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  • Commercial residential premises

    Commercial residential premises include:

    • hotels, motels, inns (or similar establishments)
    • hostels, boarding houses (or similar establishments)
    • caravan parks, camping grounds.

    Characteristics of commercial residential premises include:

    • commercial intention – where the premises are operated on a commercial basis or in a business-like manner
    • multiple occupancy – the premises have the capacity to provide accommodation to several unrelated guests or residents at once in separate rooms ,or in a dormitory
    • the premises offer accommodation to the public or a segment of the public
    • providing accommodation is the main purpose of the premises
    • the premises have central management to accept reservations, allocate rooms and arrange for guest services
    • the operator of the premises supplies accommodation in their own right
    • management provides, or arranges for, services and facilities for guests
    • the occupants usually have the status of guests.

    On this page:

    See also:

    Selling commercial residential premises

    If you sell commercial residential premises, you are generally making a taxable sale.

    You may also sell commercial residential premises:

    You can claim GST credits on purchases you make that relate to selling your property – for example the GST included in a real estate agent's fees or solicitor's fees.

    Purchasing commercial residential premises

    If you purchase commercial residential premises, you may be entitled to claim the GST included in the purchase price of the property unless the seller used the margin scheme to work out the GST included in the price.

    See also:

    Leasing commercial residential premises

    If you lease commercial residential premises to someone (who uses them to run their own accommodation business), 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, for example the GST included in real estate agent fees.

    Supplying commercial accommodation

    'Commercial accommodation' is accommodation in commercial residential premises.

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

    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.

    Short-term commercial accommodation

    You provide short-term accommodation to an individual when they stay for fewer 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.

    Long-term commercial accommodation

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

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

    If you supply long-term commercial accommodation, you are eligible for one of the following treatments to account for GST:

    As a general rule, the GST concessions apply to the supply of the accommodation plus incidental supplies, such as:

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

    GST concessions do not apply where fees are charged separately – for example for phone calls, mini-bar items, meals, personal laundry or in-house videos. You must charge GST on your supply of these things at the normal rate.

    See also:

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

    If you choose this option, you:

    • do not pay GST 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 this treatment 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). You also cannot claim GST credits at 1B (GST on purchases) for anything 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.

    Concessionary treatment for long-term accommodation

    The concessionary treatment for long-term accommodation consists of:

    • charging full GST for the first 27 days, then
    • charging concessionary GST from day 28 onwards.

    The concessionary GST for long-term accommodation is determined by calculating GST on half of the normal GST-inclusive price of the accommodation.

    Example: Concessionary GST for 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 ($200 plus GST at 10%).

    For the first 27 days of his stay, Joshua is charged at the normal rate – that is, $220.

    On day 28, Eiffel Towers calculates the concessionary GST. Half of the usual GST-inclusive price ($220) is $110. GST on that is $11 (10% of $110). Eiffel Towers adds that amount to the normal GST-exclusive charge ($200), arriving at a new price of $211.

    So, Joshua is charged:

    • $220 a night for the first 27 days
    • $211 a night for the rest of his stay.
    End of example
    Concessionary treatment for predominantly long-term accommodation

    If you provide predominantly long-term accommodation, you calculate GST on half of the normal GST-inclusive price of that accommodation from the beginning of the occupant's stay.

    Example: Concessionary GST for 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.

    End of example

    Using long-term commercial accommodation

    If you have paid for long-term commercial accommodation, report this on your activity statement in the following way if both:

    • you paid for it for business purposes
    • 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 (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).

    Holiday apartments and units

    A single holiday apartment or unit is classed as 'residential premises', even when it is within commercial residential premises.

    Leasing your individual apartment or unit to either a guest or a management company (that uses it as part of commercial residential premises) is an 'input-taxed supply'.

    This means you:

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

    Example: Residential apartment in a commercial residential complex

    Aiko owns a strata-titled apartment in an apartment complex. She leases her apartment to Mink Management Services (MMS).

    MMS groups Aiko's apartment with other apartments in the complex and lets them out as part of their boutique hotel business.

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

    This means the lease by Aiko to MMS is input taxed and Aiko:

    • is not liable for GST on the lease payments
    • cannot claim GST credits for anything she purchases or imports for the purpose of leasing the premises. However, the supply by MMS is taxable.
    End of example

    Selling your holiday apartment or unit

    If you sell your apartment, unless the apartment is new residential premises, the sale is input taxed, regardless of whether the apartment is located within commercial residential premises.

      Last modified: 20 Nov 2017QC 21960