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Disclaimer
This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1012869919160

Date of advice: 4 September 2015

Ruling

Subject: GST and commercial residential premises

Question

Are you making taxable supplies of accommodation in commercial residential premises when you supply accommodation at a property?

Answer

Yes, provided you do not make a choice pursuant to section 87-25 of the GST Act. We consider the facility falls within the definition of 'commercial residential premises' as being a hostel or something similar to a hostel.

We note that there is an exclusion in the definition of 'commercial residential premises'. It does not include premises to the extent that they are used to provide accommodation in connection with an education institution that is not a school. Based on the facts provided, we consider the facility does not fall within the exclusion in the definition of 'commercial residential premises'.

Relevant facts and circumstances

Overview

    • A is the trustee for you.

    • You are registered for goods and services tax (GST).

    • You own premises.

    • You own apartments and car parks.

    • The remaining apartments are owned by unrelated parties.

    • You use the premises to operate a low cost residential accommodation business.

The Premises

    • You completed the construction of the premises in YYYY.

    • The premises consist of:

    • A level consisting of reception, commons areas and a number of apartments;

    • Upper levels consisting of accommodation and additional common areas

    • There are shared apartments, single bedroom apartments and various common areas. In total X beds are provided via single or double occupancy.

    • Most apartments contain one or two single beds (with a small number containing queen size beds), a kitchenette, coffee table, dining table and chairs, television and storage space. Deluxe apartments have private en suite bathrooms. Two bedroom standard and penthouse apartments have shared bathrooms.

    • Residents of the shared apartments must agree to accept a roommate. They are provided with a swipe card access to the premises' front doors and an individual key for their bedroom.

    • Common areas available to residents include:

    • Laundry room including washing machines, dryers and ironing facilities;

    • TV areas;

    • Outdoor terrace with barbeque area;

    • Bike racks;

    • Study areas;

    • Communal cooking area and dining tables; and

    • Games room.

    • The reception office provides a full range of services including check in, check out, room changes, maintenance requests, cleaning requests and deals with queries and provides general assistance. Room services such as Internet connection and bed and kitchen packs are arranged via the reception office.

    • Residential advisors are available at all times to provide all residents with support, counselling and pastoral care services.

    • Residents must comply with all reasonable requests from B and staff and security and must agree to abide by the code of behaviour.

    • The premises provide accommodation from several education institutions.

    • However education institutions do not have any input into the operation of the facility.

    • The premises are not constructed on land owned by an education institution and nor is the accommodation governed by any education institution charter.

    • All apartments are separately strata titled.

The Letting Agent and Manager

    • B was appointed by you as the Letting Agent and Manager due to its expertise in the area of accommodation.

    • B is registered as an agent pursuant to the Land Agent Act.

    • Its duties include:

    • Attending to the supervision, direction, control, management and operation of the complex being the building, apartments and common property.

    • Carrying out all sundry incidental activities normally associated with management of a apartment business of a similar type to the business.

    • Providing all maintenance services to the premises.

    • It advertises through the internet and a number of Universities but B is not affiliated to any one particular institution and no education institution has any input in the running of specified place.

    • It provides a fully resourced, on site, full time management team supporting the letting of the apartment and the day to day management of the lease arrangements. The management team deals with enquiries, complaints and issues.

Tenancy Agreements

    • The minimum tenancy term is X nights.

    • The majority of the terms are for Y or Z months.

    • Residents rent include charges for water and gas usage.

    • Internet, phone, electricity usage and printing are subject to an additional charge.

    • Residents are not permitted to hang devices on walls or keep pets.

    • Residents do not arrange for connection of utilities.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Section 9-40

A New Tax System (Goods and Services Tax) Act 1999 Subsection 40-35(1)

A New Tax System (Goods and Services Tax) Act 1999 Section 87-25, and

A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.


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