Private ruling: GST and nominal consideration
Date of advice: 3 October 2022
Published: December 2022
Ruling period: 1 September 20XX till quarter ending 31 December 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Will the sub-lease of the residential premises by Entity A to Entity B be a GST-free supply pursuant to section 38-250 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, the sub-lease by Entity A to Entity B will be considered GST-free provided that, using the proposed methodology in Question 3, the supply is for consideration that is for less than 75% of the GST-inclusive market value of the supply. | Q2: Will the sub-lease of residential premises by Entity A to Entity C be a GST-free supply pursuant to section 38-250 of the GST Act? | A2: Yes, the sub-lease by Entity A to Entity C will be considered GST-free provided that, using the proposed methodology in Question 3, the supply is for consideration that is for less than 75% of the GST-inclusive market value of the supply. | Q3: For the purposes of section 38-250 of the GST Act, does the Commissioner of Taxation (Commissioner) agree with the proposed method for determining the market value of supplies of residential premises made by Entity A under the sub-lease to Entity C and the head-lease to Entity B? | A3: Yes, the Commissioner agrees with the proposed methodology for determining the market value of supplies of the residential premises. Relevantly, the methodology has appropriately applied the 'same supply test' and/or the 'similar supply test' discussed in the Charities Consultative Committee, Non-commercial activities of charities, cost of supply and market value tests (Issues Register). According to paragraph 44 of the Issues Register charities need to take into account the following when making the comparison: • identifying the market • the locality of the supply or area of the market • the quality or nature of supply • the size, quantity or duration of supply • the conditions of supply • other charitable or commercial suppliers, and • the number of comparisons. The proposed methodology effectively compares the same and/or similar types of residential premises for categorising the accommodation provided. On this basis the Commissioner agrees with the proposed methodology for determining the market value of supplies of the residential premises.

Relevant facts and circumstances: The applicant provided the relevant contracts which define the scheme.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 38-250