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Edited version of your written advice
Authorisation Number: 1013040823108
Date of advice: 23 June 2016
Ruling
Subject: Leased car parking spaces and GST
Question 1
Is the supply of residential car parking spaces exempt from GST?
Answer
No, the supply of residential car parking spaces is not exempt from GST, if you are registered or required to be registered for GST.
Relevant facts and circumstances
• You are a sole trader.
• You are neither registered nor required to be registered for GST.
• You are in the business of leasing a large number of residential car parking spaces (parking spaces) from individual tenants and/or property owners and re-leasing the parking spaces to individuals, your customers.
• You do not have formal/written contracts with the owners of the parking spaces. However, you have agreed with the owners to have unlimited access to a parking spaces for a month at a time. The cost to you of leasing the parking spaces varies depending on the location.
• You re-lease the parking spaces to customers. Although the agreements vary with each customer, generally customers are given access to your parking space for a stipulated period of time. You usually require a refundable bond for a remote to access the parking space.
• You currently have parking spaces leased in capital cities in Australia.
• You expect to increase the number of leased car parking spaces within the next few years.
• You do not lease and re-lease anything other than an area to park a car - parking spaces.
Assumption
• We have assumed that your GST turnover does not satisfy or exceed the registration turnover threshold of $75,000.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999, Section 9-5
A New Tax System (Goods and Services Tax) Act 1999, Section 9-20
A New Tax System (Goods and Services Tax) Act 1999, Section 23-5
A New Tax System (Goods and Services Tax) Act 1999, Section 40-35
A New Tax System (Goods and Services Tax) Act 1999, Section 87-15
A New Tax System (Goods and Services Tax) Act 1999, Section 195-1
Reasons for decision
For the purposes of the GST law, that is the A New Tax System (Goods and Services Tax) Act 1999, if you register or are required to be registered, the supplies of leasing parking spaces that you make may be:
• 'taxable supplies' - GST is payable and input tax credits (GST credits) can be claimed
• 'GST-free' - no GST is payable and GST credits can be claimed; or
• 'input taxed' - no GST is payable and GST credits cannot be claimed.
Because there is no liability to GST in respect of GST-free or input taxed supplies they are sometimes informally referred to as 'GST exempt'.
Taxable supplies
Under section 9-5 of the GST law you make a taxable supply if:
(a) you make the supply for consideration; and
(b) the supply is made in the course or furtherance of an enterprise that you carry on; and
(c) the supply is connected with Australia ('indirect tax zone'); and
(d) you are registered or required to be registered.
You lease (supply) parking spaces for payment (consideration) from your customers.
You supply parking spaces in the course of an enterprise (business) that you carry on.
The parking spaces are in Australia. Therefore, your supply of parking spaces is connected with Australia.
You are neither registered nor required to be registered for GST. We have assumed that your GST turnover does not satisfy or exceed the registration turnover threshold of $75,000.
If you register or are required to be registered for GST, your supplies of parking spaces would be taxable supplies. Currently, you are not registered or required to be registered for GST. Therefore, you do not make taxable supplies and are not liable to GST.
For completeness, we will explain why your supplies of parking spaces are not GST-free or input taxed supply.
GST-free supplies
The supply of car parking spaces is not covered by any of the GST-free provisions in the GST law.
Input taxed supplies and sharing economy platforms
In your private ruling application you indicated that the supply you make is similar to sharing economy platforms that lease 'residential premises'.
You explained that your business of leasing residential car spaces should have the same GST treatment that is, 'GST exempt', like sharing economy platforms that lease residential premises.
Unlike sharing economy platforms that lease residential premises, parking spaces are not residential premises under the GST law.
Residential premises are properties that are to be used predominantly for residential accommodation that is, for occupation or intended and capable of being occupied as a residence by people, regardless of the term of occupation.
Goods and Services Tax Ruling GSTR 2012/5 explains that the physical characteristics of premises are a single test that determines if it is a residence. In turn, these characteristics determine when the use or proposed use is for residential accommodation.
The parking spaces are described as an area to park a car. The parking space does have any basic living facilities, such as a kitchen or toilet/shower facilities. The car parking spaces are not intended, nor capable of being occupied as a residence or for residential accommodation.
Goods and Services Tax Ruling GSTR 2012/5 explains that the supply of a car parking space that is not supplied with residential premises is not a residence premises to be used predominately for residential accommodation. Relevantly, paragraph 17 states:
17. A supply of a garage, car-parking space, or storage area that is supplied separately from the supply of a residential unit is not a supply of residential premises to be used predominantly for residential accommodation. This may occur, for example, where the garage, car-parking space, or storage area is supplied after the original supply of the residential unit, or where the garage, car-parking space, or storage area is located in a separate building. The supply is a taxable supply where the requirements of section 9-5 are satisfied.
The GST law also refers to the supply of commercial residential premises. Again, the reference is to residential accommodation, but in a commercial arrangement, including a hotel, motel, inn, hostel or boarding house or anything similar.
You do not lease residential or commercial residential premises and your supplies are not input taxed. Parking spaces that are supplied separately from a supply of residential accommodation is neither residential premises nor commercial accommodation for the purposes of the GST law.
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