GST issues registers

Property and construction

Section 03 - commercial residential premises

(a) added, (u) updated, (w) withdrawn

3.1 General

3.1.1 Do all the main characteristics of 'commercial residential premises' have to be satisfied?

For source of ATO view, refer to paragraphs 11-12 of GSTR 2012/6 - Goods and services tax: commercial residential premises.

ATO position

The main characteristics should be shown to some degree.

3.1.2 Are all boarding houses treated as 'commercial residential premises'?

This issue is now superseded by Goods and Services Tax Ruling GSTR 2012/6 - Goods and services tax: commercial residential premises.

3.1.3 Does the rental of weekend cottages and other different styles of accommodation by a central manager satisfy the characteristics of 'commercial residential premises'?

For source of ATO view, refer to GSTR 2012/6 - Goods and services tax: commercial residential premises.

ATO position

GSTR 2012/6 provides that if you supply accommodation in a single detached or semidetached home on its own land, where the guest is granted the right to use the entire premises, they are not commercial residential premises, regardless of the length of stay. These premises are not in the nature of a hotel, motel, inn, hostel or boarding house. Where accommodation of different styles is managed and let centrally and offered by an entity across a range of locations (and not through an agent for others), the various premises must be classified individually using the characteristics that each premises exhibits. It is unlikely that the 'multiple occupancy' characteristic would be satisfied in this case. However, where separately titled adjacent cottages or villas are combined and then offered for letting by an enterprise, they can form commercial residential premises. Adjacent, in this context, means on adjoining or abutting land. Residential premises making up commercial residential premises by being aggregated and let in this manner are similar to offering resort style accommodation. These forms of accommodation are more or less self contained accommodation offered within the larger precincts of the resort.

3.2 Caravan parks and camping grounds

3.2.1 Is GST payable on the rental of caravans and camping sites?

For source of ATO view, refer to:

•

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

•

the general principles in GSTB 2001/2 - Accommodation in caravan parks and camping grounds.

ATO position

GST is payable on taxable supplies (section 9-5 of the GST Act). Supplies of commercial accommodation in commercial residential premises satisfy the elements of a taxable supply. The definition of 'commercial residential premises' specifically includes 'a caravan park or a camping ground' (section 195-1 of the GST Act). However, special rules apply to the amount of GST payable in relation to long term accommodation in commercial residential premises. See 3.2.4 below. GSTB 2001/2 and GSTB 2001/3, dealing with accommodation in caravan parks and camping grounds, provide further information on this issue.

3.2.2 What sort of accommodation is included in the definition of 'a caravan park or a camping ground'?

For source of ATO view, refer to:

•

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

•

the general principles in GSTB 2001/2 - Accommodation in caravan parks and camping grounds.

ATO position

Section 195-1 of the GST Act provides that 'commercial residential premises' means 'a caravan park or a camping ground or anything similar to residential premises described' as a caravan park or a camping ground. The rental of a caravan, demountable home, permanent cabin or villa on site and the rental of a site for a caravan or a demountable home is caught by this definition even though most individuals who rent sites pay for all associated expenses (for example, electricity, gas) (GSTR 2012/6).

3.2.3 Are retirement villages or nursing homes included within 'a caravan park or a camping ground; or anything similar to residential premises described' as a caravan park or a camping ground (i.e. a home park)?

Non-Interpretative - straight application of the law.

ATO position

No. A separate guideline relating specifically to retirement villages is published on the Australian Taxation Office (ATO) website.

3.2.4 How is GST calculated on the supply of 'commercial accommodation'?

Non-Interpretative - straight application of the law

ATO position

For further information on this issue refer to 'Commercial residential premises' in GST and property (NAT 72957).

3.2.5 Will GST concessions apply to fees and charges related to commercial accommodation?

For source of ATO view, refer to GSTR 2012/7 - Goods and services tax: long-term accommodation in commercial residential premises

ATO position

The GST concessional treatment applies to taxable supplies of 'commercial accommodation' that are provided in commercial residential premises and provided as long-term accommodation (section 87-5 of the GST Act). The meaning of 'commercial accommodation' under section 87-15 of the GST Act means the right to occupy the whole or any part of commercial residential premises, including, if it is provided as part of the right to so occupy, the supply of:

(a)

cleaning and maintenance, or

(b)

electricity, gas, air-conditioning or heating, or

(c)

telephone, television, radio, or any similar things.

It does not include the provision of meals, personal laundry, drinks, cost of telephone calls or service charges. Any service that is provided separately to that which is supplied as part of the tariff is unlikely to be considered part of commercial accommodation and therefore the GST concession will not apply, for example, the provision of separately metered electricity, mini bar items, personal laundry or dry cleaning charges, meals and phone calls. These items will attract the full rate of 10% of the value.

For further information on this issue refer to 'Commercial residential premises' in GST and property (NAT 72957).

3.2.6 Does the guest in commercial residential premises have to be present at all times during the whole long-term stay to satisfy the continuity requirement?

For source of ATO view, refer to GSTR 2012/7 - Goods and services tax: long-term accommodation in commercial residential premises.

ATO position

Section 87-20 of the GST Act specifically provides that 'long-term accommodation is provided to an individual if commercial accommodation is provided, for a continuous period of 28 days or more'. A guest who is provided with long-term accommodation in a hotel, motel, inn, hostel, boarding house, caravan park, camping ground or similar premises does not need to physically occupy the premises for the entire duration of the stay for the stay to be continuous. For example, a guest who occasionally leaves the premises overnight to travel, will maintain continuity of the stay provided they are charged for the days they are absent and their suite or room may not be let in their absence. If management moves a guest to another room either when a guest is present or away and charges for the new room, this will be treated as one continuous stay.

In relation to caravan parks, the right to occupy is granted when a site is hired for a caravan, even if the caravan is left unoccupied for most of the time. The continuity of the stay is not broken. Where the operator moves a caravan from one site to another, but effectively maintains the bookings, this is a continuous site rental. However, if the owner of a caravan and the park operator agree to 'store' the caravan in another area of the park for an agreed fee, the continuity of the site rental ceases when the caravan is moved. The storage breaks the continuity of the stay as the storage of the caravan is a separate supply, subject to the basic rules (section 9-5 of the GST Act).

3.2.7 How are the 28 days calculated in relation to commercial residential premises that are not predominantly providing long-term commercial accommodation?

For source of ATO view, refer to:

•

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

•

the general principles in GSTB 2001/2 - Accommodation in caravan parks and camping grounds.

ATO position

When calculating the 28 days, the day on which the guest is first provided with the commercial accommodation (including any day prior to 1 July 2000) is included in the count, however, the day on which the guest ceases to be provided with the commercial accommodation is excluded.

3.2.8 How is the 70% calculated when determining whether the commercial residential premises are 'predominantly for long-term accommodation'?

For source of ATO view, refer to:

•

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

•

the general principles in GSTB 2001/2 - Accommodation in caravan parks and camping grounds.

ATO position

The 70% figure is based upon the number of supplies or number of bookings rather than the number of individuals. For more information on how to work out whether your commercial residential premises are predominantly for long-term accommodation, see GSTR 2012/7 and page 2 of GSTB 2001/2.

3.3 Marina berths

3.3.1 Are marinas similar to caravan parks and therefore treated in the same manner as 'commercial residential premises'?

For source of ATO view, refer to the general application of the principles in GSTB 2001/2 - Accommodation in caravan parks and camping grounds.

ATO position

Pursuant to an amendment to the GST Act, which received royal assent on 21 December 2000, the definition of commercial residential premises in section 195 of the GST Act was broadened to include a new paragraph (da) as follows:

(da)

a marina at which one or more of the berths are occupied, or are to be occupied, by ships used as residences.

For information about the GST treatment of long-term accommodation at marinas, see GSTR 2012/6.

3.4 Strata title holders

3.4.1 When does the letting of strata titled accommodation fall within the scope of 'commercial accommodation'?

For source of ATO view, refer to GSTR 2012/6 - Goods and services tax: commercial residential premises.

ATO position

The letting of strata titled accommodation will be a supply of accommodation in commercial residential premises when the main characteristics of commercial residential premises listed in GSTR 2012/6 are met. Satisfying the characteristics of 'central management', 'management offers accommodation in its own right' and 'multiple occupancy' will generally not be met by strata titled accommodation.

To establish central management and that management offers accommodation in its own right, the manager will have to show that control over the premises exists. The test for control is whether the manager holds a lease or licence over the premises or has been granted rights that give the manager a legal interest in the premises. Therefore, a distinction has to be made between:

(a)

managers who hold a lease or licence from the owner (control exists); and

(b)

managers who are allowed to let premises on the owner's behalf under the terms of an agreement or arrangement and the manager merely collects rent on behalf of the owners (control does not exist).

To establish multiple occupancy, the manager will have to show that the premises provide sleeping accommodation to a number of guests in separate apartments/units etc at one time. The letting of a privately owned holiday apartment/unit through a local real estate agent will not satisfy the multiple occupancy characteristic. The letting of a privately owned holiday apartment/unit together with other holiday apartments/units in a complex through an on-site agent may satisfy the multiple occupancy characteristic as the manager aggregates these units/apartments under their own control so that this characteristic is met. However, the central management characteristic is not satisfied (that is, the manager does not hold a lease or licence nor granted rights over the units). See also paragraphs 95 to 98 of GSTR 2012/6.

3.4.2 If multiple strata titled apartments are owned by an individual and used for letting, are those apartments commercial residential premises?

For source of ATO view, refer to GSTR 2012/6 - Goods and services tax: commercial residential premises.

ATO position

The test is one of fact and degree. It does not matter whether an individual owns three, ten or forty units/apartments, the main characteristics of commercial residential premises still need to be satisfied. This requirement may be met if an individual owns several units in one complex and makes arrangements for the letting out of the units in such a way that the characteristics of commercial residential premises are satisfied.

3.4.3 Where an owner of a strata titled apartment leases the apartment to a manager who aggregates it with other apartments for letting out as commercial residential premises, what are the GST implications for the owner?

For source of ATO view, refer to GSTR 2012/6 - Goods and services tax: commercial residential premises.

ATO position

When the owner of the strata titled apartment leases the apartment to the manager, the owner is making an input taxed supply under section 40-35 of the GST Act. Even though the apartment takes on the character of commercial residential premises when it is aggregated with the other apartments by the manager, it does not by itself have the characteristics of commercial residential premises. Because the owner is making an input taxed supply, the owners cannot claim input tax credits for any acquisitions in relation to that supply.

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