Private ruling: GST and supply of residential premises under sublease
Date of advice: 4 September 2025
Published: 3 November 2025
Ruling period: XX/XX/20XX to XX/XX/20XX
Date scheme commenced: XX/XX/XXXX

Ruling: Q1: Are you making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you supply residential premises under a sublease arrangement? | A1: No, you are not making a taxable supply when you supply residential premises under a sublease arrangement as the supply is input taxed. | Q2: Are you entitled to input tax credits under section 11-20 of the GST Act on acquisitions that relate to your supply of residential premises under a sublease arrangement? | A2: No, you are not entitled to input tax credits on acquisitions that relate to your supply of residential premises under a sublease arrangement as your acquisitions will not be creditable acquisitions.

Relevant facts and circumstances: You are an Australian company. Your Australian Business Number was registered effective XX/XX/20XX. You registered for GST effective XX/XX/20XX. You will operate an enterprise of renting residential property to then sublease primarily on short-stay platforms. Longer stays of up to X years will be offered where demand is present. You will upscale your enterprise over time. You will furnish and maintain the residential properties. Only essential maintenance will be performed. You will not purchase or lease commercial residential premises. You will not provide reception services, daily cleaning, or meal provision. Your properties will be cleaned once guests have departed. Cleaning and maintenance will be managed in house and by casual labour hire.

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 11-20 | 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

Reasons for decision: Summary: No, you are not making a taxable supply when you supply residential premises under a sublease arrangement as the supply is input taxed under section 40-35 of the GST Act. | Detailed Reasoning - Detailed reasoning: A supply of something will be a taxable supply if it satisfies the requirements of section 9-5 of the GST Act. However, that supply will not be a taxable supply to the extent that it is input taxed. A supply of residential premises is an input taxed supply under subsection 40-35(1) of the GST when: A supply of premises that is by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) is input taxed if: (a) the supply is of residential premises (other than a supply of commercial residential premises or a supply of accommodation in commercial residential premises provided to an individual by the entity that owns or controls the commercial residential premises); or (b) the supply is of commercial accommodation and Division 87 (which is about long-term accommodation in commercial premises) would apply to the supply but for a choice made by the supplier under section 87-25. Residential premises has meaning given to it by section 195-1 of the GST Act: 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. Commercial residential premises is defined in section 195-1 of the GST Act to mean: commercial residential premises means: (a) a hotel, motel, inn, hostel or boarding house; or (b) premises used to provide accommodation in connection with a school; or (c) a ship that is mainly let out on hire in the ordinary course of a business of letting ships out on hire; or (d) a ship that is mainly used for entertainment or transport in the ordinary course of a business of providing ships for entertainment or transport; or (e) a marina at which one or more of the berths are occupied, or are to be occupied, by ships used as residences; or (f) a caravan park or a camping ground; or (g) anything similar to residential premises described in paragraphs (a) to (e). However, it does not include premises to the extent that they are used to provide accommodation to students in connection with an education institution that is not a school. Common characteristics of commercial residential premises are set out in Goods and Services Tax Ruling GSTR 2012/6 (GSTR 2012/6) Goods and services tax: commercial residential premises at paragraph 12: 12. Common characteristics of operating hotels, motels, inns, hostels and boarding houses that are relevant, though not necessarily determinative, to characterising premises as commercial residential premises are: • Commercial intention The premises are operated on a commercial basis or in a business-like manner even if they are operated by a non-profit body. • Multiple occupancy The premises have the capacity to provide accommodation to multiple, unrelated guests or residents at once in separate rooms, or in a dormitory. • Holding out to the public The premises offer accommodation to the public or a segment of the public. • Accommodation is the main purpose Providing accommodation is the main purpose of the premises. • Central management The premises have central management to accept reservations, allocate rooms, receive payments and perform or arrange services. This can be provided through facilities on-site or off-site. • Management offers accommodation in its own right. The entity operating the premises supplies accommodation in its own right rather than as an agent. • Provision of, or arrangement for, services Management provides guests and residents with some services and facilities, or arranges for third parties to provide them. • Occupants have status as guests Predominantly, the occupants are travellers who have their principal place of residence elsewhere. The occupants do not usually enjoy an exclusive right to occupy any particular part of the premises in the same way as a tenant. We do not consider your supply of residential premises will constitute commercial residential premises as your enterprise lacks associated key characteristics. These include the provision of services to guests, indicative features of centralised management such as a reception area, and the accommodation of multiple unrelated guests. Additionally, a supply of residential premises will not be input taxed if it is a long-term lease as under subsection 40-35(2) of the GST Act. Long-term lease is defined in section 195-1 of the GST Act as: long-term lease means a supply by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) for at least 50 years if: (a) at the time of the lease, hire or licence, or the renewal or extension of the lease, hire or licence, it was reasonable to expect that it would continue for at least 50 years; and (b) unless the supplier is an Australian government agency - the terms of the lease, hire or licence, or the renewal or extension of the lease, hire or licence, as they apply to the recipient are substantially the same as those under which the supplier held the premises. You will be acquiring residential premises by rent for the purpose of subleasing them as residential accommodation. While your primary leasing model will involve short-stay accommodation, guest demand may occasionally result in longer-term stays. However, none of your leases will meet the threshold for long-term leases under subsection 40-35(2) of the GST Act. This activity constitutes a supply of residential premises. The nature of this supply remains unchanged regardless of whether the premises are leased or purchased, or whether they are offered through short-stay platforms. Therefore, your supply of residential premises under a sublease arrangement will be an input taxed supply under section 40-35 of the GST Act. | Detailed Reasoning - Question 2: Are you entitled to input tax credits under section 11-20 of the GST Act on acquisitions that relate to your supply of residential premises under a sublease arrangement? | Summary: No, you are not entitled to input tax credits on acquisitions that relate to your supply of residential premises under a sublease arrangement as your acquisitions will not be creditable acquisitions under section 11-5 of the GST Act. | Detailed Reasoning - Detailed reasoning: You are entitled to an input tax credit under section 11-20 of the GST Act for any creditable acquisition that you make. A creditable acquisition is defined in section 11-5 as: | Detailed Reasoning - 11-5 What is a creditable acquisition?: You make a creditable acquisition if: (a) you acquire anything solely or partly for a creditable purpose; and (a) the supply of the thing to you is a taxable supply; and (b) you provide, or are liable to provide, consideration for the supply; and (c) you are registered, or required to be registered. Acquiring something for a creditable purpose requires satisfying section 11-15 of the GST Act, in particular paragraph 11-15(2)(a) of the GST Act: However, you do not acquire the thing for a creditable purpose to the extent that: (a) the acquisition relates to making supplies that would be input taxed; Any acquisitions you make in the course of your enterprise will be connected to your supply of residential premises under a sublease arrangement. As answered in Question 1, this supply is wholly input taxed. Accordingly, your acquisitions do not meet the creditable purpose requirements of subsection 11-5(a) of the GST Act and are not creditable acquisitions. As a result, you are not entitled to claim input tax credits.

Are you making a taxable supply under section 9-5 of the GST Act when you supply residential premises under a sublease arrangement?