• Commercial residential premises

    Commercial residential premises include:

    • hotels, motels, inns
    • hostels, boarding houses
    • caravan parks, camping grounds
    • establishments that provide residential premises that are similar to hotels, motels, inns, hostels and boarding houses.

    Commercial accommodation is accommodation in these commercial residential premises.

    Some characteristics of commercial residential premises include:

    • multiple occupancy
    • central management
    • providing accommodation to paying guests.

    Selling commercial residential premises

    If you sell commercial residential premises, such as hotels, motels, inns, hostels or boarding houses, you are generally making a taxable sale and you are liable for GST of one-eleventh of the sale price.

    You may also sell commercial residential premises in either of the following ways:

    You can claim GST credits on purchases you make that relate to selling your property (subject to the normal rules on GST credits) – for example, the GST included in real estate agents’ fees.

    If you purchase commercial residential premises, you can claim the GST included in the purchase price of the property only if the seller did not use the margin scheme to work out the GST included in the price.

    You may also be able to claim a GST credit on other expenses, such as solicitors' fees, that relate to buying the property.

    Leasing commercial residential premises

    If you lease commercial residential premises, such as hotels, motels, inns, hostels or boarding houses, to be operated by the lessee to provide accommodation to individuals, you are making a taxable supply and you are liable for GST of one-eleventh of the lease payment made to you.

    You can claim GST credits on purchases you make that relate to leasing your property (subject to the normal rules on GST credits) – for example, the GST included in real estate agents’ fees.

    Supplying commercial accommodation

    As a general rule, if you are registered, or required to be registered, for GST, you are liable for GST on any commercial accommodation you supply to your guests.

    The amount of GST you are liable for depends on whether you provide short-term, or long-term accommodation, and whether your premises are predominantly for long-term accommodation.

    GST concessionary treatment

    If you supply long-term commercial accommodation, you can apply a concessionary GST treatment to your supplies of such accommodation. The applicable treatment will depend on whether or not your premises are predominantly for long-term accommodation.

    What supply attracts the concessionary treatment

    As a general rule, the GST concessionary treatment applies to the supply of the long-term accommodation including incidental supplies made in the course of providing that accommodation. They may include the supply of the following:

    • electricity
    • gas
    • air-conditioning or heating
    • cleaning and maintenance
    • phone, television and radio.

    What supply does not attract the concessionary treatment

    Where fees are charged separately for phone calls, mini-bar items, meals, personal laundry or in-house videos, there is a separate supply of these things and the concessionary treatment does not apply to such a supply. You must charge GST on your supplies of these things at the normal rate.

    Accounting for short-term accommodation

    You provide short-term accommodation to an individual when they stay for less than 28 continuous days in your premises. You must pay GST of one-eleventh of the price you charge for the accommodation.

    If you are using the accounts method, use your accounts to work out the amount of GST you need to report at 1A (GST on sales) or 1B (GST on purchases) on any short-term accommodation you provide.

    If you are using the calculation worksheet method, use the worksheet to calculate the amount to be reported at 1A and 1B.

    Accounting for long-term accommodation

    You provide long-term accommodation to an individual when they stay for 28 continuous days or more in your premises.

    Your premises are predominantly for long-term accommodation if, at least, 70% of your guests stay for 28 or more continuous days.

    You can choose to account for GST on your supplies of long-term commercial accommodation by either:

    Treating long-term accommodation as input taxed

    If you choose this option, you:

    • do not pay GST to us on long-term accommodation you supply
    • cannot claim any GST credits for the GST included in the price of goods and services you purchase to provide the long-term accommodation.
    • must apply it to all long-term accommodation you provide for a period of at least 12 months.

    Report the amount for all long-term accommodation you supply in the reporting period at G1 (total sales) on your activity statement.

    Because you do not pay GST under this option, you do not report anything in relation to your supplies of long-term accommodation at 1A (GST on sales) on your activity statement. You also cannot claim GST credits at 1B (GST on purchases) for any thing purchased that you use for supplying long-term accommodation.

    If you use the calculation worksheet method to work out your GST liability, you need to report the total sales amount for long-term accommodation at G1 (total sales) and also at G4 (input-taxed sales) on your worksheet.

    You must also pay GST on any short-term accommodation you supply. You can claim GST credits for the GST included in the price of purchases you make for the purpose of providing that short-term accommodation.

    Long-term accommodation – the concessionary treatment

    If you provide long-term accommodation, you can apply a concessionary GST treatment to your supplies of such accommodation. You do this by:

    • charging full GST for the first 27 days – in the same way as short-term accommodation
    • calculating GST on half of the normal GST-inclusive price of the accommodation from day 28 onwards.

    See GST concessionary treatment for information about what supply attracts the concessionary treatment.

    Example: Long-term accommodation

    Joshua accepts a temporary transfer to Brisbane for six months. He stays for the whole time at Eiffel Towers, a hotel that usually provides short-term accommodation.

    Eiffel Towers usually charges $220 a night, including GST.

    For the first 27 days of his stay, Joshua is charged at the normal rate – that is, $220 ($200 plus GST at 10%).

    From day 28 onwards, Eiffel Towers calculates GST on half the usual GST-inclusive price ($110). It adds GST of $11 (10% of $110) to the normal GST-exclusive charge ($200) to arrive at the price actually charged.

    So, Joshua is charged both:

    • $220 a night for the first 27 days
    • $211 a night for the rest of his stay.
    End of example

    Predominantly long-term accommodation – the concessionary treatment

    If you provide long-term accommodation and your premises are predominantly for long-term accommodation, the concessionary GST treatment you apply to your supply of that accommodation is different. If this is the case, you calculate GST on half of the normal GST-inclusive price of that accommodation from the beginning of the occupant's stay.

    See GST concessionary treatment for information about what supply attracts the concessionary treatment.

    Example: Predominantly long-term accommodation

    Moon River is a motel that provides predominantly long-term accommodation.

    The standard short-term room rate is $66 a night – that is, $60 plus $6 GST.

    To calculate the GST on its supplies of long-term accommodation, Moon River Motel halves the normal GST inclusive price of $66 to $33 and calculates 10% of $33 ($3.30). It adds GST of $3.30 to the GST-exclusive rate of $60, and accordingly charges long-term occupants $63.30 a night. This is the amount Moon River Motel would report for one night of long-term accommodation at G1 total sales on its activity statement.

    Another way of working out the GST is to multiply the GST-exclusive rate by 5.5% – for example, $60.00 x  5.5 /100 = $3.30.

    By applying this concessionary treatment, Moon River Motel is liable to pay $3.30 GST to the ATO for each night of long-term accommodation it supplies. If the concession did not apply, the normal GST would be $6.

    End of example

    See also:

    • GSTR 2012/7 Goods and services tax: long-term accommodation in commercial residential premises

    Accounting for purchases of long-term commercial accommodation

    If you purchase long-term commercial accommodation, you report your purchases of long-term accommodation on your activity statement in the following way if both:

    • you have purchased long-term accommodation in commercial residential premises for the purposes of your business
    • GST was included in the amount you paid or are liable to pay.

    Report at G11 (non-capital purchases) the total amount of GST you paid in the price of the commercial accommodation (usually shown on the tax invoice) multiplied by 11.

    If you are using the accounts method to prepare your activity statement, use the information in your accounts to work out the amount of GST to report at 1A (GST on sales) or GST credit at 1B (GST on purchases).

    If you are using the calculation worksheet method, use the worksheet to calculate the amount of GST to report at 1A (GST on sales) or 1B (GST on purchases).

    Leasing your holiday apartment or unit

    You make an input-taxed supply if you lease your individual apartment or unit to either:

    • a guest
    • a management company (that will use it as part of commercial residential premises).

    This means you both:

    • are not liable for GST on the income
    • cannot claim GST credits for anything you purchase or import for the purpose of leasing the premises.

    Example: In a commercial residential complex

    Aiko owns a strata titled apartment in an apartment complex. When she leases her apartment to Mink Management Services (MMS), the supply is input taxed.

    MMS will group Aiko's apartment with other apartments in the complex and let them out in the same manner as a hotel, motel, inn or hostel would.

    Even though Aiko's apartment is located within commercial residential premises, her apartment does not, by itself, have the characteristics of commercial residential premises – it is residential.

    This means Aiko both:

    • is not liable for GST on the lease income
    • cannot claim GST credits for anything she purchases or imports for the purpose of leasing the premises.
    End of example

    See also:

    • GSTR 2012/6 Goods and services tax: commercial residential premises

    Selling your holiday apartment or unit

    If you sell your apartment, you are selling:

    • residential premises
    • unless the apartment is new residential premises, your supply is input taxed, regardless of whether the apartment is located within commercial residential premises.

    This means you both:

    • are not liable for GST on the income
    • cannot claim GST credits for anything you purchase or import for the purpose of making the sale.

    See also:

    • GSTR 2012/5 Goods and services tax: residential premises
      Last modified: 05 Jul 2016QC 21960