Goods and Services Tax Ruling GSTR 2018/1
Date of effect: 22 August 2018

What this ruling is about: 1. This Ruling discusses when a supply of real property is connected with the indirect tax zone under subsection 9-25(4) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). 2. For a supplier to be liable for goods and services tax (GST) on a taxable supply, one of the requirements is that the supply must be connected with the indirect tax zone. [1] In this Ruling, the 'indirect tax zone' is referred to as 'Australia'. 3. While this Ruling does not address whether a particular supply of real property is a taxable supply, references and examples are included to explain the effect of certain provisions on whether a supply of real property is a taxable supply.


Ruling: Supplies of real property: 6. A supply of real property is connected with Australia if the real property, or the land to which the real property relates, is in Australia. [2] 'Land' in this context means the physical land. 7. Real property is defined to include: 8. The reference in subsection 9-25(4) to 'land to which the real property relates' means that an interest in, or right over land is connected with Australia if the physical land to which the interest or right over it relates, is in Australia. The test is the location of the land and not the location of the right. [4] 9. A supply of real property [5] is connected with Australia if it involves, for example: | Supplies of rights to accommodation in Australia: 10. There are a variety of different means by which accommodation in Australia may be provided. The supply of such accommodation, including a supply of rights to the accommodation, will be a supply of real property connected with Australia when the accommodation is in Australia. This is because the supply is: 11. The supply of rights to accommodation will be a supply connected with Australia irrespective of whether it provides any actual accommodation to the guest. For example, the supplier could be a tour operator which grants a traveller the right to stay at a hotel in Australia, where the hotel is operated by a different entity. [7] The tour operator is making a supply of rights to accommodation in Australia which is a supply of real property connected with Australia. Example 1: contractual right exercisable over or in relation to land - Australian tour operator 12. Australian tour operator Big Bight Pty Ltd acquires 140 nights of accommodation in Perth from an Australian hotel chain. This entitles Big Bight Pty Ltd to on-sell these nights of accommodation to its customers. The reservations will then be honoured by the Australian hotel chain. Big Bight Pty Ltd makes the following supplies of the accommodation rights they acquired: 13. In each of these cases, Big Bight Pty Ltd is making a supply of real property connected with Australia. This is because the accommodation is situated in Australia. Example 2: a supply of real property - non-resident tour operator 14. Following on from Example 1 of this Ruling, the New Zealand tour operator on-sells (as principal) five nights accommodation in Perth to two New Zealand resident tourists, as part of a package tour of Western Australia. The supply of accommodation by the New Zealand tour operator to the New Zealand tourists is also a supply of real property connected with Australia, even though it is supplied by a non-resident tour operator. [8]


Appendix: 17. The following is a detailed contents list for this Ruling: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Previously released in draft form as GSTR 2017/D2


Summary - what this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | Relevant provisions: 4. The following diagram shows how the provisions dealt with in this Ruling fit in with the other requirements for a supply to be a taxable supply. | Previous rulings: 5. This Ruling replaces the Commissioner's view on supplies of real property as provided in Goods and Services Tax Ruling GSTR 2000/31 Goods and services tax: supplies connected with Australia and replaces Goods and Services Tax Determination GSTD 2004/3 Goods and services tax: Is a supply of rights to accommodation a supply of real property for the purposes of the A New Tax System (Goods and Services Tax) Act 1999? | Date of effect: 15. This Ruling applies from 22 August 2018. | 16. Additionally, the Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). | Commissioner of Taxation 22 August 2018 | Appendix 1 - Detailed contents list


Related rulings: GSTR 2001/7 GSTR 2003/7 TR 2006/10
Legislative references: ANTS(GST)A 1999 ANTS(GST)A 1999 9-5 ANTS(GST)A 1999 9-5(a) ANTS(GST)A 1999 9-5(b) ANTS(GST)A 1999 9-5(c) ANTS(GST)A 1999 9-5(d) ANTS(GST)A 1999 9-25(4) ANTS(GST)A 1999 38-190(1) ANTS(GST)A 1999 188-15(3)(c) ANTS(GST)A 1999 188-20(3)(c) ANTS(GST)A 1999 188-25 ANTS(GST)A 1999 195-1 TAA 1953
Case references: Saga Holidays Ltd v. Commissioner of Taxation [2006] FCAFC 191 2006 ATC 4841 (2006) 64 ATR 602 (2006) 156 FCR 256 (2006) 237 ALR 559
Other references: Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998