EDITED VERSION OF GST PRIVATE RULING

Authorisation Number: 34328

SUBJECT:

GST and accommodation

QUESTION AT ISSUE:

Is goods and services tax (GST) payable on the fee that you charge to the managers?

FACTS:

· You are registered for GST.

· You have stated that you are an accommodation and marketing agent involved in the tourism industry.

· You have on your books a number of apartment buildings which you actively market which involves negotiating with building/property managers (who are responsible for letting rooms).

· When asked whether you receive a commission for your services you stated the consideration received has been described as 'a commission' but you suggest that what you receive is the difference between the negotiated accommodation rate and the rate the accommodation is sold for.

· You have not confirmed if you were are acting as an agent for the building/property managers nor could you confirm if you receive a commission.

· You prepare travel brochures for promoting the properties. That is the brochures list the properties available for accommodation. You charge a marketing fee to the building/property managers to recover this cost.

· You were requested to provide a copy of a contract or agreement between yourself and the building/property managers and a copy of any contract or agreement between yourself and another entity.

· You were also requested to provide a copy of tax invoices for the same.

· The purpose of this request was to clarify the nature of the supplies between yourself and the building/property managers and between yourself and the other entity based on the limited and conflicting information you had provided.

· You provided us with only schedules which show the agreed tariff rate that you will pay the building/property managers for any accommodation on sold.

· The documentation provided does not clarify whether you are acting as agent or providing the accommodation as principal.

· Some of the documentation that you have provided indicates that the accommodation is input taxed.

DECISION:

GST is payable on the marketing fee that you charge.

REASONS FOR DECISION:

Section 9-5 of the GST Act provides that an entity is making a taxable supply where:

· the entity makes the supply for consideration; and

· the supply is made in the course or furtherance of an enterprise carried on by the entity; and

· the supply is connected with Australia; and

· the entity is registered or required to be registered for GST; and

· the supply is neither GST-free nor input taxed.

You are a supplier of marketing services to apartment building managers. You supply those marketing services in return for payment, and the supply is in the course or furtherance of your enterprise. The supply is taking place in Australia and you are registered for GST.

The supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act.

As the supply satisfies all of the positive limbs of section 9-5 of the GST Act and is neither GST-free nor input taxed, it is not excluded by the negative limb of section 9-5 of the GST Act.

Therefore, you are making a taxable supply under section 9-5 of the GST Act when you supply marketing services to the apartment building managers.

In accordance with section 9-40 of the GST Act which states you must pay the GST payable on any taxable supply that you make, GST will be payable on the marketing fee that you charge to the apartment building managers.

Disclaimer

The Register of Private Binding Advice is published as a public record of the binding advice issued by the ATO. Each piece of advice is based on a specific set of circumstances advised to the ATO and the law in force at the time of the advice, and is considered binding only in respect of the person/s or entity/ies on whose behalf the advice was sought. The Register is a historical record of advice provided, and is not updated to reflect changes in the law, withdrawal of advice or any other change in circumstance. Each piece of advice has been edited to avoid disclosing the identity of the person or entity on whose behalf advice was sought and published advice may therefore not disclose all the relevant facts or circumstances on which the advice was based. For these reasons, advice published in this Register cannot be relied upon as precedent for any other person or entity.