'commercial residential premises' the supply will be a taxable supply provided that all of the requirements of section 9-5 of the GST Act are met. The term 'commercial residential premises' is defined in section 195-1 of the GST Act to include amongst other things: (a) a hotel, motel, inn, hostel or boarding house, or (b) ….. (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 Tax Office view of the characteristics of commercial residential premises. Paragraph 10 of GSTR 2012/6 provides that the objective factors that are 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. Of relevance is whether the buildings with the offsite offices is a hotel motel or inn or similar to a hotel motel or inn. The terms hotel, motel, and inn are not defined in the GST Act and therefore take their ordinary or common meanings, subject to context. Paragraph 141 of GSTR 2012/6 provides the ordinary meaning of hotels, motels and inns according to the definitions in the Macquarie Dictionary 5 th Edition, the Oxford English Dictionary 2 nd and 3 rd editions and the Shorter Oxford English Dictionary 5 th edition. Based on the definitions in paragraph 141 of GSTR 2012/6, a hotel motel or inn is a building or establishment from which accommodation and other services or facilities are supplied. The accommodation that you supply is not from a single building or establishment as the accommodation is situated in separate buildings. Relevantly, paragraphs 95 and 96 of GSTR 2012/6 provides guidance in respect of separately titled apartments that are not located within the same building. Paragraphs 95 and 96 state: 95. In addition to living accommodation areas, premises that are commercial residential premises include commercial infrastructure to support the commercial operation of the premises. This infrastructure may include (but is not limited to) reception areas, dining and bar areas, meeting/function areas, kitchens, laundry facilities, storage areas and car parks. This infrastructure is used to provide services to occupants. Premises described in paragraph (a) and similar premises under paragraph (f) of the definition contain some or all of these areas to some degree. 96. Separately titled rooms, apartments, or adjacent cottages or villas located on adjoining or abutting land can be combined with sufficient commercial infrastructure (as discussed in paragraph 95 of this Ruling) so that, as a whole, it can be operated similarly to a hotel, motel, inn, or hostel. Supplies of accommodation in premises operated in this way are supplies of accommodation in commercial residential premises. You supply accommodation from separate buildings that are not co-located and you provide services to guests from offsite offices. As the accommodation and the infrastructure to provide services is not located within a single building or from buildings that are situated on adjoining or abutting land, these premises cannot be characterised as a hotel motel or inn or sufficiently similar to a hotel, motel or inn. Accordingly, the premises from which you supply the accommodation does not satisfy the definition of commercial residential premises under paragraph (a) or (f) of section 195-1. This means that you are not making a supply of accommodation in commercial residential premises provided to an individual by an entity that owns or controls the commercial residential premises. Consequently your supply is an input taxed supply of residential premises pursuant to section 40-35. We will consider whether the supply of a car space in conjunction with the supply of accommodation is part of the input taxed supply of the accommodation. The car space that you supply to a guest is located within the same building complex as the apartment from which the accommodation is supplied. Paragraph 16 of Goods and Services Tax Ruling GSTR 2012/5 Goods and services tax: residential premises (GSTR 20121/5) explains that the supply of a residential apartment which includes a car parking space is a composite supply of residential premises provided that the car parking space is physically located within the same building complex. The principles for determining a composite supply are explained in Goods and Services Tax Ruling GSTR 2001/8: Goods and services tax: apportioning the consideration for a supply that includes taxable and non-taxable parts (GSTR 2001/8). Paragraph 17 of GSTR 2001/8 explains that the term 'composite supply' is used to describe a supply that contains a dominant part and includes something that is integral, ancillary or incidental to that part. Paragraph 17 continues that a composite supply is a supply of a single thing. Paragraph 18A of GSTR 2001/8 advises that if a composite supply is taxable, then GST is payable on the whole supply whereas if a composite supply is non-taxable, then no GST is payable on the supply. Paragraph 43 of GSTR 2001/8 provides further guidance on mixed and composite supplies as follows: 43. A mixed supply contains separately identifiable parts where one or more of the parts is taxable and one or more of the parts is non-taxable. None of these parts is integral, ancillary or incidental in relation to the whole supply. On the other hand, a composite supply is a supply of one dominant part that has other parts that are not treated as having a separate identity as they are integral, ancillary or incidental to the dominant part of the supply. In accordance with the guidance in GSTR 2012/5 and GSTR 2001/8 we consider that your supply of the accommodation with a car space is a composite supply. Even though there is a separate charge for the supply of the car space, this does not prevent it from constituting one composite transaction. The composite supply is an input taxed supply of residential premises pursuant to section 40-35 of the GST Act. In accordance with the reasoning in question 2, we have also applied the principles in Goods and Services Tax Ruling GSTR 2001/8: Goods and services tax: apportioning the consideration for a supply that includes taxable and non-taxable parts (GSTR 2001/8) to determine whether the supply of accommodation with the supply of a porta-cot and/or a high chair is a composite supply. We consider that the supply of furnished accommodation with a supply of a porta-cot and/or a high chair to a guest is a single composite supply as the supply of a porta-cot or a high chair is an integral part of the dominant supply of the accommodation. Even though there is a separate charge for the supply of the porta-cot and the high chair, this does not prevent it from constituting one composite transaction. Accordingly, the supply of a porta-cot and/or a high chair with the accommodation is a composite supply. This composite supply is an input taxed supply of residential premises pursuant to section 40-35 of the GST Act.