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Edited version of your written advice
Authorisation Number: 1051190475323
Date of advice: 20 April 2017
Ruling
Subject: GST and commercial residential premises
Question
Are you making taxable supplies of accommodation in commercial residential premises when you supply accommodation at specified address?
Answer
Yes, you are making taxable supplies of accommodation in commercial residential premises when you supply accommodation at specified address.
Relevant facts and circumstances
● You are registered for goods and services tax (GST) and are conducting the enterprise of providing commercial residential accommodation.
● You acquired the original property (ie vacant land) located in specified address and amount under the margin scheme and contracted with a builder to construct the units on the property. The units are separately titled. There is a central driveway down the middle of the block.
● The property consists of residential units that are marketed and rented as self-contained holiday units on a website.
● Given the location, your intention was to use these units to provide short term self-contained holiday units.
● Specified units were furnished upon completion of construction.
● When furnishing the units was completed in specified time, they were marketed and rented on a website as self-contained holiday units for travellers.
● To provide you with a stable constant cash flow and counter the periods of vacancies, specified unit was leased, unfurnished under a specified time lease which commenced in specified time.
● Specified unit will be marketed and rented on a website as a self-contained holiday unit upon the expiry of this lease and after it becomes fully furnished.
● You are developing your own website to compliment the marketing and booking system.
● Central management is outsourced to an off-site entity to accept reservations, allocate units, receive payments and perform or arrange services.
● There is an on-call caretaker who carries out the co-ordination of cleaning and maintenance of the units and is the contact point for guests renting the units.
● Guests have exclusive access to one full apartment inclusive of their own kitchen, bathroom(s) and laundry.
● The usual length of guest occupancy is 3-5 days.
● All guests of specified units are travellers who have their principal place of residence elsewhere.
● Specified units are rented out on a per night rate basis although weekly and monthly stays are discounted from the standard daily rates.
● Projected rent for specified units is specified amount pa (exclusive of GST).
● A car hire service is currently being established as an option for guests and you are in the process of establishing more tourist/hospitality affiliates as the business gets more established.
● The units were never marketed for sale.
● The services provided to the occupants of the holiday specified units are detailed below:
a. Guests are provided with a welcome pack on arrival which includes tea, coffee, milk, sugar and biscuits;
b. Breakfast foods such as cereals milk etc. are provided to guests;
c. Basic snack foods e.g. biscuits, crackers are provide to guest during the duration of their stay;
d. Airport pickup/drop off services are provided upon request;
e. Full linen/towels are provided to guests;
f. Units are cleaned after each guest has vacated;
g. A guest can request daily cleaning and extra linen and towels but they are required to pay extra charges;
h. Local tourist attraction brochures are provided to guests;
i. There is tea/coffee making facilities in each unit;
j. Free wireless internet access is provided for all guests;
k. Off street parking is provided for each self-contained unit;
l. Each unit contains a refrigerator and television.
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), and
A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.