Private ruling: GST and commercial residential premises
Date of advice: 20 April 2017
Published: September 2017

Ruling: Q1: Are you making taxable supplies of accommodation in commercial residential premises when you supply accommodation at specified address? | A1: Yes, you are making taxable supplies of accommodation in commercial residential premises when you supply accommodation at specified address.

Relevant facts and circumstances: ● You are registered for goods and services tax (GST) and are conducting the enterprise of providing commercial residential accommodation. ● You acquired the original property (ie vacant land) located in specified address and amount under the margin scheme and contracted with a builder to construct the units on the property. The units are separately titled. There is a central driveway down the middle of the block. ● The property consists of residential units that are marketed and rented as self-contained holiday units on a website. ● Given the location, your intention was to use these units to provide short term self-contained holiday units. ● Specified units were furnished upon completion of construction. ● When furnishing the units was completed in specified time, they were marketed and rented on a website as self-contained holiday units for travellers. ● To provide you with a stable constant cash flow and counter the periods of vacancies, specified unit was leased, unfurnished under a specified time lease which commenced in specified time. ● Specified unit will be marketed and rented on a website as a self-contained holiday unit upon the expiry of this lease and after it becomes fully furnished. ● You are developing your own website to compliment the marketing and booking system. ● Central management is outsourced to an off-site entity to accept reservations, allocate units, receive payments and perform or arrange services. ● There is an on-call caretaker who carries out the co-ordination of cleaning and maintenance of the units and is the contact point for guests renting the units. ● Guests have exclusive access to one full apartment inclusive of their own kitchen, bathroom(s) and laundry. ● The usual length of guest occupancy is 3-5 days. ● All guests of specified units are travellers who have their principal place of residence elsewhere. ● Specified units are rented out on a per night rate basis although weekly and monthly stays are discounted from the standard daily rates. ● Projected rent for specified units is specified amount pa (exclusive of GST). ● A car hire service is currently being established as an option for guests and you are in the process of establishing more tourist/hospitality affiliates as the business gets more established. ● The units were never marketed for sale. ● The services provided to the occupants of the holiday specified units are detailed below: a. Guests are provided with a welcome pack on arrival which includes tea, coffee, milk, sugar and biscuits; b. Breakfast foods such as cereals milk etc. are provided to guests; c. Basic snack foods e.g. biscuits, crackers are provide to guest during the duration of their stay; d. Airport pickup/drop off services are provided upon request; e. Full linen/towels are provided to guests; f. Units are cleaned after each guest has vacated; g. A guest can request daily cleaning and extra linen and towels but they are required to pay extra charges; h. Local tourist attraction brochures are provided to guests; i. There is tea/coffee making facilities in each unit; j. Free wireless internet access is provided for all guests; k. Off street parking is provided for each self-contained unit; l. Each unit contains a refrigerator and television.

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 9-40 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 40-35(1), and | A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.