• Commercial residential premises and GST

    The sale and lease of commercial residential premises is subject to goods and services tax (GST).

    Commercial residential premises include:

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

    Retirement villages are not commercial residential premises for GST purposes.

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    Buying and selling commercial residential premises

    If you sell commercial residential premises (such as hotels, motels, inns, hostels or boarding houses), you're generally liable for GST on the sale price. This means you:

    • pay GST of one-eleventh of the sale price
    • can claim GST credits on your purchases that relate to selling the property (subject to the normal rules on GST credits) – such as the GST included in a real estate agent's fees.

    GST applies differently if you sell commercial residential premises under the margin scheme or as a going concern.

    If you purchase commercial residential premises, you can claim a credit for the GST included in the purchase price if either:

    • the seller did not use the margin scheme to work out the GST included in the price
    • the sale was not a GST-free sale of a going concern to you, and the seller was registered, or required to be registered, for GST.

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

    Leasing commercial accommodation

    If you're registered, or required to be registered, for GST, you're generally liable for GST on commercial accommodation you lease to others. Commercial accommodation is accommodation in commercial residential premises, such as hotels, motels, inns, hostels or boarding houses.

    Your GST liability depends on whether you provide short-term, long-term or predominantly long-term accommodation.

    You provide:

    • short-term accommodation – when a guest stays for less than 28 continuous days, in which case you're liable for GST of one-eleventh of the price you charge for the accommodation
    • long-term accommodation – when a guest stays for 28 or more continuous days, in which case concessionary GST treatment applies
    • predominantly long-term accommodation – if at least 70% of the individuals to whom you provide commercial accommodation stay for 28 or more continuous days, in which case concessionary GST treatment applies.

    See also:

    Last modified: 01 Nov 2016QC 23656