Private ruling: Goods and services tax: residential premises
Published: December 2014
Date scheme commenced: 1 July 2014.

Ruling: Q1: Is your supply of accommodation an input taxed supply? | A1: Yes. Section 40-35 of the A New Tax System (Goods and Services Tax) Act 1999 ( GST Act) provides that a supply of residential premises by way of lease, hire or licence is input taxed to the extent that the premises are to be used predominantly for residential accommodation (regardless of the term of occupation). However, section 40-35 also provides that the supply of accommodation in commercial residential premises is not input taxed. Your supply of accommodation is 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. Your accommodation does not possess the characteristics of such premises, as outlined in paragraph 12 of Goods and Services Tax Ruling GSTR 2012/6, to the scale or degree to classify as a hotel, motel, inn, hostel or boarding house or anything similar for GST purposes.

Relevant facts and circumstances: You are a non-profit company limited by guarantee and operating as a club. You are registered for GST and conduct all activities in Australia. Although not operating for profit, you are conducting an enterprise under the A New Tax System (Goods and Services Tax) Act (1999) (GST Act). Your principal activities are the promotion and encouragement of sporting activities and the provision of accommodation to facilitate these activities. Your members are also shareholders in the company. The club has a number of directors who are also shareholders and members and voluntary office holders who are not paid by the club. The directors perform various honorary services to the club such as general administration and financial management. The club owns a building on land in Australia. The building is used to accommodate up to a specific number members at any one time. The building comprises: • A number of bedrooms of various configurations, • Shared showers, • Shared toilets, • Shared self-catering kitchen, • Shared living/dining room • Shared children playroom • a shared storage area • a shared self-help laundry The accommodation is for the use of owners/members and their families/friends only. The club does not advertise the accommodation or offer its use to non-members or members of the general public. The club does not actively manage its spare accommodation. Bookings are managed by one owner/director remotely. Owners/members may book accommodation for a nightly fee throughout the year. Stays are typically short term ranging from 1 to 7 nights. There is no on-site management presence and users of the accommodation provide their own food and other supplies, do their own cooking and cleaning and are responsible for cleaning their rooms and common areas. As part owners, owner/members who use the accommodation are personally responsible for maintaining it in good condition. The annual subscription paid by members cover the fixed costs of the accommodation while usage fees are designed to cover normal wear and tear and utilities. The club is currently charging GST on these fees.

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