Edited version of private advice

Authorisation Number: 1051523208967

Date of advice: 31 May 2019

Ruling

Subject: GST and requirement to register

Are you required to be registered for GST pursuant to section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999?

Answer

Yes

This ruling applies for the following period(s)

1 April 2016 - 31 March 2020

The scheme commences on

1 April 2016

Relevant facts and circumstances

You are registered for GST effective from dd/mm/yyyy.

You commenced to carry on an enterprise of renting portable accommodation cabins (PACs) in yyyy.

Your Financial Statements state that income received for the 12 month period from dd/mm/yyyy to dd/mm/yyyy was greater than $75,000.

You expect your turnover of $75,000 or greater to continue for the foreseeable future.

The PAC's come with sleeping area, toilet, kitchen and bathroom and includes air conditioning.

All PACs are supplied to you by Entity A.

Upon delivery to your customer, the cabin and chassis are placed on the customer's property, blocked up and levelled on site prior to use by the customer.

The cabins and chassis are not registered permanently, however their registration is covered under the trade plates of Entity A and are fit for on-road transport.

You have provided a copy of a weighbridge certificate and inspection report indicating compliance as a caravan.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 23-5

Section 40-35

Subsection 40-35(2)

Section 188-10

Section 188-15

Section 188-20

Section 195-1

Reasons for decision

Note: In this reasoning, unless otherwise stated,

·  all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

·  reference material(s) referred to are available on the Australian Taxation Office (ATO) website ato.gov.au

Section 23-5 provides that you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold (currently $75,000).

Section 23-10 provides that you may choose to register for GST if you are carrying on an enterprise and your GST turnover is at or below the threshold of $75,000.

In this case we consider you are carrying on an enterprise as defined in section 9-20. Given the facts of this case, you commenced to carry on your enterprise in yyyy. As such we need to determine whether your turnover meets the registration turnover threshold ($75,000).

Section 188-10 provides you have a GST turnover that meets, in this case, the registration turnover threshold if:

·  your current GST turnover is at or above $75,000, and the Commissioner is not satisfied that your projected GST turnover is below $75,000; or

·  your projected GST turnover is at or above $75,000.

'Current GST turnover' is defined in section 188-15 as the sum of the values of all of your supplies made in a particular month and the preceding 11 months.

'Projected GST turnover' is defined in section 188-20 as the sum of the values of all of your supplies made in a particular month and the following 11 months.

In summary, a business should monitor its turnover on a monthly basis in order to determine whether it is required to register. Upon the requirement to register for GST, an entity must apply for registration within 21 days (section 25-1).However, in the calculations of both 'current GST turnover' and 'projected GST turnover', the value of supplies that are 'input taxed' are disregarded.

You have advised that your turnover has reached $75,000 and therefore subject to these supplies not being input taxed you will be required to register for GST

Input taxed

Section 40-35 provides that a supply of residential premises by way of lease, hire or licence (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) is input taxed.

Under subsection 40-35(2), the supply is input taxed only to the extent the premises are to be used predominately for residential accommodation (regardless of the term of occupation).

The definition of 'residential premises' in section 195-1 refers to land or a building that is occupied as a residence or for residential accommodation, or is intended to be occupied, and is capable of being occupied as a residence or for residential accommodation (regardless of the term of occupation or intended occupation).

The Goods and Services Tax Ruling GSTR 2012/5 Goods and services tax: residential premises (GSTR 2012/5) outlines the characteristics of residential premises.

Paragraphs 49 and 50 of GSTR 2012/5 state the following:

'Transportable buildings

49. A transportable building such as a demountable dwelling or moveable home that is designed as a residence, or to provide residential accommodation, is residential premises when placed on land and installed ready for occupation.

50. A supply of a transportable building before it is placed on land and installed ready for occupation is not an input taxed supply under sections 40-35, 40-65 or 40-70. The supply is subject to the basic rules.'

For the purposes of GSTR 2012/5, the term 'moveable home' means a structure designed to be used as a residence that can be relocated from site to site.

However, paragraph 52 of GSTR 2012/6 states:

'Vehicles designed for road use

52. Road vehicles, including motor homes, caravans and campervans, are not residential premises as they are not land or a building. This is the case regardless of whether they are used as a residence or for residential accommodation.'

The term 'caravan' is not a defined within the GST legislation and therefore takes its ordinary meanings. The Macquarie Dictionary (online version) contains the following meaning for the word 'caravan':

'noun 1. a vehicle in which people may live, whether temporarily or permanently, usually having two wheels and designed to be drawn by a car.'

In this case the PACs are constructed by Entity A and consist of a steel chassis fitted with working brakes, lights, axels and wheels for transport with the cabin built onto the chassis.

PACs are able to be transported to your customer's property using the trade plates of Entity A enabling road transport. PACs are able to be towed to locations using large 4WD or light truck.

The classification of such structures was examined in Korena Marie Russell v Camden Council [2018] NSWLEC 1159 (Camden Council). Dixon C at [5] determined that the essential issue in the case was whether the 'mobile structure' being the subject of the case, was a caravan. Dixon C at [8] noted the structure in question was rectangular in shape with wheels, drawbar, lights and with a VIN plate attached. The structure was positioned on the site on temporary supports and connected to plumbing, sewer, gas and electricity services. Internally there is a kitchenette and bedroom area with separate ensuite. There is no stove or cooking facilities within the structure. The structure in this case was brought onto the land by motor vehicle/crane and is an RMS accredited registrable vehicle under the Motor Vehicles Act 1982 and registered at the time in question. Dixon C at [23] found the structure in question was a caravan.

We consider the subject matter examined in the Camden Council case is similar to the PACs you supply and consider that for GST purposes, the PACs are properly described as a 'caravan'. In accordance with paragraph 52 of GSTR 2012/5, we consider the PACs are not 'residential premises'.

Therefore your supply of the PACs by way of lease, whilst with the intention to be used as a residence, is not an input taxed pursuant to section 40-35 and as such, turnover generated from such activities are not excluded from the calculations of either your 'current GST turnover' or your 'projected GST turnover'.

From the information provided, your current GST met the registration threshold at some point prior to dd/mm/yyyy. If at that time your projected GST turnover (i.e. your anticipated turnover for that particular month and the following 11 months) is also $75,000 or more you would be required to register for GST.

In this case, your enterprise has reached a turnover of $75,000, you anticipate this level of turnover to continue for the foreseeable future and your supplies are not input taxed. Therefore you are required to be registered for GST pursuant to section 23-5.

Additional information

As discussed above, you are entitled to be registered for GST from the date you commenced to carry on your enterprise regardless of the level of your turnover. If you register effective from an earlier date you will be entitled to GST credits and liable for GST on your supplies made from this date.

Where you find that you were required to be registered earlier than your current GST start date of dd/mm/yyyy, you will be required to request your GST start date to be backdated to that date.

However, please note that there is a four limit time period in which you are able to claim GST credits for your purchases of goods and services. As such, the Commissioner will not generally backdate the date of effect to a date that is more than four years before the date on which the Commissioner decides the date of effect of the entity's registration.