Edited version of private ruling

Authorisation Number: 1011655174505

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST and caravan park fees

Questions

1. Is goods and services tax (GST) payable on the guest accommodation rental fees (rental fees) you receive from your tenants?

2. Are you entitled to an input tax credit (GST credit) on the annual fee you pay the caravan park operator (operator)?

3. Are you entitled to a GST credit on the fees the operator deducts from your rental fees?

Answers

1. Yes, but only on those fees where your supply of commercial residential premises is taxable.

2. Yes, but only on your supplies of commercial residential premises that are taxable.

3. Yes, but only on your supplies of commercial residential premises that are taxable.

Relevant facts and circumstances

You are registered for GST.

You were granted by an associated entity the individual lease rights of each site on the site plan of a caravan park for a substantial period of time with an option for a further period.

An investor can purchase from you a leasehold interest in a site which will be registered on title with the Registrar of Titles.

The associated entity rents out your sites not purchased by an investor on your behalf for which you receive rental fees paid by your tenants.

There is no written agreement between you and the associated entity that they will rent out your sites but there is a general understanding that they will do so.

A site can be either vacant land or land with a cabin.

You pay the following fees to the associated entity for managing your sites:

§ a annual fee to meet their expenses which include, wages, rates and taxes, insurance, gas, bank fees and security.

§ management, cleaning, linen and similar fees (deducted from your rental fees).

A check on the Australian business register shows that the associated entity is registered for GST.

Reasons for decision

Summary

GST is payable on your rental fees where your supply of commercial residential premises is taxable (your supply, or part of your supply, may be treated as input taxed in certain circumstances).

Where your supply is taxable then you are entitled to claim a GST credit on the fees paid to the operator. Where only part of your supply is taxable then you can only claim a GST credit on that part.

Detailed reasoning

1. Is GST payable on the rental fees you receive from your tenants?

The supply of accommodation or a camping ground in a caravan park is a supply of commercial residential premises for the purposes of GST as per section 195-1 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

The Australian Tax Office view on commercial residential premises is provided by Goods and Services Tax Ruling GSTR 2000/20. Paragraphs 56 to 60 of the ruling confirm that in this case it is you that supply commercial residential premises with the operator acting as your agent.

Therefore, your supply of commercial residential premises would be taxable (hence GST payable on the rental fee) provided the following requirements of section 9-5 of the GST Act are met.

§ you make the supply for consideration

§ the supply is made in the course or furtherance of your enterprise

§ the supply is connected with Australia, and

§ you are registered, or required to be registered for GST.

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

With respect to section 9-5 of the GST Act, you are supplying commercial residential premises to your tenants as part of your enterprise for which you receive a rental fee. The supply of the commercial residential premises is also connected with Australia as it is supplied in Australia and you are registered for GST.

However in certain circumstances, a leaseholder supplying long-term (28 days or more) or predominantly long-term commercial residential premises in a caravan park may treat their supply as input taxed (not taxable under section 9-5 of the GST Act) or instead apply a concession under Division 87 of the GST Act that allows the rate of GST to be reduced. Goods and services tax bulletin GSTB 2001/2 (copy enclosed) which provides the Australian Tax Office view on accommodation in caravan parks provides further information in relation to this.

Hence, it does depend on the type of commercial residential premises you supply (short-term, long-term or predominantly long-term) and how you decide to treat your supply as to whether your supply is taxable.

Given this, it is possible you may be supplying a mixture of taxable and input taxed commercial residential premises. There are no provisions in the GST Act or any other Act that would allow your supply to be GST-free.

Either way, GSTB 2001/2 does provide that the supply of all short-term commercial residential premises (27 days or less) would be taxable at the full GST rate (and hence GST payable on your rental fee).

2. Are you entitled to a GST credit on the annual fee you pay the operator?

You are being charged an annual fee by the operator for their services that include fee collection and maintenance.

To be entitled to claim a GST credit under Division 11 of the GST Act the annual fee must be paid to the operator for a creditable acquisition. Section 11-5 of the GST Act provides that you make a creditable acquisition if:

§ you acquire anything for a creditable purpose

§ the supply to you is taxable

§ you provide or are liable to provide consideration for the supply, and

§ you are registered for GST.

Section 11-15 further defines creditable purpose as the acquisition of a thing that is used in carrying on your enterprise but excluding those things that are used to make input taxed supplies or used for a private or domestic purpose.

In this case, you acquire the operator's services in carrying on your enterprise. Also, the operator's services are connected with Australia as they are supplied in Australia and the operator is registered for GST making their supply to you taxable under section 9-5 of the GST Act.

You are registered for GST thus satisfying the last dot point of section 11-5 of the GST Act. As a result, you would be entitled to claim a GST credit on the annual fee paid to the operator but only in relation to your supply of commercial residential premises that are taxable. You are not entitled to a GST credit under section 11-5 of the GST Act where your supply of commercial residential premises is input taxed.

Consequently, if you supply a mixture of taxable and input taxed commercial residential premises then you would be required to make an apportionment between your taxable and non taxable supplies. I refer you to the ruling GSTR 2001/8 that provides examples of apportionment. This is available from our website www.ato.gov.au .

3. Are you entitled to a GST credit on the fees the operator deducts from your rental fees?

For the same reasons provided in question 2, you would be entitled to claim a GST credit on the said fees in relation to your supplies of commercial residential premises that are taxable. Again it may also be necessary to make an apportionment between your taxable and non taxable supplies.