Private ruling: GST - commercial premises
Date of advice: 19 September 2025
Published: 24 November 2025
Ruling period: 1 XX 20XX to 30 XX 20XX
Date scheme commenced: 1 XX 20XX

Ruling: Q1: Does the supply of xxxx (the Property) by the xxxx (the Vendor) to xxxx (the Purchaser) constitute an input taxed supply of residential premises under section 40-65 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. The supply of the Property by the Vendor to the Purchaser does not constitute an input taxed supply of residential premises under section 40-65 of the GST Act. | Q2: If the supply of the Property is not considered to be an input taxed supply of residential premise under section 40-65 of the GST Act, is it a taxable supply under section 9-5 of the GST Act? | A2: Yes. The supply of the Property is a taxable supply under section 9-5 of the GST Act | Q3: If the supply of the Property is considered a taxable supply under section 9-5 of the GST Act, is the Purchaser entitled to the input tax credits in respect of its acquisition of the Property under section 11-20 of the GST Act? | A3: Yes. The Purchaser is entitled to the input tax credits in respect of its acquisition of the Property under section 11-20 of the GST Act.

Relevant facts and circumstances: The Purchaser is registered for GST. The Purchaser's enterprise only consists of the holding of the Property, as well as the intended leasing of the Property as a commercial property, and also the potential sale of the Property as a commercial property in the future. If the Property is to be sold, the Purchaser may undertake some renovation works to improve its condition but not for altering its character from that of a commercial property. The Vendor is a not-for-profit trade union and is registered for GST. The Vendor purchased the Property on xxxx (Purchase Date). The Property is zoned R2 'Low Density Residential'. Since purchasing the Property, the Vendor has used it exclusively as its operational headquarters and administrative office. On xxxx, the Purchaser entered into a Contract of Sale with the Vendor for the purchase of the Property from the Vendor. The purchase price of the Property was $xxxx(Purchase Price) with settlement due to occur on xxxx (Settlement Date). The Purchaser intends to use the Property as part of their business activities. The Purchaser intends to lease the Property as a commercial property to a commercial tenant, with a possibility of subleasing part of the premises for commercial purposes. The Purchaser has no intention of using the Property, to any extent, to make any supplies that would be input taxed, nor for private or domestic use. The characteristics of the Property • On xxxx, additional drainage was constructed to avoid flooding in the car park. • On xxxx, external fencing was erected for security reasons. • On xxxx, an internal refresh was undertaken including new carpets and painting works performed internally. • On xxxx, a refurbishment was undertaken of the executive room upstairs and the staff break room as well as the downstairs toilets. • In xxxx, plumbing repairs were undertaken in association with the bathrooms. • On xxxx, a solar power generation system was installed on the roof. The current floor plan of the Property which was used as part of the advertisement for its sale (Advertisement for Sale) included the following facilities: • a boardroom, • x rooms, • a reception area, • a foyer area, • two bathrooms, • a powder room and toilet, • a kitchen area with pantry, and • car park with six car spaces. Further to this, photos used by the Vendor as part of the Advertisement for Sale of the Property showed some of the internal physical characteristics of the Property including how facilities within have been used by the Vendor. These included: • multiple large glass panelled windows to the front of the Property on ground floor including double glass panelled front doors and visible street address with numbering above the front doors; • the boardroom, as shown on the floor plan, with a television and large table surrounded by sixteen office chairs; • one of the rooms containing multiple desks and computer monitors as well as large shelves which appeared to be used for storage of various documents; • another room containing two desks and computer monitors as well as a whiteboard; • another room featuring a desk with a computer monitor; • the reception area with a reception desk, computer monitor, as well as glass partitioning with a glass door that leads from the foyer into the rest of the Property, and also glass partitioning behind the reception area that leads to a room with filing cabinets; • kitchen which included a sink, storage cupboards, fridge, microwave and coffee machine; • the car parking area. Neither the photo of the kitchen nor the floorplans showed any space or facilities allocated for cooking appliances such as a stove, oven or rangehood.

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 11-5 | A New Tax System (Goods and Services Tax) Act 1999 - section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 - section 11-20 | A New Tax System (Goods and Services Tax) Act 1999 - section 40-65

Reasons for decision: Detailed Reasoning - Sales of residential premises: Section 40-65 of the GST Act provides: 1) A sale of *real property is input taxed, but only to the extent that the property is *residential premises to be used predominantly for residential accommodation (regardless of the term of occupation). 2) However, the sale is not input taxed to the extent that the *residential premises are: a. *commercial residential premises; or b. *new residential premises other than those used for residential accommodation (regardless of the term of occupation) before 2 December 1998. (*denotes a term defined in section 195-1 of the GST Act) Section 195-1 of the GST Act defines residential premises as follows: residential premises means land or a building that: (a) is occupied as a residence or for residential accommodation; or (b) is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation; (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) considers how Subdivision 40-B and Subdivision 40-C of the GST Act apply to supplies of residential premises and at paragraph 9 explains that 'residential premises to be used predominantly for residential accommodation (regardless of the term of occupation)' is to be interpreted as a single test that looks to the physical characteristics of the property to determine the premises suitability and capability for residential accommodation. Additionally, GSTR 2012/5 explains what is meant by 'residential premises'. Paragraphs 6 & 7 of GSTR 2012/5 state: 6. Premises, comprising land or a building, are residential premises under paragraph (a) of the definition of residential premises in section 195-1 where the premises are occupied as a residence or for residential accommodation, regardless of the term of occupation. The actual use of the premises as a residence or for residential accommodation is relevant to satisfying this limb of the definition. 7. Premises, comprising land or a building, are also residential premises under paragraph (b) of the definition of residential premises if the premises are intended to be occupied, and are capable of being occupied, as a residence or for residential accommodation, regardless of the term of the intended occupation. This limb of the definition 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. Further to this, paragraphs 14 & 15 of GSTR 2012/5 state: Living accommodation provided by shelter and basic living facilities 14. 'Residential premises' are not limited to premises suited to extended or permanent occupation. Residential premises provide 'living accommodation', which does not require any degree of permanence. It includes lodging, sleeping or overnight accommodation. 15. To satisfy the definition of residential premises, premises must provide shelter and basic living facilities. Premises that do not have the physical characteristics to provide these are not residential premises to be used predominantly for residential accommodation. Paragraphs 25 to 27 of GSTR 2012/5 provide reference to where premises are not residential premises to be used predominantly for residential accommodation. They state: | Detailed Reasoning - Other premises: 25. Not all premises that possess basic living facilities are residential premises to be used predominantly for residential accommodation. If it is clear from the physical characteristics of the premises that their suitability for living accommodation is ancillary to the premises' prevailing function, the premises are not residential premises to be used predominantly for residential accommodation. Example 4 - office building 26. Commercial Place is a five storey building. The ground floor has a foyer and reception area. All floors have been constructed with large open spaces for staff cubicles and desks, smaller office spaces, meeting rooms and areas for storage of documents. Each floor also contains a kitchen, amenities area and toilets. The ground floor also has showers provided with the toilet facilities . 27. While the office building provides shelter and basic living facilities including kitchens, toilets and shower facilities, the physical characteristics of the premises indicate that they are not residential premises to be used predominantly for residential accommodation. The physical characteristics indicate that the premises are a place for office workers to undertake tasks associated with a business. A supply of the premises would not be input taxed under Division 40 . While not forming part of GSTR 2012/5, paragraphs 84 to 86 of Appendix 1 to GSTR 2012/5 explains: | Detailed Reasoning - Other premises: 84. A variety of buildings may include basic living facilities, such as office buildings and hospitals. However, it does not follow that all premises that have these facilities are necessarily residential premises to be used predominantly for residential accommodation. 85. Although these premises have, in part, physical characteristics common to premises that provide living accommodation, they also have physical characteristics which reflect their suitability for another purpose. Where premises' suitability for the provision of living accommodation is ancillary to the premises' prevailing function, they are not residential premises to be used predominantly for residential accommodation. 86. Even if an office worker eats and sleeps overnight in an office building for a period, it does not follow that the premises are residential premises to be used predominantly for residential accommodation. Rather, the physical characteristics of the premises reveal that the building is an office. Similarly, a squatter might eat and sleep in an otherwise vacant factory or warehouse but this does not make it residential premises to be used predominantly for residential accommodation. As per shown in the Advertisement for Sale of the Property, it is considered that the layout and physical characteristics of the Property are sufficiently similar to that contemplated in example 4 of GSTR 2012/5 above. The Property provides shelter and basic living facilities. However, the physical characteristics of the premises indicate that these facilities are ancillary to the premises' prevailing function as an office space. As shown in the Advertisement for Sale, there is a boardroom, foyer, reception area and many rooms used as office spaces. Since the Purchase Date, the Property was also used by the Vendor as an office exclusively for its administrative and operational headquarters. In addition to this, the Purchaser intends to lease the Property to a commercial tenant after the Settlement Date or hold the Property to sell as a commercial premises. Consequently, having regard to the circumstances in this case as a whole, it is considered that the sale of the Property will not be an input taxed supply of residential premises under section 40-65 of the GST Act as it will not be used predominantly for residential accommodation. | Detailed Reasoning - Question 2: 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. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. The supply of the Property will not be an input taxed supply of residential premises under section 40-65. There are also no other provisions in the GST Act under which the supply will be considered GST-free. The supply of the Property by the Vendor will be made for consideration and is connected with Australia. Further to this, the Vendor is registered for GST and the supply will be made in the course or furtherance of the trade union enterprise carried on by the Vendor. Therefore, by satisfying all the requirements under section 9-5 of the GST Act, the supply of the Property by the Vendor will be a taxable supply. | Detailed Reasoning - Question 3: Under section 11-20 of the GST Act, an entity is entitled to the input tax credits for creditable acquisitions that it makes. Section 11-5 of the GST Act provides that an entity makes a creditable acquisition where all of the following conditions are met: • the entity acquires the thing solely, or partly for a creditable purpose, • the supply of the thing to the entity was a taxable supply, • the entity provides, or is liable to provide, consideration for the supply, and • the entity is registered or required to be registered for GST. Section 11-15 of the GST Act provides that an entity acquires a thing for a creditable purpose to the extent that the entity acquires it in carrying on its enterprise. However, the entity does not acquire a thing for a creditable purpose to the extent that the acquisition relates to making supplies that would be input taxed, or the acquisition is of a private or domestic nature. In this case, the Purchaser is registered for GST and is acquiring the Property in carrying on its enterprise. Further to this, the Property will be used to make taxable supplies of leasing of commercial premises and the Property is not intended to be used, to any extent, to make any supplies that would be input taxed, nor for a private or domestic nature. The Purchaser will also provide consideration for the supply of the Property. Consequently, the acquisition of the Property will be made for a creditable purpose. As the requirements of 11-5 of the GST Act are considered satisfied in respect of the Purchaser's acquisition of the Property from the Vendor, the Purchaser is entitled to the input tax credits in respect of its acquisition of the Property under section 11-20 of the GST Act.