ATO Interpretative Decision
ATO ID 2001/469 (Withdrawn)
Goods and Services Tax
GST and lease of a Display HomeFOI status: may be released
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The ATO view on this issue is contained in the Property and Construction Industry Partnership - Issues Register - Section 10 - Leased or rented property - 10.3.5.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, an owner of a house, making an input taxed supply under section 40-35 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies its house by way of a lease to be used by the lessee as a display home?
Decision
Yes, the entity is making an input taxed supply under section 40-35 of the GST Act when it supplies its house by way of a lease to be used by the lessee as a display home.
Facts
The entity is an owner of a house. The entity is leasing the house to a builder who uses the house as a display home. The house has all the physical characteristics that enable it to be used for residential accommodation.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Under subsection 40-35(1) of the GST Act, a supply of premises by way of lease is input taxed if it is a supply of residential premises.
A house is a residential premise as it is intended to be occupied, and is capable of being occupied, as a residence (section 195-1 of the GST Act). However, paragraph 40-35(2)(a) of the GST Act states that the supply is input taxed only to the extent that the premises are to be used predominantly for residential accommodation.
In order to determine whether the supply is input taxed, the issue that needs to be considered is whether the house is 'to be used predominantly for residential accommodation'.
It is considered that it is the physical characteristics of the premises that determine whether or not premises 'are to be used predominantly for residential accommodation'.
The premise leased as a display home is a house and has all the physical characteristics that enable it to be used for residential accommodation. Therefore, it is considered that the house being leased as a display home is to be used predominantly for residential accommodation.
Therefore, the supply of the house by way of lease, to be used by the lessee as a display home is an input taxed supply under section 40-35 of the GST Act.
Date of decision: 20 August 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 40-35
subsection 40-35(1)
paragraph 40-35(2)(a)
section 195-1
Keywords
Goods & services tax
GST property & construction
GST residential premises
GST residential rents
Input taxed supplies
ISSN: 1445-2782
| Date: | Version: | |
| 20 August 2001 | Original statement | |
| You are here | 9 December 2005 | Archived |
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