FFYS v FC of T

Members:
BJ McCabe DP

Tribunal:
Administrative Appeals Tribunal, Sydney

MEDIA NEUTRAL CITATION: [2021] AATA 4844

Decision date: 24 December 2021

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BJ McCabe (Deputy President)

1. The applicant in these proceedings uses the AirBnB platform to source bookings from paying guests who wish to stay in her home. The home is located on the Sunshine Coast, a popular destination for travellers from Brisbane and elsewhere. The applicant experienced an actual decline in bookings and revenue as a result of the disruption caused by the pandemic. She believes she is entitled to the Jobkeeper payment. The Commissioner of Taxation disagreed. The Commissioner's objection decision in relation to eligibility has now come before the Tribunal.

2. While this decision relates to the applicant's eligibility for the Jobkeeper payment, the reasoning may yet be of interest to other 'hosts' using the AirBnB platform. That is because the central issues in the case deal with issues arising under the GST legislation. Those issues are (a) whether the applicant can be said to be conducting a 'business' when she accepts paying guests through the AirBnB platform, and (b) is she supplying 'commercial residential premises' to her guests?

Introduction to the applicant, her home and the listing on AirBnB

3. Much of the applicant's evidence is uncontroversial. She was cross-examined at the hearing and provided two witness statements. While some of her claims may have been ambitious - about the amount of time she devoted to some of the activities around the house, for example - and there are unresolved questions over some of her claims for deductions, I found her to be an essentially honest witness. I have set out a factual narrative in the paragraphs that follow which is derived from that evidence.

4. The applicant is an enterprising individual. She currently has two part-time jobs that generate the greater part of her taxable income. Her husband also works. The couple live together in a pleasant, well-appointed home in a desirable location on the Sunshine Coast. I was provided with a floorplan and photographs of the dwelling in the applicant's statement. The dwelling has four bedrooms, three bathrooms, a study, a kitchen and two living areas. It also has a garage. The property fronts onto a waterway with a jetty. There is a swimming pool in the well-maintained gardens.

5. In 2016, the applicant says she and her husband were experiencing financial difficulties and looked about for new ways to make some money. She hit upon the idea of accepting paying guests into her home using the AirBnB platform. She says she discussed the proposal with her accountant and prepared a feasibility study of some kind. The study was not produced but the applicant says she satisfied herself that the proposal made economic sense. I have no reason to doubt this uncontradicted evidence as to her motivation at the time. She subsequently signed up as a host with AirBnB and listed her home on the site in 2016. The agreement with AirBnB was provided in evidence, and its terms are potentially relevant to the outcome. I will have more to say about that below.

6. I was provided with printouts of the listing on the AirBnB website which identifies the location of the property and lists its features. There are pictures of the property and a

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description of the sleeping arrangements. There is a list of available services and inclusions. These include wifi and limited access to the kitchen and a kayak for use on the waterway. The listing also mentions a continental breakfast which is included in the room rate. There is a heading called 'house rules' with a link to another page but there is a specific reference on the front page to the host not allowing small children, pets, parties or smoking. The listing also talks about the applicant. The listing says the applicant and her daughter are the hosts. The applicant says that information is incorrect: while it was originally intended the applicant's daughter would assist with the initiative, it quickly became clear to the applicant that her daughter would not be regularly involved. There is no reason to doubt that explanation.

7. The listing does say the applicant qualifies as a 'superhost', a label applied by AirBnB to hosts that meet certain criteria. The listing features the applicant's rating which is achieved through guest feedback. There is also a link to a list of reviews.

8. Most of the reviews provided in the material are positive. They typically comment favourably on the quality of the facilities, the cleanliness of the property, the desirability of the location and the pleasant interactions with the applicant and her husband who live in the house. Many of the reviews refer to the fact the property is the applicant's home, and the reviewers plainly perceive of themselves as (paying) guests in that home. That is no accident: the listing explains "We live here and host guests". The applicant says it is important guests realise they are not renting an entire house which they will occupy on their own. They are guests in the applicant's home. The applicant said there was a handful of occasions when guests arrived and were disappointed to learn they would not have the house to themselves despite the applicant's efforts on the listing to make the occupancy arrangements clear.

9. The applicant said the property was very popular from the moment it was listed. She said she consistently enjoyed good occupancy rates until Covid struck. She said that was partly because she updated her listing regularly and responded quickly to reviews posted by guests. She explained that being active on the website caused the algorithm in the AirBnB search engine to give her listing a higher profile compared to listings belonging to less diligent hosts. I was not provided with any expert evidence on the operation of the AirBnB algorithm. I cannot say for sure whether it was possible to manipulate outcomes in that way, but I am generally aware that savvy users of search engines are often able (or believe they are able) to take advantage of quirks in an algorithm to produce favourable results. The applicant was also identified as a Superhost on the website, as I have explained. The AirBnB site explains Superhosts "are experienced hosts who provide a shining example for other hosts, and extraordinary experiences for their guests." I was told a Superhost might enjoy greater prominence on the site and accrue other benefits. The applicant said that maintaining Superhost status took hard work: the property needed a high average satisfaction rating from guests, and the host had to actively perform in other ways.

10. Achieving positive guest reviews and engaging with her listing to achieve a prominent place in search results on the AirbBnB website were the keys to the applicant's marketing strategy, I was told. She did not advertise the property on any other website or undertake independent marketing activities.

11. The applicant included patronage figures in her statement (exhibit one) as follows:

55. My review of the summary data available to me from the Air BnB platform indicates that, since I started my Business in 2016, I have achieved the following commercial succeses:

• (a) I have had a total of 796 bookings and have hosted 1637 guests, over 1034 booked nights, between 2016 and approximately 31 March 2021, broken down by year as:
  • (i) September 2016 - 31 December 2016: 47 guests across 50 nights and 26 bookings;
  • (ii) 1 January 2017 - 31 December 2017: 360 guests across 260 nights and 175 bookings;

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  • (iii) 1 January 2018 - 31 December 2018: 421 guests across 245 nights and 194 bookings;
  • (iv) 1 January 2019 - 31 December 2019: 413 guests across 269 nights and 194 bookings;
  • (v) 1 January 2020 - 31 December 2020: 336 guests across 174 nights and 176 bookings.
  • (vi) 1 January 2021 - 31 March 2021: 60 guests across 36 nights and 31 bookings.
• (b) My Air BnB profile and advertisement is viewed on average 1,000 times a month, which means that since September 2016 my advertisement for my Business on Air BnB has been viewed approximately 50,000 times; and
• (c) I had an occupancy rate of 78.71% in 2019 (prior to COVID).

12. I was provided with a printout from the applicant's account on AirBnB which provided a basis for those occupancy figures. I note the applicant does not purport to keep other records which record reservations and stays. She relies on the data provided by AirBnB.

13. The applicant said she accepted bookings for between one and four nights. While each booking might relate to a party comprised of up to four people, she said she did not normally accept bookings from more than one party on any particular night. She said she could only recall one occasion when she had two unrelated parties in the house at the same time. That occurred when the guests from the previous night asked to stay for an additional night. That booking was extended with the agreement of the incoming guests.

14. A guest who used the AirBnB site to make a booking would pay using a credit card at the time of the booking. AirBnB would remit the room rate (presumably less a service fee) to the host 24 hours after the guest checked out. The applicant said the brief delay ensured there was an opportunity for the guest to alert AirBnB to any dispute. The applicant said AirBnB would remit the cleared funds into a Paypal account she established for the purpose, and she would thereafter transfer money from that account to her regular bank account (or perhaps that of her husband) as the need arose. She did not keep a spreadsheet or other records of transactions apart from her bank statements or the statement provide by Paypal.

15. In her oral evidence, the applicant claimed she made a profit from the beginning. When questioned about that claim she conceded she reported a loss in the first year of income. She attributed the loss to start-up costs, although she was vague about what costs were incurred. She also failed to produce conventional accounting records including profit and loss statements that might give a clearer sense of the genuine extent of the profits she was making. I note the Commissioner asked for a range of documents and records in advance of the hearing but those requests were resisted, at least in part. I was left with the impression of somebody who did not have a particularly sophisticated understanding of business affairs, cash-flow analysis, or an appreciation of the benefits associated with good record-keeping. The applicant appeared to be content to accept she was making extra money that justified the effort. That was not necessarily unreasonable given the scale of her activities.

16. The applicant reported the money she made from the AirBnB listing in her income tax returns in subsequent years. The amounts reported are not large, although that is unsurprising given the scale. Interestingly, in her tax returns, the income from the AirBnB was recorded as 'rental income' rather than income from a business. In the years of income ending 30 June 2018, 2019 and 2020, she claimed deductions relating to the property against that rental income.

17. I was provided with a printout of the various claims for deductions the applicant made. The applicant recorded the expenditures in the Australian Taxation Office's app which includes what is known as the 'my deductions' function. She said she would make a purchase of some item or incur an AirBnB-related expense and enter details of the expenditure in the app and upload a picture of the invoice which was stored on her phone. The app includes the ability to upload the deduction claims directly to the Australian Taxation Office website but the applicant did not do that. She apparently informed her accountant of the claims and her accountant completed the returns on that basis. The applicant was

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asked questions in cross-examination about those deductions. Suffice to say it is unclear whether all the deductions were properly claimed by the applicant. It is not clear whether the applicant (as opposed to her husband) incurred all the expenses in question. Some expenses appear to relate to domestic or household acquisitions that would have occurred in any event. Some expenses may have been double-counted, and others should have been apportioned. But the validity of those claims is not an issue before me in these proceedings.

18. My takeaway from the applicant's tax returns and other financial records (including the printout she provided recording deductions) is that:

• • she derived a relatively modest amount of income from the AirBnB activities;
• • that income was identified in tax returns as rental income from property, not business income - although the applicant, when pressed about the significance of reporting the income in that way, shrugged and said that was a choice made by her accountant; and
• • her record-keeping was rudimentary, at best. She relied on the records built into the AirBnB website, Paypal, the ATO app and her bank statements.

19. The applicant spoke at some length about her daily activities in connection with property. She pointed out she had a high turnover of guests because she tended to take overnight and short stay bookings. Guests would typically depart in the morning. The house would be cleaned and readied for guests arriving that afternoon. The applicant described the forensic cleaning of the rooms and the laundering process in some detail. She made clear these tasks had to be done quickly and to a very high standard. She generally undertook the work herself. She made clear she put a lot of thought and pride into her work: she described how she would launder and dry the towels so they were appropriately fluffy. She said the cleaning was important because guests noticed if the property was not clean. That would result in bad reviews which would impact on her satisfaction rating.

20. Many of the applicant's daily activities - such as cleaning, gardening and attending to the pool - would be undertaken in any event. She insisted she was unlikely to do those things with the same intensity and regularity but for the presence of paying guests. I have no reason to doubt that evidence. I accept she acquired more linen and did more laundry and expended more on cleaning products and maintenance activities than she would have done if she were maintaining a family home without visitors in the ordinary course. I accept she incurred some other expenditures that would not be incurred, or which would not be as great, if she were not hosting paying guests. These expenses ranged from the cost of continental breakfast items to the chocolate mints that she left on the pillows of guests.

21. I also accept the thrust of the applicant's evidence that she regularly engaged with the AirBnB website. She said she regularly adjusted her listing - although I note she did not amend the reference to her daughter as a host. It is not clear how often she actually made meaningful changes to the content, but I accept she regularly checked and responded to reviews, and she regularly and diligently engaged with guests providing private feedback.

22. The applicant estimated she spent up to 18 hours a week on activities associated with the AirBnB guests. She was questioned about her other part-time work. Her various part-time jobs generated more income than she derived from the AirBnB activities but she insisted that other work fitted in around her hosting activities. She said her husband might help if she was unavailable to greet guests upon arrival, and her daughter and friends might step in on the few occasions when the applicant was on holidays or otherwise indisposed. That evidence is consistent with the content of the reviews from guests.

23. I should add there was some evidence that the applicant provided transport for guests as part of the service she offered. As it turned out, that service was not included in the room-rate. She charged a fee to pick up clients from the airport or drive them to nearby restaurants. It unclear how often she provided that service. It is also unclear how she accounted for the money she was paid when she was paid in cash, although she appears to have claimed generous

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deductions in respect of motor vehicle expenses.

24. The arrangements with respect to guests accessing the kitchen and parking at the premises also merit a comment. The House Rules said guests had limited access to the kitchen. Guests were able to store items in the refrigerator and use the microwave oven but they did not have free rein in the kitchen. Some other parts of the house were off-limits. I was told guest rooms could be locked from the inside but the applicant might access a guest room to service it as required even when it was allocated to a guest. The applicant said she and her husband might lock their own room and the study door if they were going out while guests were present. The garage was not available to guests. The listing on the website pointed out there was ample street parking available.

The Jobkeeper payment and the challenge in this case

25. The Jobkeeper payment is one of several emergency measures introduced to assist businesses affected by the Coronavirus pandemic. The measures were provided for in the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth) (the CERP Act). Jobkeeper was specifically intended to assist businesses to meet the cost of wages where the business might otherwise be forced to lay-off its workforce because of a pandemic-related decline in turnover. Payments were also available for a business participant - a measure directed to a small business owner who worked in an affected business. Businesses that applied for Jobkeeper payments needed to satisfy the eligibility rules found in an instrument published pursuant to the CERP Act called the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) (the Rules).

26. The CERP Act and associated provisions were devised and introduced quickly in response to an urgent need. The Parliament (which passed the CERP Act) and the Treasurer (who issued the Rules) did not start from scratch. They relied upon existing institutions, processes and legal concepts that were borrowed or repurposed to deliver the benefits. It follows the core concepts I need to discuss when considering eligibility are familiar - even if there are interesting questions over the application of those concepts to AirBnB hosts.

27. One of the familiar concepts that was yoked to the scheme was the Australian Business Number (ABN). The Rules included a requirement that an applicant for Jobkeeper have a registered ABN as at 12 March 2020: s 11(6) of the Rules. The requirement was described as an 'integrity' measure that was presumably intended to exclude zombie businesses and phantoms from collecting the payment. As it happens, the applicant in this case did not have an active ABN on that date. She said her accountant had previously told her that she did not need an ABN (nor did she need to register for GST) because the turnover of her business fell below the threshold level. She subsequently applied for an ABN and was registered with effect from 4 January 2020.

28. The Commissioner has the discretion under the Rules to waive the requirement that the applicant hold an ABN on 12 March 2020. The discretion was discussed by the Full Court in
Commissioner of Taxation v Apted [2021] FCAFC 45. The Full Court concluded the Tribunal could review the Commissioner's refusal to exercise the discretion in an applicant's favour. While the Commissioner initially declined to exercise the discretion in this case, he made clear at the hearing he would not contest that issue if the Tribunal decided the applicant otherwise had a good case on review. In those circumstances, we can put the exercise of discretion to one side. For the sake of completeness, I note the Commissioner also abandoned an argument that had arisen during the pre-hearing phase over whether the applicant was operating the AirBnB in partnership with her husband.

29. That brings us back to the provisions of the Rules which are central to the outcome in this case. Section 6 sets out the principal criteria which must be satisfied to determine eligibility where the applicant claims to be entitled to Jobkeeper as an employer. Where the applicant is seeking payments as a business participant - which is what happened in this case - the principal criteria are contained in s 11. The criteria set out in both provisions are further defined in other provisions within the Rules. Both sections refer to, amongst other things, a requirement that "the [entity or the employer, as

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the case may be] qualifies for the Jobkeeper scheme at or before the end of the fortnight". That requirement is addressed in s 7 of the Rules. Section 7(1) provides:

• (1) For the purposes of paragraphs 6(1)(b) and 11(1)(c), an entity qualifies for the jobkeeper scheme at a time if:
  • (a) on 1 March 2020, the entity carried on a business in Australia, or was a non-profit body that pursued its objectives principally in Australia; and
  • (b) the entity has satisfied the decline in turnover test at or before the time (see section 8).

30. Each limb of s 7 throws up a question that requires an answer in these proceedings. Specifically:

• (a) Was the applicant carrying on a business at the relevant time? The concept is not defined in the Rules or the CERP Act (although it is defined very generally in s 195 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act) to include "any profession, trade, employment, vocation or calling, but does not include occupation as an employee"). That imprecision is unsurprising. The concept is fluid and inherently difficult to exhaustively define - but, like obscenity, one knows it when one sees it.^[1] The evaluative task required in this case brings to mind the oft-quoted remarks of Stewart J in Jacobellis v Ohio 378 US 184 (1964), a decision of the United States Supreme Court which considered whether pornography was protection by the free speech guarantees contained in the 1 ^st amendment to the US Constitution. Referring to expressions like “obscenity” and “hard-core pornography” his Honour observed at 197: I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that. As I shall explain, determining whether someone carries on a business is a question of fact. The question is resolved by referring to all the facts and circumstances. One forms an impression having regard to the presence or absence of indicia which are commonly associated with a business. I will refer to the indicia in more detail below.
• (b) Did the applicant experience a decline in projected turnover as required? There is no doubt the applicant experienced a decline in bookings at the relevant time. There were some lockdowns during the period which precluded travel, and interstate travellers were unable to enter Queensland for lengthy periods. There was a significant drop in income from guests as a consequence. But there is more to the enquiry. Section 8 of the Rules refers to a decline in 'projected GST turnover'. In doing so, s 8 incorporates (and to some extent adapts) provisions of the GST Act. The effect of that can be summarised as follows. The entity's projected GST turnover does not include revenue made from input taxed supplies. The GST Act says the supply of residential premises is input taxed - whereas the supply of commercial residential premises will be a taxable supply that does generate turnover that can be counted. If the applicant was making input taxed supplies of residential accommodation, as opposed to taxable supplies of commercial residential premises, the applicant would not have experienced the required decline in projected GST turnover. I will return to this question in more detail below. Suffice to say that if the applicant was making input taxed supplies, she did not experience a decline in turnover as required, whereas she did experience a sufficient decline if I find she was making taxable supplies.

Was the applicant carrying on a business at the relevant time?

31. In
Spriggs v Federal Commissioner of Taxation [2009] HCA 22; (2009) 239 CLR 1 the High Court discussed (at [59]) the nature of the enquiry into whether the applicant is conducting a business. The Court explained:

The existence of a business is a matter of fact and degree. It will depend on a number of indicia, which must be considered in combination and as a whole. No one factor is necessarily determinative. Relevant factors include, but are not limited to, the existence of a profit-making purpose, the scale of activities, the commercial character of the transactions, and whether the activities are systematic and organised, often described as whether the activities are carried out in a business-like manner.

32. The footnotes accompanying this passage referred to several well-known authorities.^[2] The cited authorities include: Martin v Federal Commissioner of Taxation [1953] HCA 100 ; (1953) 90 CLR 470 at 473-474 per Webb J, 479, 481 per Williams ACJ, Kitto and Taylor JJ; [1953] HCA 100 ; Ferguson v Federal Commissioner of Taxation [1979] FCA 29 ; (1979) 26 ALR 307 at 311 per Bowen CJ and Franki J; Federal Commissioner of Taxation v Walker (1985) 16 ATR 331 at 334-335 per Ryan J; Evans v Federal Commissioner of Taxation [1989] FCA 205 ; (1989) 20 ATR 922 at 939-943 per Hill J. Those authorities appear to have informed the development of a list of indicia set out in paragraph 13 of Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? I should say at once I appreciate the applicant is not engaged in a business of primary production, but the list of indicia in that ruling is a convenient summary of the indicia that are relevant for our enquiry -

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provided one keeps in mind that the indicia set out in the ruling (and in the case law, for that matter) are a useful guide but not a checklist: see, generally,
Nelson v Commissioner of Taxation [2014] FCA 57.

33. The Commissioner's case at the hearing made much of the applicant's approach to record-keeping. The criticism was premised on the assumption that businesses needed to keep records because:

• (a) Section 262A(1) of the Income Tax Assessment Act 1936 (Cth) (ITAA36) created a general obligation to the effect that a person carrying on a business was required to "keep records that record and explain all transactions and other acts engaged in by the person that are relevant for any purpose of" the taxation legislation; and
• (b) records enabled the business-owner to keep track of cashflow and expenses.

34. Many small businesses fail because their (often over-worked or under-capitalised) owners do not have a clear idea of whether they are actually making any money - which is often down to poor financial information. It follows a level of financial record-keeping is a feature of well-run businesses, particularly where the business is larger, has relatively substantial creditors or even co-owners who might expect accountability, or where the business in question is being conducted through a company where obligations with respect to record-keeping and insolvent trading might be more onerous. The need for good financial record-keeping is particularly important if the business is liable to remit the GST. But not all businesses are registered for GST. Some businesses - especially very small ones - are simple to operate, and they do not generally have external stakeholders like the Commissioner or creditors demanding a level of transparency. And, of course, the fact a business is not well-run according to conventional concepts does not preclude it from being a business. One must resist the temptation to require a standard of perfection or even best-practice for the purposes of this enquiry.

35. The applicant resisted the production of some records, and some of the records that were produced were only provided late in the day. The records that were provided suggest the applicant tended to rely on the AirBnB site, Paypal and her bank to record income, while she relied on an unsophisticated process of recording deductions on the ATO app on her phone. (The print-outs from the app raised questions over whether all of the deductions were properly claimed and attributed, but that is a question for another day.) All things considered, the applicant had fewer records that one might expect of a business even allowing for the considerations I have mentioned.

36. While the applicant did not have the sort of records one might expect of a business that would enable her to monitor profitability, she made clear in her oral evidence that she only engaged in the activities to make money. She said she would not have dreamed of accepting strangers in her home but for the fact they paid for the privilege. She explained - and I accept - there was a lot of work involved in making the premises suitable for guests, She exerted considerable effort in attending to their needs and the expectations of the AirBnB website. A lot of that work (eg cleaning, maintenance, and so forth) would be done in any event in a private home, but - as I have already explained - the work would not have occurred with the same level of intensity and attention if the applicant was simply running a household comprised of herself and a husband. The applicant was unable to produce the feasibility study she claims prompted her to commence hosting activities, and her understanding of profitability came down to whether she felt the activities were generating enough revenue to justify continuing. In those circumstances, I accept the applicant had a profit-making purpose but the unsophisticated approach to the concept suggests this factor counted for less than it might.

37. The Commissioner also emphasised the applicant identified the income she derived through the AirBnB activities as rental income rather than business income in her annual income tax returns. While that is true, the applicant also explained in her oral evidence that her accountant completed her tax returns. It is not clear the applicant ever really turned her mind to the distinction the Commissioner is making. The applicant certainly did not appear to be a sophisticated business-person and almost certainly did not have a well-developed understanding of the taxation consequences of

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categorising income in different ways - although the applicant certainly appeared to be conscious of tax benefits in the form of deductions. The accountant was not called to explain why she chose to categorise the income in this way (assuming it was the accountant's choice to make), but I can surely infer the accountant described the income as rental income from a property in the nature rather than business income because that is how the accountant saw the activity.

38. The Commissioner also said the fact the applicant (with one identified exception) only took a maximum of one booking per night (so that she only ever accommodated one party) made the activity sound less like a business. I am not sure that accepting bookings from more than one party on a given night was inevitably more business-like than the applicant's model, but there is force to the Commissioner's point.

39. As it happens, the following are the strongest indicia that the applicant was undertaking a business:

• • the repetition and regularity of the bookings (and the high occupancy rates);
• • the regularity and intensity of the cleaning and preparation work that had to be carried out every time guests came and went;
• • the focused and deliberate attention that went into making each guest's stay pleasant, which included the provision of carefully laundered towels and linen and chocolates on the guest's pillow; and
• • the deliberate efforts made to engage with the demands and quirks of the AirBnB platform, which included responding diligently to reviews and engaging in other activities that were designed to elicit positive reviews and earn the title 'Superhost'.

40. I accept the applicant had a theory of how to make money using the AirBnB site, and she acted consistently, deliberately and systematically to that end. I am satisfied that is so even if I make some allowance for how much effort went into the hosting activities relative to other demands on the applicant's time, and even if some of the evidence about her level of engagement with the AirBnB website might have been exaggerated: for example, while the applicant said she regularly tweaked her listing to manipulate the algorithm, she did not correct the longstanding misleading reference to her daughter being involved in the business.

41. There is also evidence that the applicant was not simply providing access to a room. She was providing additional services as part of a bundle, and the bundle was marketed on the AirBnB site to make it attractive. The listing refers to several services, including the provision of wifi, tea and coffee-making facilities and a continental breakfast. There is also mention of access to a kayak and a laundry, although it is not clear how often those services were actually provided or what was involved. The site refers to parking being available, but it is street parking in the neighbourhood rather than dedicated parking. The evidence in relation to the kitchen was that access was very limited indeed: the house rules, as they were explained in evidence, permitted use of the microwave and barbeque and the refrigerator for the preparation of limited meals. There were some additional services - most obviously transport, for a fee - which were provided on a limited basis.

42. While there were additional services made available to paying guests, the Commissioner emphasised the applicant was ultimately welcoming paying guests into her home. They entered the property through the front door rather than having separate access to the guest rooms. (While at least two of the rooms appeared to have been dedicated for use by guests, there was a third bedroom that may have been used more flexibly for guests, or for other purposes - but the evidence on this point was ultimately unclear.) The guests' rooms could be locked from the inside but they were note otherwise lockable. The applicant said she could lock her own bedroom and the study and might do so if she and her husband were not at home, but it is not clear how often they used the locks in question. The fact those guests came via a booking platform which referred to additional services should not obscure the fact the services in question were mostly conventional domestic services. In short: guests in the applicant's home were treated as (admittedly important) guests in her private home. When they arrived, those guests enjoyed the sort of domestic services one might enjoy as

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a guest in any well-appointed private home. The guests did not have exclusive occupancy of the space; they shared the domestic space with the host.

43. The Commissioner made several other observations which I think carry less weight. Mr Josfoski, who appeared for the Commissioner in relation to this aspect of the case, pointed out:

• • the applicant was not registered for GST and did not hold an ABN. As I havealready pointed out, the applicant said she did not need either of those things because she was not making enough money out of the modest activities she undertook;
• • there is no clear evidence of the applicant making a capital outlay at the start of the business. I accept the applicant did not produce evidence that substantiated her start-up costs, but the attraction of hosting guests on AirBnB lay in the fact it allowed the applicant to repurpose an existing (domestic) asset to make some money without incurring significant costs;
• • the applicant did not advertise or undertake promotional activities. I accept that is so - however the attraction of the AirBnB website is that it provides a platform for connecting suppliers with potential customers. It is, in that sense, an online marketplace which (particularly for small and micro-businesses) obviates the need for external marketing activities. It is wrong to say the applicant had no marketing plan. While unsophisticated, she deliberately fostered good reviews and tended to her listing on the site to attract traffic;
• • the applicant's husband (and perhaps friends, and on occasion her daughter) appeared to play a role in the business. That makes it sound like a domestic arrangement, even if it was only a minor supporting role according to the applicant. The Commissioner also pointed out the applicant's husband appeared to pay some of the expenses, including the mortgage repayments, that were claimed against the income attributed to hosting. The involvement of family in a family business is not unusual, of course. The arguments on this point appear to be the residue of the Commissioner's contention prior to the hearing that the applicant may have been involved in a partnership. That contention was expressly abandoned at the outset of the hearing; and
• • the activity only generated modest income and did not really progress or expand. While the activities occurred on a very small scale and did not account for even half of the applicant's working week or income, the fact those activities did not expand is not definitive. The applicant never anticipated this would be a large-scale venture, and there is no reason to suppose that every business must inevitably establish a trajectory of growth.

44. On balance, I am not satisfied the applicant has established she was carrying on a business at the relevant time. My conclusion is necessarily the product of an impressionistic analysis in which indicia point both ways. I accept there are indicia which point to her carrying on a business, but the law on this topic proceeds on the assumption that not every taxpayer who engages in an activity that generates revenue is necessarily carrying on a business. The applicant in this case is ultimately taking paying guests into her own home that she shares with her husband. In doing so, she is merely repurposing a spare room along with other domestic facilities in that home to make some extra money on the side.

45. It is not strictly speaking necessary for me to deal with the Commissioner's second argument against the applicant's claim for Jobkeeper given the conclusion I reached on the question of business, but I will address it for the sake of completeness.

Did the applicant experience a decline in projected GST turnover as required?

46. 8 of the Rules refers to projected GST turnover. Section 4 links that concept back to s 188-20 of the GST Act. Section 188-20(1) provides:

Your projected GST turnover at a time during a particular month is the sum of the * values of all the supplies that you have made, or are likely to make, during that month and the next 11 months, other than:

• (d) supplies that are * input taxed; or
• (e) supplies that are not for * consideration (and are not * taxable supplies under section 72-5); or
• (f) supplies that are not made in connection with an * enterprise that you * carry on.

47. Section 40-35 of the GST Act says that supplies of residential premises (whether by way of lease, hire or licence) are input taxed - but s 40-35(1)(a) says the supply of residential premises in question will not be input taxed if the supply is regarded as:

…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)…

48. There is no doubt the applicant is supplying residential premises. That expression is defined in s 195-1 to include 'land or a building that…is occupied as a residence or for residential accommodation…" or which is intended or capable of being occupied on that basis. (I note the definition in s 195-1 adds that the term of the occupation or intended occupation is irrelevant.) The question is whether the applicant is supplying a subset of residential premises that answer the definition of commercial residential premises in s 195-1 which says:

"commercial residential premises" means:

• (a) a hotel, motel, inn, hostel or boarding house; or
• (b) premises used to provide accommodation in connection with a * school; or
• (c) a * ship that is mainly let out on hire in the ordinary course of a * business of letting ships out on hire; or
• (d) a ship that is mainly used for * entertainment or transport in the ordinary course of a * business of providing ships for entertainment or transport; or
• (da) a marina at which one or more of the berths are occupied, or are to be occupied, by * ships used as residences; or
• (e) a caravan park or a camping ground; or
• (f) anything similar to * residential premises described in paragraphs (a) to (e).

However, it does not include premises to the extent that they are used to provide accommodation to students in connection with an * education institution that is not a * school.

49. I have reproduced the entire definition because the applicant says her premises are similar to… a hotel, motel, inn, hostel or boarding house.

50. The words 'hotel', 'motel', 'inn', hostel and 'boarding house' are not defined in the legislation. They are common expressions. I asked both parties during submissions whether the innkeeper legislation in each state had any relevance to the discussion of the meaning of the terms. There is no suggestion that definitions in those state statutes somehow trump or control the meaning of the concepts in the GST legislation, but I asked whether the common understanding of the concepts was partly shaped by the operation of the state legislation. Mr Sievers, who appeared for the Commissioner, was wary of that suggestion but Dr Schulte and Ms Pearce, who appeared for the applicant, thought the Queensland version of the innkeeper statute - the Traveller Accommodation Provider (Liability) Act 2001 (Qld) (TAP Act) - was worthy of closer examination.

51. The state legislation regulates certain rights, liabilities and duties of entities that provide accommodation to members of the travelling public as part of a commercial transaction. Section 6 of the TAP Act defines 'traveller accommodation' in similar (though not identical) terms to the definition of 'commercial residential premises' in the GST legislation. 'Traveller accommodation' is taken to include (but is not limited to) the following types of accommodation:

• (a) backpacker;
• (b) bed and breakfast;
• (c) hotel;
• (d) motel;
• (e) resort;
• (f) serviced apartment.

52.

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The eyes are drawn at once to the fact a 'bed and breakfast' is bracketed in the definition with other sorts of accommodation that are expressly included in the GST Act definition of commercial residential premises. But the expression 'bed and breakfast' is not defined in the state legislation and it is not used in the GST Act. Dictionary definitions suggest the expression encompasses a range of accommodation types, from small hotels to overnight home-stay accommodation. The provisions of breakfast, as the name suggests, appears to be an important defining feature.

53. It is important to keep in mind the state innkeeper statutes have a different focus to the GST Act (and the CERP Act, for that matter), so they offer limited guidance for present purposes. Even so, it is likely that some bed and breakfast establishments will fit within the residual category of commercial residential premises in the GST Act definition. But what of the applicant's activities which involve hosting in a private home with a breakfast?

54. Ms Pearce emphasised it was important to focus on the character of the supply, and not be distracted by (amongst other things) the experience of that which is supplied in the hands of consumers. She argued the starting point for that analysis was the tripartite contract between the applicant as host, AirBnB as the provider of the platform, and the guests who booked accommodation.

55. The AirBnB terms of service were reproduced in annexure JL-7 to the applicant's first statement (exhibit one). The first thing that must be said is that the terms of service document appears to be intelligible. That sets the document apart from many so-called 'shrink wrap' terms and conditions that flash up on internet sites before one clicks them away with reading them. The applicant was not expressly asked whether she had read, understood and agreed to the terms. Ms Pearce argued I should be satisfied from the applicant's oral evidence that she demonstrated a level of familiarity with the AirBnB platform so as to suggest she was aware of the contents of the document. I accept that is so.

56. The preamble to the document explains:

Hosts offer accommodations (" Accommodations "), activities, excursions, and events (" Experiences "), and a variety of travel and other services (collectively, " Host Services ," and each Host Service offering, a " Listing ").

57. That explanation clearly contemplates a person in the position of the applicant providing a bundle of services in addition to the bare licence to access and occupy space. Ms Pearce said that of itself tends to draw the applicant's offering closer to the central conception of commercial residential premises like hotels, as opposed to a rental arrangement. The terms go on to clarify (at [5.2]) that the host contracts directly with the guest when they interact over the platform on the terms set out in the listing. That provision of the terms document underlines the importance of comprehensive and accurate information in the listing on the site concerning house rules, the features and location of the property, ancillary services, cancellation policies, and so forth.

58. While there are obviously wide variations in the type and features of properties listed on the AirBnB website, it is worth noting all the interactions on the platform are carried on in essentially the same way. The contracts struck between hosts and guests are governed by the same general set of terms - whether the listing relates to accommodation in a small hotel or inn, a serviced apartment, an entire apartment or house, or a room in a private dwelling as in the applicant's case.

59. Both parties referred me to the reasoning in
ECC Southbank Pty Ltd as trustee for Nest Southbank Unit Trust v Commissioner of Taxation [2012] FCA 795. In that case, Nicholas J was required to characterise the supply of residential accommodation to students. The accommodation was provided in a 13-story tower in inner-city Brisbane. The purpose-built complex included a total of 686 combined study/bedrooms in a variety of configurations. Some were individual or single studios, while most of the others were within apartments in which the occupants of four or six bedrooms shared a common lounge and kitchen. All of the bedrooms had en suite facilities. The complex also offered a range of facilities in the common areas, including a cafeteria-style eating area, a library, games room and laundry facilities. There was also a reception and concierge desk that employed a

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team of staff to manage check-in and check-out, receive deliveries, and administer the arrangements with students that resided in the complex. The concierge service could also provide laundry and cleaning services, travel cards, food packs and a variety of other services for a fee. The applicants in that case, like the applicant here, argued the accommodation entity was supplying commercial residential premises just like a hotel. The Commissioner argued in ECC that the accommodation provider was simply renting each room to students.

60. Nicholas J undertook a detailed comparison between the properties being offered and the features of hotels, motels, inns, hostels and boarding houses. While there were similarities in each case, his Honour concluded:

• (a) the premises were not like a hotel (or a motel, which he described as a sub-set of hotels) because
  • (i) the configuration of the premises into apartments with internal shared facilities was different to the typical configuration of a hotel;
  • (ii) the dining arrangements were not typical of hotels;
  • (iii) the rooms were not serviced during one's stay;
  • (iv) the form and terms of the agreements between residents and the provider did not resemble the arrangements that were typically negotiated between a hotelier and its guests; and
  • (v) the residents were students whereas hotels tended to cater for visitors and travellers.
• (b) The premises were not similar to an inn or boarding house because the nature of the lodgings was different, and catered to a different clientele.
• (c) The premises were similar to a hostel. While some of the features associated with a hostel were missing - such as the refectory - the central concept of supervised, low-cost accommodation to a student community was present.

61. In this case, the applicant's premises are nothing like a hostel. But while the applicant's guests are travellers who do not enter into detailed agreements with the accommodation provider like the agreements discussed in ECC, the premises are certainly not configured like a hotel, either. Configuration was an important consideration in ECC: see [60]. The fact that some of the services typically offered by a hotel are also available at the applicant's premises does not overcome that fundamental difference.

62. The applicant's premises in this case are more like an inn or boarding house which provide a range of services to travellers, but the configuration of the premises is still strikingly different.

63. The importance of configuration was emphasised in
The Married Couple and Commissioner of Taxation [2013] AATA 888. In that case, SM Lazanas noted the premises in question were "indisputably a house, as ordinarily understood": at [75]. The Senior Member referred to the observation of Stone J in
South Steyne Hotel Pty Ltd v Federal Commissioner of Taxation [2009] FCA 13; (2009) 71 ATR 228 at paragraph [44] that:

[i]n addition to providing accommodation they [hotels, motels, inns, hostels and boarding houses] also have in common that, large or small, they provide for multiple occupancies. The terms [hotel, motel, etc] are not used where only one apartment, room or other space is provided.

64. The comparison I must make is impressionistic. It depends on indicia that one popularly associates with hotels and the other establishments expressly mentioned in the definition of commercial residential premises. While I am satisfied the bundle of services the applicant is supplying are similar in some ways to the services and features of hotels, motels, inns, hostels and boarding houses, the physical configuration and layout and the absence of multiple occupancies is a key and overwhelming distinction that sets aside the applicant's premises. There is no getting past the fact the applicant's premises are configured as a private home into which she invites single parties of guests.

65. I am satisfied the applicant is not supplying commercial residential premises, which means the supply of residential premises is input taxed. The revenue generated in connection with those supplies does not form part of the applicant's projected GST turnover.

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Conclusion

66. The reviewable eligibility decision is affirmed.