Edited version of private advice

Authorisation Number: 1051851725977

Date of advice: 10 September 2021

Ruling

Subject: Leasing of premises

Question

Are you making a taxable supply for Goods and Services Tax (GST) purposes under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you rent each of the two cabins at your property in Australia to guests?

Answer

No.

This ruling applies for the following period:

10 September 20XX to 9 September 20XX

Relevant facts and circumstances

You have an Australian Business Number (ABN). However, you are not registered for GST.

You are registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC).

You earn money from your cash investments and net rentals from your residential property investments. A proportion of this (net of operating expenses) is annually given by you to other charities.

You run your organisation at a profit in order to give away the net money which is generated. Extensive records are kept.

Your ruling relates to two cabins which you rent out to guests via Airbnb. The cabins are marketed as accommodation only, for holiday letting.

The cabins are located on a large property that you own in Australia. The cabins are a few hundred metres apart.

Other buildings on the same property, a few hundred metres from the cabins, include a house that is leased via a local real estate agent to tenants under a residential tenancy and an office from which your organisation is administered. The office is not used as a concierge desk or reception desk for cabin guests.

Airbnb largely looks after the coordination of guests into your cabins, takes the bookings and collects the rent.

You have employed a local lady to clean the cabins following each stay. No cleaning occurs during a stay.

You do not provide or arrange for 24 hour reception services for cabin guests. The local cleaning lady sometimes liaises with guests, including providing incoming guests with the code for the front door key box. She is available via a mobile phone to assist guests as needed; although this is very rarely needed as guests usually look after themselves.

The arrangement for the cabins is much the same as for the main residential house, except they are managed by Airbnb and the guests do not pay additional outgoings such as electricity and garbage collection costs. The rent for the cabins includes costs such as electricity, gas, and garbage collection. Guests do not need to arrange these services themselves.

Wi-fi access is provided to the cabins which allows guests to connect to their own entertainment providers, such as Netflix. Internet access is provided via a code to cabin guests who can then access their own entertainment platforms. You include the internet access cost in the rent, but guests cover their own entertainment platform costs.

The cabins are self-contained. They are fully furnished with tables, chairs, beds, crockery, and cutlery. Each cabin consists of two (two bed) bedrooms, a combined lounge/kitchen, a bathroom and toilet, and a veranda.

You do not provide any meals to your guests; nor do you organise for someone else to provide meals. You also do not provide any breakfast ingredients for your guests.

Guests provide their own food and prepare their own meals in the cabin's kitchen.

The cabins are cleaned at the end of each stay and the cleaning cost is included in the rent. Linen for the cabins is changed at the end of each stay when cleaning occurs. There are no laundry facilities in the cabins. The laundry of the linen is done by the cleaner (at a separate facility) at the end of each stay when a clean is completed.

No services are provided by you to guests, or arranged by you for guests, other than those services mentioned above. For example, you do not arrange food deliveries, etc. for guests. You also do not arrange/book tours for guests; however, you do provide some limited contact details and guests then make their own arrangements.

Communal facilities/activities include walking anywhere on the property, swimming in the river, using the barbeque in the cabana, or using the fire pit. Cabin guests arrange this themselves.

There is a minimum two night stay applied in relation to the cabins, but guests usually stay longer, some up to a fortnight. Rent is charged as a minimum two night stay, multiplied by the numbers of nights stayed. The same rate is applied for longer stays (i.e. rents do not vary for longer terms).

Guests do not enter into a residential lease agreement. They enter into an agreement with Airbnb which provides them with exclusive access to the cabin for the time they have booked.

Guests are not allowed to make minor alterations to the cabins or to have pets. Usual maintenance on the cabins is your responsibility. If damage is caused by the guests, this is usually recouped from a bond held by Airbnb.

Guests would be responsible for the cost of repairs if the damage has obviously been done by them. Also, if guests leave the cabins in an unacceptable mess, then the cost of additional cleaning is negotiated and taken from a bond if necessary.

A cabin is never shared by different groups. Normally, they are occupied by families or groups of friends spending time together.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 40-35

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Detailed reasoning

Section 9-5 of the GST Act provides you make a taxable supply if:

•         you make the supply for consideration

•         the supply is made in the course or furtherance of an enterprise that you carry on

•         the supply is connected with the indirect tax zone (essentially Australia), and

•         you are registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

None of the GST-free provisions in the GST Act operate to make the rental of your two cabins GST-free supplies.

It is therefore necessary to determine whether the rental of each of your two cabins is an input taxed supply.

It is noted that you are not currently registered for GST. Should your only supplies be input taxed supplies of residential premises, you would also not be required to be registered for GST, regardless of the income generated from such supplies. You would only be required to register for GST if you were supplying commercial residential premises (which are generally taxable supplies) and the total value of rent received and/or likely to be received from such supplies for the relevant 12 month period reached or exceeded $150,000.

Input taxed supplies are not included in the calculation of turnover for GST purposes. As turnover, along with carrying on an enterprise, determines when an entity is required to be registered for GST, where you are carrying on an enterprise but your GST turnover does not meet the registration turnover threshold, you are not required to register for GST (refer to Divisions 23 and 188 of the GST Act).

Division 40 of the GST Act deals with input taxed supplies and section 40-35 of the GST Act (which deals with residential rent) relevantly provides as follows:

(1)  A supply of premises by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence) is input taxed if:

(a)  the supply is of *residential premises (other than a supply of *commercial residential premises or a supply of accommodation in commercial residential premises provided to an individual by the entity that owns or controls the commercial residential premises); or

(b)  the supply is of *commercial accommodation and Division 87 (which is about long-term accommodation in commercial premises) would apply to the supply but for a choice made by the supplier under section 87-25.

(1A) ...

(2)  However:

(a)  The supply is input taxed only to the extent that the premises are to be used predominantly for residential accommodation (regardless of the term of occupation); and

(b)  ...

(* denotes a defined term in section 195-1 of the GST Act).

As seen from section 40-35 of the GST Act, it is necessary to determine whether or not you are supplying residential premises, and if so, whether what you are supplying are also commercial residential premises or accommodation in commercial residential premises provided to an individual where you either own or control the commercial residential premises.

If you are supplying residential premises to be used predominantly for residential accommodation, which are also not commercial residential premises, then your supplies will be input taxed. However, a supply by way of lease, hire or licence of commercial residential premises would generally be a taxable supply.

Residential premises

Section 195-1 of the GST Act provides that 'residential premises' means land or a building that: (a) is occupied as a residence or for residential accommodation; or (b) is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation; (regardless of the term of the occupation or intended occupation) and includes a floating home.

Goods and Services Tax Ruling 2012/5 Goods and services tax: residential premises (GSTR 2012/5), relevantly explains what is meant by 'residential premises' in the following paragraphs:

6. Premises, comprising land or a building, are residential premises under paragraph (a) of the definition of residential premises in section 195-1 where the premises are occupied as a residence or for residential accommodation, regardless of the term of occupation. The actual use of the premises as a residence or for residential accommodation is relevant to satisfying this limb of the definition.

7. Premises, comprising land or a building, are also residential premises under paragraph (b) of the definition of residential premises if the premises are intended to be occupied, and are capable of being occupied, as a residence or for residential accommodation, regardless of the term of the intended occupation. This limb of the definition refers to premises that are designed, built or modified so as to be suitable to be occupied, and capable of being occupied, as a residence or for residential accommodation. This is demonstrated through the physical characteristics of the premises.

14. 'Residential premises' are not limited to premises suited to extended or permanent occupation. Residential premises provide 'living accommodation', which does not require any degree of permanence. It includes lodging, sleeping or overnight accommodation.

15. To satisfy the definition of residential premises, premises must provide shelter and basic living facilities. Premises that do not have the physical characteristics to provide these are not residential premises to be used predominantly for residential accommodation.

Further, paragraph 9 of GSTR 2012/5 provides that the requirement in section 40-35 of the GST Act that premises be 'residential premises to be used predominantly for residential accommodation (regardless of the term of occupation)' is to be interpreted as a single test that looks to the physical characteristics of the property to determine the premises' suitability and capability for residential accommodation.

In addition, paragraph 25 of GSTR 2012/5 provides that not all premises that possess basic living facilities are residential premises to be used predominantly for residential accommodation. If it is clear from the physical characteristics of the premises that their suitability for living accommodation is ancillary to the premises' prevailing function, the premises are not residential premises to be used predominantly for residential accommodation.

The following relevant paragraphs from GSTR 2012/5 discuss in more detail living accommodation, shelter and basic living facilities, other premises, and the importance of identifying the premises:

74. The ordinary meaning of the word 'residence' connotes a degree of permanent or long-term commitment to the occupation of premises. However, the Marana amendments broaden the definition of residential premises, ensuring that it is not limited to premises suited to extended or permanent occupation. The amendments included the words 'residential accommodation' and 'regardless of the term of occupation or intended occupation'. This gives 'residential premises' a broader meaning in the GST Act than they ordinarily have.

75. Residential premises, as defined in the GST Act, provide living accommodation. Living accommodation does not require any degree of permanence of occupation. It includes lodging, sleeping or overnight accommodation. In South Steyne Hotel Pty Ltd v. FC of T (South Steyne), Stone J referred to a number of overseas decisions on this point including Urdd Gobaith Cymru and Owen. Her Honour noted:

37.... [In Urdd Gobaith Cymru] The Tribunal chairman agreed that 'a residence' clearly implied a building with a significant degree of permanence of occupation but added:

However, the word loses that clear meaning when used as an adjective. In ordinary English 'residential accommodation' merely signifies lodging, sleeping or overnight accommodation. It does not suggest the need for such accommodation to be for any fixed or minimum period.

38.... In Owen the Court of Appeal expressed a similar view as to the meaning of 'residential accommodation' used in the context of the Capital Gains Tax Act 1979. The position was put succinctly by Leggat LJ who said:

In my judgment the expression 'residential accommodation' does not directly or by association mean premises likely to be occupied as a home. It means living accommodation, by contrast, for example with office accommodation.

76. In South Steyne it was held that only the elements of shelter and basic living facilities are necessary for premises to satisfy the definition of residential premises. This includes, for example, shelter and basic living facilities provided by a bedroom and bathroom. However, premises may provide shelter and basic living facilities without necessarily having a conventional bedroom or bathroom.

82. Contractual or legal prohibitions against long-term or short-term occupation as a residence do not prevent premises from being suitable for, and capable of, providing residential accommodation.

83. Before considering whether a supply of premises consists of residential premises, commercial residential premises, or another type of premises, it is necessary to identify the premises subject to the supply. In this context it is possible for premises to be part of larger land or a building. For example, if the subject of the supply is limited to a strata-titled room or apartment within a larger building, it is necessary to consider the character of that room or apartment, not the character of the larger building.

84. A variety of buildings may include basic living facilities, such as office buildings and hospitals. However, it does not follow that all premises that have these facilities are necessarily residential premises to be used predominantly for residential accommodation.

85. Although these premises have, in part, physical characteristics common to premises that provide living accommodation, they also have physical characteristics which reflect their suitability for another purpose. Where premises' suitability for the provision of living accommodation is ancillary to the premises' prevailing function, they are not residential premises to be used predominantly for residential accommodation.

87. These outcomes are consistent with the legislative policy. The legislative intention is that Subdivisions 40-B and 40-C operate so that those renting a house, flat or home unit are on the same footing as persons who own their own homes: neither is to bear the cost of GST in connection with such occupation. There is nothing to suggest that the legislative intention is that a supply of non-residential structures (such as a factory, warehouse or office) should be input taxed simply because someone occupies the premises when they are supplied, even if that person could be said to be living there.

88. Design or construction documents, such as architectural plans, may assist in identifying the physical characteristics of premises as residential premises to be used predominantly for residential accommodation where inspection of the physical characteristics of the premises does not give a clear indication. See Example 7 at paragraph 36 of this Ruling. This documentation may also be relevant in determining the intended character of premises before construction of the premises is completed.

Commercial residential premises

Section 195-1 of the GST Act also contains the definition of 'commercial residential premises'. That term is relevantly defined to mean a hotel, motel, inn, hostel or boarding house (in paragraph (a) of the definition), or anything similar to a hotel, motel, inn, hostel or boarding house (in paragraph (f) of the definition).

While paragraph (f) of the definition of commercial residential premises extends the scope of the definition, its operation is limited to premises that have some or all of the characteristics of both residential premises and one of the classes of premises listed in paragraphs (a) to (e) of the definition (refer to paragraph 143 of Goods and Services Tax Ruling 2012/6 Goods and services tax: commercial residential premises (GSTR 2012/6)).

Paragraphs 9 and 140 of GSTR 2012/6 relevantly provide that the terms in paragraph (a) of the definition of commercial residential premises are not defined within the GST Act and therefore take their ordinary meanings in context. The ordinary meanings of these terms can be found in paragraph 141 of GSTR 2012/6, which provides as follows:

'Hotel, motel, inn, hostel or boarding house - paragraph (a) of the definition'

The following meanings sourced from the Macquarie Dictionary 5th Edition, the Oxford English Dictionary 2nd and 3rd editions and the Shorter Oxford English Dictionary 5th Edition are relevant in interpreting the meaning of paragraph (a) of the definition:

Hotel

a building in which accommodation and food, and alcoholic drinks are available.

building or establishment where travellers or tourists are provided with overnight accommodation, meals and other services.

an establishment, esp. of a comfortable or luxurious kind, where paying visitors are provided with accommodation, meals and other services.

Motel

a roadside hotel which provides accommodation for travellers in self-contained, serviced units, with parking for their vehicles.

a hotel catering primarily for motorists; spec. on comprising self-contained accommodation with adjacent parking space.

Inn

a small hotel that provides lodging, food etc., for travellers and others.

a public house providing accommodation, refreshments, etc., for payment, esp. for travellers.

now also, a public house serving alcoholic liquor for consumption on the premises, whether providing accommodation or not.

Hostel

a supervised place of accommodation, usually supplying board and lodging provided at a comparatively low cost, as one for students, nurses, etc.

a public house of lodging and entertainment for strangers and travellers; an inn, a hotel.

a house of residence for students at a university or on a course, esp. at a non-residential college, or for some other special class of people.

Boarding house

a dwelling in which lodging is provided to paying residents who share common facilities such as a kitchen, laundry, living room, etc.

a dwelling, usually a private house, in which board and lodging are provided for payment.

a house offering board and lodging for paying guests.

In their ordinary meanings, these terms share the common attribute of providing accommodation to guests. Premises that are 'similar' to establishments that are commercial residential premises must have sufficient characteristics in common with one of the class of premises described above.

Paragraphs 10 and 142 of GSTR 2012/6 provide that objective factors that are relevant to characterising premises as falling within either paragraph (a) or (f) of the definition of commercial residential premises include the overall physical character of the premises and how the premises are operated. Where these objective factors do not give a clear characterisation, the following may also be considered:

•         contractual documentation that provides evidence of current or future use, and

•         government zoning and planning permissions.

The tests to be applied are whether the premises are a hotel, motel, inn, hostel or boarding house for the purposes of paragraph (a), or whether the premises are similar to these types of premises, in the sense that they have a sufficient likeness or resemblance to any of these types of establishments for the purposes of paragraph (f). These tests necessarily raise questions of fact involving matters of impression and degree (paragraphs 11 and 147 of GSTR 2012/6).

Common characteristics of operating hotels, motels, inns, hostels and boarding houses that are relevant, though not necessarily determinative, to characterising premises as commercial residential premises are set out in paragraph 12 of GSTR 2012/6, as follows:

•         Commercial intention

The premises are operated on a commercial basis or in a business-like manner even if they are operated by a non-profit body.

•         Multiple occupancy

The premises have the capacity to provide accommodation to multiple, unrelated guests or residents at once in separate rooms, or in a dormitory.

• Holding out to the public

The premises offer accommodation to the public or a segment of the public.

• Accommodation is the main purpose

Providing accommodation is the main purpose of the premises.

• Central management

The premises have central management to accept reservations, allocate rooms, receive payments and perform or arrange services. This can be provided through facilities on-site or off-site.

• Management offers accommodation in its own right

The entity operating the premises supplies accommodation in its own right rather than as an agent.

• Provision of, or arrangement for, services

Management provides guests and residents with some services and facilities, or arranges for third parties to provide them.

• Occupants have the status of guests

Predominantly, the occupants are travellers who have their principal place of residence elsewhere. The occupants do not usually enjoy an exclusive right to occupy any particular part of the premises in the same way as a tenant.

Paragraphs 13 to 25 of GSTR 2012/6 discuss the features of hotels, motels and inns. Some of the comments made in these paragraphs include the following:

•         A motel is a particular type of hotel that primarily caters to the needs of motorists seeking roadside accommodation. An inn is a small hotel at which board (meals) and lodging are provided to travellers. Subject to these qualifications, the features below are equally relevant to motels and inns.

•         Hotels provide accommodation for a commercial purpose. Non-profit entities can also operate commercial residential premises. ...

•         Hotels have the capacity to supply accommodation for multiple occupancies.

•         Hotels usually offer meals to guests and they usually have a kitchen where meals are prepared ... The premises usually include a restaurant or dining room ... A motel does not necessarily have a dining room, but guests of the motel may still be provided meals.

•         The guest rooms in a hotel are invariably furnished ... In some cases, hotel rooms may also have a kitchenette for self-catering.

•         Linen and towels are usually supplied. The rooms are usually cleaned and serviced by staff on a daily basis, with the costs of these services being included in the tariff.

•         Predominantly, the guests of hotels are travellers who ordinarily have their principal place of residence elsewhere, ... However, this feature may not be evident in hotels ... that provide accommodation to long-term residents for whom the premises are a permanent place of residence.

•         Guests of hotels do not usually enjoy an exclusive right to occupy any particular part of the premises in the same way as a tenant ...The guest is usually charged at a daily rate ...

•         Hotels usually have a reception desk to handle the requirements of both management and guests, ... Hotels may also offer concierge services ...

•         Hotels do not normally provide shared accommodation to guests in the sense of having a number of unrelated guests sharing a kitchen and living facilities.

•         A hotel is centrally managed by the operator, typically having at least one person present, or offsite but readily accessible, to manage the accommodation and arrange or provide services.

•         Accommodation in a hotel is supplied by the operator of the hotel in its own right ...

•         When determining whether premises are, or are similar to, a hotel, motel or inn, it is necessary to consider the premises in its entirety. It is not sufficient to only consider the features of part of the premises, such as an individual room, in which accommodation is provided.

Based on the definitions in paragraph 141 of GSTR 2012/6, a hotel, motel or inn is a building or establishment from which accommodation and other services or facilities are supplied. Broadly, accommodation falling into this category would have multiple occupancies such as a block of apartments, central management of the properties, and provision of services to the guests beyond the accommodation such as breakfast or room servicing.

The features of hostels and boarding houses are discussed in paragraphs 26 to 35 and 36 to 40 of GSTR 2012/6 respectively.

Essentially, the term 'hostel' includes premises that can be described as a hostel, a hotel or inn. The features of hotels and inns identified earlier are also relevant to hostels. Hostels also include supervised places of accommodation usually supplying board and lodging at a comparatively low cost. Hostel accommodation may be provided either in a dormitory environment or in separate bedrooms.

Physical characteristics of hostels may include a commercial kitchen where meals are prepared, a communal area suitable for a dining area for occupants, and a communal laundry; however, the provision of meals is not an essential feature of a hostel. The feature that a hostel, or premises similar to a hostel, be a supervised place of accommodation can be evident where occupants can raise queries and concerns pertaining to the management of the premises with an on-site manager.

A 'boarding house' is a dwelling at which board and lodging are provided to guests or residents. While the term indicates that the premises ordinarily consist of a single dwelling, premises are not precluded from being a boarding house where the premises consists of a building with an additional stand alone structure in which board (meals), or lodging, or both, is provided.

Paragraph 41 of GSTR 2012/6 provides that ultimately, whether premises are commercial residential premises is a matter of overall impression involving the weighing up of all relevant factors.

Paragraphs 95, 96 and 98 of GSTR 2012/6, which discuss separately titled rooms, apartments, cottages or villas, relevantly provide as follows:

Separately titled rooms, apartments, cottages or villas

95. In addition to living accommodation areas, premises that are commercial residential premises include commercial infrastructure to support the commercial operation of the premises. This infrastructure may include (but is not limited to) reception areas, dining and bar areas, meeting/function areas, kitchens, laundry facilities, storage areas and car parks. This infrastructure is used to provide services to occupants. Premises described in paragraph (a) and similar premises under paragraph (f) of the definition contain some or all of these areas to some degree.

96. Separately titled rooms, apartments, or adjacent cottages or villas located on adjoining or abutting land can be combined with sufficient commercial infrastructure (as discussed in paragraph 95 of this Ruling) so that, as a whole, it can be operated similarly to a hotel, motel, inn, or hostel. Supplies of accommodation in premises operated in this way are supplies of accommodation in commercial residential premises.

98. A supply by sale or lease of real property consisting of part of a building cannot be characterised by reference to another supply. For example, a hotel may be strata titled so that each hotel room and the commercial infrastructure are separate strata units. Where the strata units are individually supplied under multiple sale contracts or leases, each individual supply of a strata unit must be characterised without reference to other supplies of strata units. A supply by sale or lease of strata titled rooms, apartments, cottages or villas without sufficient commercial infrastructure referred to at paragraph 95 of this Ruling is an input taxed supply of residential premises to be used predominantly for residential accommodation regardless of whether the building complex, or any part of it, is being, or will be, operated as commercial residential premises. ...

Although the abovementioned paragraphs from GSTR 2012/6 concentrate on separately titled rooms and cottages, etc., what is made clear in those paragraphs is that commercial residential premises must include sufficient commercial infrastructure before the supply of those premises can be that of commercial residential premises.

Thus, where residential accommodation is rented without sufficient commercial infrastructure, such supplies would be input taxed supplies of residential premises to be used predominantly for residential accommodation rather than taxable supplies of commercial residential premises.

Whereas a supply by way of rent of premises that display sufficient features to be characterised as commercial residential premises would be a taxable supply where the requirements of section 9-5 of the GST Act are satisfied.

How this applies to the facts in your case

Each of the two cabins that you rent to guests satisfy the definition of residential premises as both provide shelter and basic living facilities; including a bathroom and toilet, two bedrooms and a combined lounge/kitchen area.

Regarding the question of whether the cabins are commercial residential premises, we note that while the cabins display some characteristics of commercial residential premises, the cabins do not display sufficient features of a hotel, motel, inn, hostel or boarding house in the way that they are used to be characterised as commercial premises.

The accommodation that you provide has the following characteristics in common with hotels, motels, inns, hostels and boarding houses:

•         Commercial intention - you rent the cabins to guests in order to make a profit which you then use to support various charities and causes. You also keep business records.

•         Holding out to the public - you offer accommodation to the public.

•         Accommodation is the main purpose - providing accommodation is the main purpose of you renting the cabins even though the rent that you charge also covers the guests' electricity and garbage disposal costs, as well as internet access.

•         Management offers accommodation in its own right - you rent the cabins to guests in your own right rather than as an agent for someone else.

•         Occupants have status of guests - the guests that you rent to are people whose main place of residence is elsewhere. They are not allowed to keep pets or hang things on the walls, and they do not have to clean the premises upon vacating (it is only if they leave the premises in an unreasonably dirty state that they may be charged an additional fee for cleaning).

However, the accommodation that you provide fails to have the following characteristics in common with hotels, motels, inns, hostels and boarding houses:

•         Multiple occupancy - you only rent two cabins under the same arrangements to guests (the house that you rent is subject to a residential lease agreement). Although each cabin has two bedrooms with two beds in each bedroom, the guests in each cabin are either part of the same or extended family or are a group of friends, etc. A cabin is not shared by multiple totally 'unrelated' guests.

•         Central management - there is no on-site central management for either cabin. You advertise and receive payment for rent through Airbnb. Guests are able to contact the cleaning lady by phone should they have issues; however, no one is on site to assist guests. The cleaning lady generally only provides the access number for the front door key box to incoming guests over the phone, as guests rarely need other assistance.

•         Provision of, or arrangement for services - although electricity and garbage disposal as well as internet access is included in the price of the rent that you charge and you provide fresh linen at the start of a stay, you provide no other services or meals, nor do you arrange any other services for your guests during their stay.

Further, the cabins that you rent to guests are not similar to the dictionary definitions for a hotel, motel, inn, hostel and boarding house above, for the following reasons:

•         You do not provide food, alcoholic drinks and other services like a hotel - you only provide accommodation.

•         You do not provide roadside accommodation primarily for motorists like a motel - your customers are mostly tourists, including some families, who come to say in a detached cabin located in a rural setting.

•         You do not provide lodging and food, etc. for travellers and others like an inn (small hotel) - you only provide accommodation.

•         As part of the tariff, hotels, motels and inns usually provide linen and towels, plus clean and service the rooms on a daily basis. You do not clean and service the cabins on a daily basis (you only provide fresh linen at the start of a stay).

•         You do not provide a supervised place of accommodation like a hostel - you only provide accommodation; you generally do not even meet with your guests.

•         In general, you do not provide a dwelling in which lodging is provided to paying residents who share common facilities such as a kitchen, laundry, living room, etc. like provided by a boarding house - you rent each cabin to the one group of either family members or friends, etc. who will have use of the entire cabin and who will prepare their own meals. You do not, for example, rent the different bedrooms in the one cabin to totally unrelated guests who would then share the kitchen and living areas, etc.

As stated above, determining whether premises are commercial residential premises is a matter of overall impression and degree involving weighing up all relevant factors.

Taking all of the above into consideration, we have concluded that the accommodation that you provide when renting the two cabins at your property in Australia is not the supply of commercial residential premises. Such supplies are thus input taxed supplies of residential premises and not taxable supplies.

Conclusion

As you are making input taxed supplies when renting the two cabins at your property in Australia, such supplies do not form part of your GST turnover for registration purposes.

Further, if all the other supplies that you are making are also input taxed supplies of residential accommodation, then regardless of the total amount of rent received, you would not be required to be registered for GST and your supplies would thus fall outside of the GST system (GST is only payable on taxable supplies).

For a supply to be a taxable supply, one of the requirements of section 9-5 of the GST Act is that the supplier is either registered for GST (which you are not) or required to be registered for GST (which you would not be in the circumstances mentioned above). In any case, a supply is not a taxable supply under section 9-5 of the GST Act to the extent that it is GST-free or input taxed.

Please note that you will not be entitled to claim input tax credits for the GST included in costs to the extent that they relate to making supplies that would be input taxed supplies of residential premises.

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